Critics say Mark Cuban’s pharmacy isn’t tackling the big issue: brand-name drugs

Mark Cuban’s pharmacy, Cost Plus Drug Co., has hundreds of drugs marked at discounted prices, but some pharmacy experts say there’s a larger problem that needs fixing, CNBC reported July 28. 

The online pharmacy launched in January with about 100 drugs, and by its one-year anniversary, plans to have more than 1,500 medications, according to the company’s website. The business model, which allocates for a $3 pharmacy dispensing fee, $5 shipping fee and a 15 percent profit margin with each order, aims to uproot the pharmaceutical industry, which has faced criticism for years about its opaque business practices

Gabriel Levitt, the president of PharmacyChecker, a company that monitors the cheapest drug prices, told CNBC there’s more to be done.

“As much as I support the venture, what they’re doing does not address the big elephant in the room,” Mr. Levitt said. “It’s really brand-name drugs that are increasing in price every year and forcing millions of Americans to cut back on medications or not take them at all.”

Brand-name drugs are 80 percent to 85 percent more expensive than generics since brand-name drugs have to repeat clinical tests to prove efficacy, according to the FDA. Cost Plus Drug Co. only offers generics. Mr. Cuban told CNBC he hopes to sell brand-name medications “within six months,” but added that it’s a tentative timeline.

Lawmakers urge HHS to fine drugmakers restricting 340B drug discounts

Dive Brief:

  • More than 180 members of the House of Representatives are urging the Biden administration to crack down on drugmakers restricting drug discounts in the 340B program.
  • Enforcement actions should include fines, the letter from a bipartisan group of House members to HHS Secretary Xavier Becerra and other administration officials said.
  • Currently, 18 drug manufacturers are limiting 340B discounts dispensed through pharmacies that contract with 340B providers, according to the letter.

Dive Insight:

The 340B program requires drugmakers to charge hospitals only the statutory ceiling prices for eligible outpatient drugs. The goal of the three-decade-old program is to have savings flow into care for low-income patients and underserved communities. But critics — notably, drugmakers and some lawmakers — argue the program doesn’t have enough oversight, as hospitals don’t need to account for what they do with any savings.

Drug manufacturers began imposing restrictions on 340B discounts as early as summer 2020, sparking legal challenges from regulators. The HHS sent nine warning letters to pharmaceutical companies, referring seven of them to the Office of the Inspector General for investigation and potential enforcement.

However, eight months later, the OIG has yet to take enforcement action, the new letter from 181 House members reads.

The letter asks the OIG to finish its ongoing review of seven drug manufacturers for potential noncompliance with federal law on 340B discounts “as soon as possible.”

The law allows the OIG to impose fines up to $6,000 per drug claim on companies that intentionally overcharge 340B providers, according to the Health Resources and Services Administration, which oversees the program.

Regulators should begin imposing civil monetary penalties against pharmaceutical companies found in violation, the congresspeople said.

The letter also argues that the Biden administration should pursue enforcement action against 11 drug companies restricting 340B pricing, which either haven’t received notice from the HHS that they’re in violation of law yet, or have received a notice but haven’t been referred to OIG for enforcement.

“Every day that drug manufacturers violate their obligation to provide these discounted drugs, vulnerable communities, federal grantees, and safety net health care providers are deprived of resources Congress intended to provide,” the letter reads.

A number of hospital associations came out in support of the letter, including the National Rural Health Association, the American Hospital Association, America’s Essential Hospitals and the National Association of Community Health Centers.

340B Health, which lobbies on behalf of hospitals in the 340B program, thanked the House members for the letter in a statement Monday, and reiterated calls for fines.

“HHS should impose steep financial penalties on all the companies that are ignoring their legal commitments to the health care safety net,” said Maureen Testoni, CEO of 340B Health, in a statement.

A survey of more than 500 hospitals by 340B Health released in May estimated that the annual financial impact from drug company restrictions has doubled since the end of 2021, costing hospitals millions of dollars per year.

