Research on Savings from Generic Drug Use
The Hatch-Waxman Act, passed in 1984, is largely responsible for the relationship seen today between generic and brand name drugs. While brand names are allowed to charge high prices for their first several years on the market, their patents eventually expire (as stipulated by the Act) and generic manufacturers move in to sell at a lower price, says the Government Accountability Office.
Prescription drug spending in the United States reached $307 billion in 2010 — an increase of $135 billion since 2001.
This comprised approximately 12 percent of all health care spending in the country in 2010.
As efforts to control health care spending expand, attention is naturally paid to the role of generic drugs in reducing spending on prescriptions — generics are, on average, 75 percent cheaper than their brand-name competitors.
The usage of generic drugs has grown from approximately 19 percent in 1984 to 78 percent today, and is expected to increase even further in the next few years as major drugs lose their patent.
The Government Accountability Office has conducted a review of studies on the topic in an effort to understand the future role that generic drugs might play in controlling costs. Its research yielded several conclusions.
A series of studies estimated the total savings that have accrued to the U.S. health care system from substituting generic drugs for their brand-name counterparts to be more than $1 trillion between 1999 and 2010,
One study assessed the potential for additional savings within Medicare Part D, finding that if generic drugs had always been substituted for the brand-name drugs studied, about $900 million would have been saved in 2007.
Source: “Research on Savings from Generic Drug Use,” Government Accountability Office, January 31, 2012.
For text:
http://www.gao.gov/products/GAO-12-371R
New CMS Document on the Medicaid Program on Covered Outpatient Drugs
Last Friday evening, CMS released the proposed rule regarding changes to averagemanufacturer price (AMP), which essentially formalizes the changes to AMP that had been previously discussed in the Affordable Care Act (ACA). Recall that the ACA had discussed changes to the methodology by which Federal Upper Limit, or FULs, which are used for the reimbursement of generic drugs under Medicaid, would be calculated relative to the methodology that had been previously proposed under the Deficit ReductionAct of 2005 (DRA). The significant changes in ACA included a shift to a no-less than-175% markup over the weighted average manufacturer price (AMP), whichis the acquisition cost by wholesale distributors for drugs for the retail class oftrade, which compares to the prior proposal of 250% of the lowest AMP underDRA (recall that FULs had previously been calculated based on a discount off AWP). While the new proposed rule has some minor clarifications,we don’t believe these should drive material changes to the new AMP prices.CMS did indicate that it recognizes that if reimbursements are too low, pharmacies may elect not to participate in Medicaid, which could potentially impact beneficiary access to pharmacy services. CMS is soliciting comments onthe proposed rule, which are due by April 2.
Its interesting reading should you want to review the ruling: http://www.ofr.gov/OFRUpload/OFRData/2012-02014_PI.pdf
D2 Presenting: Is Specialty Pharmacy Right for Your Hospital at HSCA
Stay at the forefront of pharmacy industry issues and take advantage of opportunities to network with leading decision-makers—join us in Tampa for the 2012 National Pharmacy Forum.
Make Key Business Contacts and Explore Critical Industry Issues.
The National Pharmacy Forum is the place to strengthen partnerships with existing clients and develop new connections. You’ll also gain insight into emerging trends and an outlook for the future with relevant educational content.
Program highlights include:
- Specialty Pharmacy: Opportunities in the Hospital Setting, which presents an expert market/situation analysis that breaks down the complexity of the biopharmaceutical marketplace and the positions of stakeholders featuring Dean Erhardt, MBA and Dan Steiber, R.Ph
- Battleground 2012: An Update on the Political Landscape, which explores the latest public opinion research on healthcare reform, the economy, and the country’s political future.
- Comparative Effectiveness Research, which gives a comprehensive overview of comparative effectiveness research (CER) and patient centered outcomes research (PCOR).
- Healthcare 2020: The Transformative Trends That Will REALLY Define Our Future, which details dramatic innovations that will impact tomorrow’s healthcare system. .
And you won’t want to miss presentations from engaging keynote speakers:
Kevin B. Sneed, PharmD, founding dean of the University of South Florida College of Pharmacy and respected lecturer on a range of healthcare topics. His research interests include the pharmacological treatment of patients with cardio-metabolic disorders and disparities in healthcare.
Jim Carroll, recognized as one of the world’s leading international futurists with a massive global blue-chip client list. He is also widely acknowledged as an authority on international trends, rapid business model change, business transformation in a period of economic uncertainty, and the necessity for fast-paced innovation.
For complete programming information, view the preliminary program/schedule of events.
For more information and to register, visit www.supplychainassociation.org/forum
FDA Submits Generic, Brand Drug User Fee Bill Language to Congress
FDA Submits Generic, Brand Drug User Fee Bill Language to Congress
Generic drugmakers won’t have long to wait after Congress passes a user fee bill to learn the various fee levels in the Generic Drug User Fee Act (GDUFA). Under statutory language delivered to Capitol Hill on Friday, the FDA would
have only until Oct. 31 to establish fee levels for a one-time backlog fee, a drug master file fee and various application and supplement fees.
New HHS Report Indicates Shocking Gaps between ASP and WAMP
The HHS Office of the Inspector General (OIG) released a report comparing average sales prices (ASP) to widely available market prices (WAMP) for selected drugs. The report compares ASPs to WAMPs for 14 drugs that have been identified in previous OIG reports for repeatedly exceeding the 5 percent ASP to average manufacturer price (AMP) threshold.
As part of the ASP price substitution policy, OIG is required to conduct studies that compare ASP to WAMP and AMP for Medicare Part B drugs to identify if the ASP of a drug exceeds either the WAMP or the AMP by a certain threshold.
The study revealed significant gaps in what is being reported between the manufacturers and the distributors in come cases gaps of over 300%!
D2 readers can find this document at http://oig.hhs.gov/oei/reports/oei-03-10-00280.pdf
Below is a summary statement taken from the above document.
Federal law requires OIG to conduct studies that compare ASPs to W AMPs and average manufacturer prices (AMP). I f OIG finds that the ASP of a drug exceeds either the WAMP or AMP by a certain threshold (currently 5 percent), the Secretary of Health and Human Services (the Secretary) may disregard the ASP for the drug when setting reimbursement amounts. Since the implementation of the ASP reimbursement methodology, OIG has issued 27 reports comparing ASPs to W AMPs and AMPs
(2 comparing ASPs to WAMPs, 25 comparing ASPs to AMPs). The purpose of this review was to compare ASPs to W AMPs for 14 drugs that have been identified in previous OIG reports as repeatedly exceeding the 5-percent ASP-AMP threshold. However, limitations and irregularities in the sales data provided by the distributors and manufacturers of the 14 drugs called into question the data’s accuracy and reliability, and prevented us from measuring W AMPs against the threshold.
All of the manufacturers that reported direct sales to providers included data on their discounts and rebates for those sales. However, two distributors (which sold over half of all the units reported to us) were not able to determine the discounts and rebates they provided, meaning that the W AMPs we calculated most likely did not reflect the actual prices paid in the marketplace. In the past, OIG has had difficulty obtaining data on discounts and rebates from distributors, but in those instances, the missing data did not have the same impact on our results.
Furthermore, the total number of units sold reported to us by distributors and manufacturers differed substantially from the number reported to the Centers for Medicare & Medicaid Services (CMS) through quarterly ASP submissions, potentially resulting in our data reflecting an inaccurate number of sales. Most likely because of these issues, the WAMPs we calculated varied widely from other pricing points; several drugs had WAMPs that were substantially higher than the associated ASPs and AMPs. We plan to continue to fulfill our statutory mandate to conduct WAMP studies, and these issues will need to be addressed before any future efforts can be made to compare ASPs to WAMPs. We will consider alternative methodologies that will allow us to conduct pricing comparisons, including directly surveying providers to obtain accurate and complete sales data.
Semi Automating REMS: New Solutions Announced
REMS programs for the opioid class of products can have significant inefficiencies. McKesson recently announced a forward thinking solution leveraging today’s technology around adjudication and using NCPDP standards. A solution worthy of note. Today in many cases, pharmacy has a very manual process. The solution detailed below offers a streamlined and transparent approach.