Drugmakers that have imposed or announced restrictions on 340B discounts for drugs dispensed at community and specialty pharmacies include AbbVie, AstraZeneca, Johnson & Johnson, Merck and Pfizer.

The 340B discounts can range from 25% to 50% of the cost of the drugs.

More pharmaceutical companies look to restrict discounts to 340B hospitals using contract pharmacies

Johnson & Johnson became the 16th drugmaker to limit 340B discounts for hospitals dispensing drugs at contract pharmacies. These manufacturers have taken issue with the proliferation of contract pharmacies in the 340B program, alleging high rates of fraud and duplicative billing. Several court battles between these drug companies and the federal government are ongoing. 

The 340B program, which requires pharmaceutical companies to provide 20 to 50 percent discounts for drugs participating hospitals purchase (see our explainer on the mechanics of the program here), has grown rapidly in recent years.

The Gist: Over 40 percent of hospitals now qualify for 340B discounts, and 340B drug sales totaled $38B in 2020. According to a recent surveyparticipating hospitals have lost 25 to 40 percent of their contract pharmacy savings since drugmakers began restricting discounts in 2020. 

Many hospitals have used savings from the program to subsidize other areas of patient care; some tell us that losing 340B revenue would erase their entire margin. Health systems should plan for a future in which their bottom lines are not dependent on this increasingly at-risk revenue source. 

Mark Cuban’s pharmacy started with a cold email

A Dallas-based generic drug startup bearing Mark Cuban's name just came out  of stealth

The Mark Cuban Cost Plus Drug Co. launched its online pharmacy in January, offering low-cost versions of high-cost generic drugs. And it all started with a cold email. 

Alex Oshmyansky, MD, PhD, fired off an email to Mr. Cuban with a simple subject line: “Cold pitch.” The then 33-year-old radiologist told Mr. Cuban about work he was doing in Denver with a compounding pharmacy and the business plan behind a company he founded in 2018, Osh’s Affordable Pharmaceuticals. 

I asked him a simple question, because this was when the whole pharma bro thing was going down,” Mr. Cuban said on NPR podcast The Limits, referring to convicted felon Martin Shkreli. “I was like, ‘Look, if this guy can jack up the prices 750 percent for lifesaving medicines, can we go the opposite direction? Can we cut the pricing? Are there inefficiencies in this industry that really allow us to do it and really make a difference?'”

Dr. Oshmyansky answered yes. Their weekly email correspondence continued for months. The Mark Cuban Cost Plus Drug Co. was quietly founded in May 2020, and Dr. Oshmyansky now serves as its CEO. The company is organized as a public-benefit corporation, meaning it is for-profit but claims its social mission of improving public health is just as important as the bottom line.

“We basically created a vertically integrated manufacturing company that will start with generic drugs,” Mr. Cuban told NPR. A major component of the strategy is to bypass pharmacy benefit managers, which Mr. Cuban likens to bouncers at a club.

They’re the ones who say, ‘Hey, I’m controlling access to all the big insurance companies. If you want this insurance company to sell your drug, you’ve got to pay the cover charge. All these drugs pay the cover charge to these PBMs through rebates, and because they’re paying the cover charges, the prices are jacked up,” Mr. Cuban told NPR. “We said we’re going to create our own PBM, we’re going to work directly with the manufacturers, and we’re not going to charge the cover charge.”

The Mark Cuban Cost Plus Drug Co. marks the prices of its drugs up 15 percent, charges a $3 pharmacy fee to pay the pharmacists it works with, and a fee for shipping. “That’s it,” Mr. Cuban said on NPR. “There’s no other added costs. The manufacturers love what we’re doing for that reason.”

Others have set out before to disrupt pharma the way Mr. Cuban and Dr. Oshmyansky intend, but their downfall is cooperating or giving in to the PBMs, the entrepreneur noted

“People always ask, well why didn’t somebody do this before? The reality is there’s so much money there, it’s hard not to be greedy,” Mr. Cuban said on the podcast. “If you get to any scale at all, those PBMs will start throwing money at you and saying, ‘Look, just play the game.’” 

Mr. Cuban has indicated he has no intention to play the game. 

“I could make a fortune from this,” Mr. Cuban told Texas Monthly last fall. “But I won’t. I’ve got enough money. I’d rather f— up the drug industry in every way possible.”

FDA fully approves Moderna’s COVID vaccine

A health care worker preparing a dose of  Moderna's coronavirus vaccine.

The Food and Drug Administration fully approved Moderna’s mRNA COVID-19 vaccine on Monday, saying it meets its safety and manufacturing requirements.

Why it matters: Moderna’s vaccine, which will now be marketed as Spikevax, is the second coronavirus vaccine to receive full approval after the FDA approved Pfizer-BioNTech’s vaccine in August.

What they’re saying: “The public can be assured that Spikevax meets the FDA’s high standards for safety, effectiveness and manufacturing quality required of any vaccine approved for use in the United States,” acting FDA Commissioner Janet Woodcock said in a statement.

  • “The totality of real-world data and the full [Biologics License Application] for Spikevax in the United States reaffirms the importance of vaccination against this virus,” Moderna CEO Stéphane Bancel said.

The big picture: The rise of the Omicron variant forced vaccine makers to reevaluate the effectiveness of their vaccines, which were developed based on eaarlier forms of the virus.

  • Studies show that Moderna and Pfizer-BioNTech’s vaccines still overwhelmingly prevent severe disease and hospitalizations, especially when the first two doses are reinforced with a booster shot.

The prescription drug pricing paradox

Net prices of brand-name drugs have increased significantly over the last decade. But savings from generics have driven average prescription prices down in Medicare and Medicaid, Axios’ Caitlin Owens writes about a new analysis by the Congressional Budget Office.

Why it matters: The analysis reiterates that the generic market is largely working as it’s intended to.

By the numbers: The average net price of a prescription fell from $57 in 2009 to $50 in 2018 in Medicare Part D, and from $63 to $48 in Medicaid.

  • The drop is largely attributable to the growing use of generics, which jumped from 75% to 90% of all prescriptions nationally during that time frame. The average price for a generic prescription also fell in both programs.
  • But the average net brand-name prescription price more than doubled in Part D and increased by 50% in Medicaid, per the analysis. These increases were driven by higher launch prices for new drugs and price increases for drugs already on the market.

FDA authorizes Merck antiviral, which joins Pfizer pill as oral option for Covid-19

https://medcitynews.com/2021/12/fda-authorizes-merck-antiviral-which-joins-pfizer-pill-as-oral-option-for-covid-19/?utm_campaign=MCN%20Daily%20Top%20Stories&utm_medium=email&hsmi=199382923&_hsenc=p2ANqtz-9Nz1-tRrrLzBQJeS5FfzcMjlOv2UaFSMGIRgd6taLPUDhX7tqQSRwxGuyJM11F-I56sLNv6llkF6vsgXlHc9DojM-kQ&utm_content=199382923&utm_source=hs_email

Merck antiviral drug molnupiravir received emergency authorization, joining Pfizer’s Paxlovid as the only authorized oral antiviral drugs for treating Covid-19. Though the Merck and Pfizer antivirals appear to work against the omicron variant, FDA officials stressed that these drugs are authorized only for certain patients and they are not a substitute for vaccination.

Merck’s oral antiviral drug molnupiravir now has FDA emergency use authorization for treating mild-to-moderate Covid-19, a Thursday decision that comes one day after the regulator authorized use of a pill from Pfizer. The FDA actions come as the highly infectious omicron variant becomes the dominant strain of the novel coronavirus, fueling a rise in Covid-19 cases that is pushing hospitals to capacity across the country.