McKesson and RelayHealth continue their success in retail REMS solutions to ensure safety and access for cancer patients
The Woodlands, Texas (Oct. 12, 2011) – Cephalon, Inc. (Frazer, PA), has chosen McKesson Specialty Health to administer its U.S. Food and Drug Administration (FDA)-approved FENTORA® (fentanyl buccal tablet) [C-II] and ACTIQ® (oral transmucosal fentanyl citrate) [C-II] Risk Evaluation and Mitigation Strategy (REMS) programs for management of breakthrough pain in cancer patients.
Building on an established track record as the “go-to” REMS administrator, McKesson Specialty Health will administer the newly-approved Cephalon REMS programs which will replace the prior risk management programs for these medications. Through McKesson Specialty Health’s sister-organization, RelayHealth, patients can have their prescriptions filled at any local retail pharmacy enrolled in the ACTIQ and FENTORA REMS programs.
“As innovators in end-to-end REMS solution, we’re building on a live, proven model in the market place today that works within pharmacy and prescriber management workflow systems to ease the administrative burden on providers,” said Heather Morel, vice president and general manager, Reimbursement, Access and Safety Services | AccessMED, McKesson Specialty Health. “We are very pleased to collaborate with Cephalon to enable safe access to medications that play an important role in patients’ cancer treatment.”
Today, McKesson Specialty Health and RelayHealth administer several FDA-approved REMS with Elements to Assure Safe Use (ETASU) in the retail pharmacy setting making it now possible to help ensure all safe-use conditions are met within the pharmacist workflow rather than increasing the burden on stakeholders or moving REMS products out of the retail channel.
“McKesson Specialty Health’s experience in end-to-end solutions for complex REMS, combined with RelayHealth’s innovative pharmacy network solutions, bring together the right expertise and infrastructure to support the goals of this important REMS program,” said James Ottinger, vice president, Worldwide Regulatory Affairs, Cephalon.
“By leveraging our partnerships with retail pharmacies across the country and existing pharmacy technology in place today, we will help ensure not only safe, but timely, access to Cephalon’s important pain medications,” said Jeff Felton, president, RelayHealth Pharmacy Solutions.
McKesson Specialty Health has extensive experience in designing and administering comprehensive REMS solutions with ETASU for both specialty and retail channels and is the only REMS administrator with multiple active retail-based REMS with ETASU programs that integrate with pharmacy practice management systems in the market today. As part of McKesson Corporation, McKesson Specialty Health and RelayHealth bring a comprehensive, unmatched set of REMS assets and solutions to all stakeholders in healthcare.
FDA links infections to repackaged Avastin
FDA said at least 12 patients developed serious eye infections, including some leading to vision loss, following intravitreal injections of repackaged Avastin bevacizumab to treat wet age-related macular degeneration at three Florida clinics. The agency traced the bacterial infections to a single pharmacy in Hollywood, Florida, which repackaged the IV cancer drug into single-use syringes for off-label treatment of wet AMD. FDA recalled all Avastin
repackaged at the pharmacy.
The humanized mAb against VEGF from Genentech Inc. is approved for multiple cancers and is used off-label in wet AMD as a cheaper alternative to Genentech’s Lucentis ranibizumab, a mAb fragment against VEGF-A. In April, NIH’s National Eye Institute reported that Avastin was non-inferior
to Lucentis in the Phase III CATT trial for wet AMD (see BioCentury May 2).
Genentech said in a statement that it does not support or promote the off-label use of Avastin. The company added that other ocular adverse events have been reported from unapproved use of Avastin for eye disorders.
In April 2010, FDA received reports of five eye infections in Tennessee linked to Avastin repackaged at a single compounding pharmacy. Genentech, a unit of Roche (SIX:ROG; OTCQX:RHHBY), markets Avastin and Lucentis in the U.S., while the drugs are marketed elsewhere by Roche and Novartis, respectively.
NACDS, NCPA Urge Protecting Patient Choice of Pharmacy
NACDS, NCPA Urge Protecting Patient Choice of Pharmacy Amid Studies on Medication Adherence
Alexandria, Va. – National Association of Chain Drug Stores (NACDS) President and CEO Steven C. Anderson, IOM, CAE and National Community Pharmacists Association (NCPA) Executive Vice President and CEO B. Douglas Hoey, RPh, MBA today issued the following statement regarding two recent studies appearing in the Journal of Medical Economics (JME) and the American Journal of Managed Care (AJMC), regarding medication “adherence,” or the proper use of medicine as prescribed by a physician:
“The AJMC study effectively counters the claims in a study published in the JME regarding the uses of mail order versus community pharmacies. Amid these studies, it is safe to say that we have at least one important takeaway lesson: The best way to promote proper adherence to medication and better health outcomes is by ensuring patients’ access to the pharmacy of their choice. Despite repeated financial and other inducements encouraging mail order in Medicare Part D and other health plans, the vast majority of patients opt to continue to rely on their local, community pharmacist to help meet their health needs.