The Merck and Pfizer antivirals both work by interfering with the virus’s ability to replicate, though in different ways. Molnupiravir introduces errors into the genetic code of SARS-CoV-2, while Paxlovid targets a key viral enzyme called main protease. Patrizia Cavazzoni, director of the FDA’s Center for Drug Evaluation and Research, said both drugs should work against omicron.

“The available data that we have indicate that both Paxlovid and molnupiravir are effective against omicron,” Cavazzoni said, speaking during a Thursday morning media briefing. “Both drugs interfere with aspects of the virus’s replication apparatus, and that apparatus is preserved across variants.”

Molnupiravir’s authorization, which comes three weeks after an FDA advisory committee meeting for the drug, covers its use in adults diagnosed with Covid-19 who are at a high risk of their disease progressing to hospitalization or death. The Merck drug is to be used when other treatment options are not accessible or appropriate. It can only be prescribed to those 18 and older because the drug can affect bone and cartilage growth.

Authorized use of Pfizer’s antiviral, Paxlovid, extends to pediatric patients. The FDA’s guidelines state the drug may be used for treating Covid-19 patients 12 and older weighing at least 40 kg (about 88 pounds). The FDA did not convene an advisory meeting for the Pfizer drug. John Farley, director of FDA’s Office of Infectious Diseases, said there were no pressing scientific questions about Paxlovid that would benefit from an advisory committee discussion.

Both molunupiravir and Paxlovid are available only by prescription. The FDA said treatment with these drugs should begin as soon as possible after a positive Covid-19 diagnosis, and within five days of the start of symptoms. These drugs aren’t for patients who are already hospitalized. Earlier this year, Merck stopped testing molnupiravir in those who are hospitalized after an early look at Phase 2 trial data indicated that the drug was unlikely to help these patients.

Authorization of Merck’s antiviral is based on a placebo-controlled clinical trial enrolling non-hospitalized adults with Covid-19 who were at high risk of progressing to severe disease or hospitalization. These higher risk patients include those who have a chronic medical condition or those who had not or could not receive a Covid-19 vaccine. The main goal was to measure the percentage of people hospitalized or dead from any cause during the 29 days after the course of treatment. The FDA said that of the 709 people in the study who received molnupiravir, 6.8% were hospitalized or died. By comparison, 9.7% of the 699 people given a placebo were hospitalized or died. During the follow-up period, one patient treated with molnupiravir died compared to nine of those given a placebo. Side effects reported include diarrhea, nausea, and dizziness.

In the clinical trial for Pfizer’s antiviral, Paxlovid led to an 88% reduction in Covid-19-related hospitalization or death from any cause compared to placebo. Of the 1,039 patients treated with Paxlovid, 0.8% of patients were hospitalized or died during the 28-day follow-up period, compared to 6% of those given a placebo.

Farley said that patients should consult with their physician to determine the best treatment. While molnupiravir is indicated for those who don’t have other treatment options, there are some groups of patients in which Paxlovid would not be appropriate. Examples include patients taking other medications that could interact with the Pfizer drug, Farley said. Paxlovid is also not recommended for patients who have severe kidney problems or cirrhosis of the liver. The key feature of both drugs is that they are oral, which enables patients to take these medication at home. Authorized antibody therapies from Regeneron, Eli Lilly, partners Vir Biotechnology and GlaxoSmithKline, and Roche, are infusions that must be administered in a clinical setting.

Patients take Merck’s molnupiravir as four pills, twice a day. Patients prescribed Pfizer’s Paxlovid must take more pills. The drug is taken with ritonavir, a drug that slows the breakdown of Paxlovid and helps it remain in the body for a longer period of time. Dosing of the Pfizer drug requires two tablets of Paxlovid and one of ritonavir, twice daily. The duration of treatment for both the Merck and Pfizer antivirals is five days.

Supreme Court hears 340B rate cut case

https://mailchi.mp/016621f2184b/the-weekly-gist-december-3-2021?e=d1e747d2d8

Earlier this week, the American Hospital Association (AHA) made its case before the US Supreme Court, in opposition to Medicare reimbursement cuts to hospitals that participate in the 340B Drug Pricing Program. The program allows hospitals that serve low-income patients to purchase outpatient drugs at a discount.

In the graphic above, we look at what’s at stake for hospitals in the case. Beginning in 2018, Medicare cut reimbursement for 340B-eligible drugs purchased by most hospitals by 28.5 percentage points, amounting to roughly $1.6B annually—which was a significant hit to hospitals’ 340B revenue. As we recently discussed, that revenue has become essential for many hospitals’ financial sustainability. However, the true impact on hospital bottom lines is more nuanced, as the savings from 340B rate cuts are being redistributed to all hospitals that participate in the Outpatient Prospective Payment System (OPPS), regardless of their 340B status, via a 3.2 percent payment bump for non-drug Part B services. While the cut negatively impacts those with large 340B programs—generally larger hospitals located in urban areas—the resulting redistribution actually provides a net benefit to about four in five hospitals.

Although 340B program revenues are at stake, the broader legal question before the Court centers on the level of authority federal agencies like the Centers for Medicare & Medicaid Services (CMS) have to create regulations to interpret ambiguous laws. (If the justices rule against CMS, it will overturn a key legal doctrine known as the Chevron Defense, which compels courts to defer to an agency’s interpretation of unclear statutes.)

A ruling isn’t expected until next spring, but regardless of the outcome, the 340B program faces other threats, chiefly from several lawsuits involving large pharmaceutical manufacturers’ moves to restrict discounted product sales to contract pharmacies. Undoubtedly, the ongoing scrutiny of the 340B program will continue to raise questions about whether there are better ways to subsidize the operations of hospitals serving low-income patients and ensure that underserved patients have access to lifesaving treatments.

Federal judge rules HHS’ efforts to punish pharma over 340B restrictions ‘arbitrary and capricious’

The pharmaceutical industry scored a muted win in its long-running feud with the Department of Health and Human Services (HHS) over 340B program discounts Friday when a federal court judge granted Eli Lilly’s bid to vacate two administrative actions aimed at drugmakers.

U.S. District Court Judge Sarah Evans Barker ruled that a December advisory opinion from HHS’ Office of the General Counsel and a May enforcement letter from the Health Resources and Services Administration (HRSA) were “arbitrary and capricious” and in violation of the Administrative Procedures Act.

But while Barker ordered the two actions to be set aside and vacated, she also specified that HHS did not exceed its statutory authority or act unconstitutionally in regard to the May enforcement letter.

“Lilly is encouraged by Friday’s opinion, which confirms that the government’s enforcement decision against it was improper,” the drugmaker said in an email statement.

Further, the judge determined that Lilly and other drug manufacturers are not permitted under the current 340B statute “to impose unilateral extra-statutory restrictions on its offer to sell 340B drugs to covered entities utilizing multiple contract pharmacy arrangements.”

HHS may have “suddenly” changed its views on whether the agency could enforce penalties against drugmakers restricting sales of the discounted products to contract pharmacies, but the law as written makes it impossible to discern whether Congress intended for drug manufacturers to have “unlimited delivery obligations … untethered to the particular covered entity’s actual distribution needs,” the judge wrote.

As such, Barker underscored the need for lawmakers to settle the ambiguity with new, explicit legislation.

“We have no insight into why there is apparently so much reluctance to promulgate a holistic legislative proposal to bring clarity to the scope of the regulated parties’ obligations and entitlements … rather than engage in piecemeal interpretations and after the fact patchwork characterizing the history of the agency’s attempts to manage this program,” Barker wrote in the Friday order.

“What we have come to see, however, is that the 340B program can no longer be held together and implemented fairly for all concerned with non-binding interpretive guidelines and mixed, sometimes inconsistent messaging by the agency regarding the source and extent of its authority to enforce statutory compliance in the area of contract pharmacies.”