“It’s important to remember that adherence is about more than simply mailing a 90-day supply of prescription medication to a patient. Possession of prescription drugs alone is not the only factor in measuring adherence. For the full patient health picture, one must take into account whether that medication was actually taken as prescribed, if the patient had an adverse reaction, or if the prescriber stopped or changed the dosage of that medication based on the patient’s need.
“If any of these factors occur, it not only impacts adherence, but also cost. If a medication is not used properly, then the potential for cost-savings is lost if additional medication, medical tests or even catastrophic and emergency care are needed by a patient, further disrupting patients’ lives and driving up healthcare costs.
“This is also why it is vital to recognize that drug costs cannot be viewed in a vacuum. Pharmacy services need to be evaluated in terms of their overall ability to bring down healthcare costs across the board and improve patient health. Pharmacists provide counseling services, medication therapy management and other services that must be considered in any comprehensive cost-benefit analysis.
“The true story of improved medication adherence is the unsurpassed value of community pharmacy and the services it provides. There is no substitute for the pharmacist-patient face-to-face relationship. Community pharmacy services help to improve patient health and lower overall healthcare costs. Maintaining patient choice of how to obtain prescription medications is essential.”
Charlie Bowlus of ECRM Passes
He was a true friend of mine and the industry and the founder of an extraordinary organization. When I started consulting many years ago it was Charlie that offered me a hand and access to his event so I could network. I’ll be forever grateful for his wisdom and generosity. Please say a prayer for his family and the extended family of his legacy, his ECRM employees.
Thank you.
Pharma leads July job losses
In July, the US pharmaceutical industry shed 13,493 jobs, more than any other sector, according to an updated Challenger, Gray & Christmas report on employment trends by industry. in job losses. Merck’s announced layoffs, totaling 13,000, brought pharma past government as the leading sector for cuts in July, but government is the runaway leader in total job losses for 2010 (106,896) and 2011 (86,980), so far.
Merck’s ongoing job cuts are the result of a restructuring exercise that began after the company’s merger with Schering-Plough. Consolidation usually results in redundancy, but PhRMA, in a statement released in July, worried about cuts from a different hatchet. The Obama Administration, according to PhRMA, is not only overseeing massive job losses in government; it’s also setting up the pharmaceutical industry for a precipitous decline as the private sector employer of choice, with the highest average wages and benefits of any US industry.
“It’s extremely unfortunate that President Obama continues to push for a policy that could destabilize the successful Medicare Part D program and have a devastating effect on American jobs,” said PhRMA vice president Karl Uhlendorf, in a statement. Citing a recent JAMA study, John Castellani, PhRMA’s president and CEO, underscored the link between Part D “price controls” and American jobs. Government price controls could not only affect patients, “it could also be a devastating blow to our economy and further worsen the jobs crisis,” said Castellani.
PhRMA’s statements about the jobs impact of giving CMS the ability to negotiate drug prices, or demand drug rebates for Medicare/Medicaid duel eligibles, reflects the agenda of Chris Viehbacher, current chair of the PhRMA Board and CEO of Sanofi-Aventis, who wants to put more emphasis on industry’s economic contribution. PhRMA data indicates that for every one job created at a pharmaceutical company, another six jobs in adjacent businesses are created. With ongoing consolidations, new generic competition and a gap in pipeline productivity, however, industry’s argument around positive economic impact is likely to receive a skeptical reception, at least in the short term. Industry messaging should instead focus on the social benefits of innovation, its sole remaining virtue in the public realm. With pharma leading the pack in job cuts for July, and a mandate to curb government spending in congress, job creation isn’t likely to be a reputational selling point any time soon. Innovation, on the other hand, offers the promise of life-saving treatments that combat unmet medical needs, a positive message that regular citizens, also known as constituents, can get behind.