Eli Lilly’s case against HHS is the latest in a lengthy dispute between the agency and a slew of pharmaceutical companies including AstraZeneca, Novartis, Novo Nordisk, Sanofi and United Therapeutics.

The 340B program requires drugmakers to offer discounted products to safety net hospitals, community health centers and other providers as a condition of participation in Medicare and Medicaid.

Beginning in July 2020, however, the drugmakers announced they would no longer provide 340B-discounted products to contract pharmacies or would be limiting sales unless a 340B-covered entity provided claims data ensuring there were no duplicative discounts being applied.

In response, HHS’ Office of the General Counsel issued the December advisory opinion, which stated that the restrictions violated federal law, and later through HRSA delivered enforcement letters threatening penalties to the six companies.

HHS’ pushback has generally taken a beating in the courtsIn June, the agency decided to pull the December advisory opinion to “avoid confusion and unnecessary litigation” after courts took the side of AstraZeneca and struck down a motion from HHS to dismiss the case.

The drugmakers have dug in their heels throughout the process, refusing to reverse their policies even as HRSA issued new (now remanded) warnings in late September.

Industry supporters of HHS’ position focused on the silver lining of Friday’s decision.

In a statement, Maureen Testoni, president and CEO of 340B Health, a membership organization of more than 1,400 340B participants, said the group was encouraged by Barker’s position on the “unilateral” restrictions on drug discounts for contract pharmacies.

“We are encouraged that the court upheld HRSA’s view that Lilly is violating the law as one that ‘best aligns with congressional intent’ of the 340B program,” she said in a statement. “We urge the government to continue its work to enforce the law and restore the statutory drug discounts that enable 340B hospitals to care for patients with low incomes and those living in rural parts of the country.”

Deal to Lower Prescription Drug Prices

https://thehill.com/policy/healthcare/579660-schumer-announces-deal-to-lower-prescription-drug-prices

Texas Drug Prices Reduced By New Bill To Lower Prescription Prices

Democratic lawmakers have reached a deal on legislation to lower prescription drug prices to be included in President Biden‘s social spending package, Senate Majority Leader Charles Schumer (D-N.Y.) announced Tuesday.  

The agreement is less far-reaching than earlier Democratic proposals, but still represents progress on an issue the party has campaigned on for years.  

The agreement would allow Medicare to negotiate drug prices in limited instances, prevent drug companies from raising prices faster than inflation and cap out-of-pocket costs for seniors on Medicare at $2,000 per year.

Democrats scaled back their earlier sweeping measure because of concerns from a handful of moderates that it would have harmed innovation from drug companies to develop new treatments. Sen. Kyrsten Sinema (D-Ariz.), as well as Reps. Scott Peters (D-Calif.) and Kurt Schrader (D-Ore.) were among those moderates and helped lead negotiations with leadership over the compromise measure.

“It’s not everything we all wanted, many of us would have wanted to go much further, but it’s a big step in helping the American people deal with the price of drugs,” Schumer told reporters.

Sinema said in a statement that she supported the agreement. “The Senator welcomes a new agreement on a historic, transformative Medicare drug negotiation plan that will reduce out-of-pocket costs for seniors – ensuring drug prices cannot rise faster than inflation – save taxpayer dollars, and protect innovation to ensure Arizonans and Americans continue to have access to life-saving medications, and new cures and therapeutics,” Sinema’s office said.

One of the key compromises leading to a deal was limiting the scope of Medicare’s ability to negotiate lower drug prices, which has long been a signature Democratic proposal. Lawmakers agreed to limit Medicare’s ability to negotiate to older drugs that no longer have “exclusivity,” meaning the period when they are protected from competition. Earlier versions of Democrats’ bills would have allowed negotiation for newer drugs too.

A draft measure that circulated to lobbyists in recent days would allow negotiation for 10 drugs starting in 2025 and 30 drugs starting in 2028. Full details of the final measure have not yet been released.