Tag Archives: High Priced Generic Drugs

Bipartisan Bill Would Increase Competition Among Drug Manufacturers and Lower Drug Prices

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , • Leave a comment

http://www.commonwealthfund.org/publications/blog/2018/jan/bipartisan-bill-drug-manufacturers-competition-prices?omnicid=EALERT1349313&mid=henrykotula@yahoo.com

Image result for bipartisan generic drug bill

 

Congress is considering including bipartisan legislation that could expedite the availability of lower-priced generic drugs in its must-pass bill to fund the federal government in 2018. The legislation, called the CREATES Act, tackles one of the numerous problems driving high drug prices — brand-name drug manufacturers’ use of anticompetitive tactics to block access to generic drugs — that we describe in our report, Getting to the Root of High Prescription Drug Prices: Drivers and Potential Solutions. If passed, the CREATES Act, which has bipartisan support, would increase the development and availability of generic drugs by addressing anticompetitive behaviors of certain brand-name manufacturers that use limited distribution systems and congressionally mandated risk-mitigation programs as a way to delay generic drug development. And because the Act could save the federal government more than $3 billion over 10 years, it could help pay for other necessary federal spending, including funding for community health centers.

Purpose of the Bill

The Drug Price Competition and Patent Term Restoration Act of 1984 — commonly referred to as the Hatch-Waxman Act — created the generic drug market in order to balance incentives for innovation (i.e., extended patent terms and market exclusivity protections) with a system that ensures safe, therapeutically equivalent generic drugs are available at lower prices when patents and exclusivities expire. Before a generic drug can be approved by the Food and Drug Administration (FDA) it must demonstrate that it is bioequivalent to the brand-name drug it intends to compete against on the market.

The Food and Drug Administration Amendments Act of 2007 authorized the FDA, when there are safety concerns like increased toxicity or risk factors, to require manufacturers to adhere to a Risk Evaluation and Mitigation Strategy, or REMS. A REMS program can have four components: patient information, communication plan, elements to assure safe use (ETASU), and implementation system.

Some brand-name drug manufacturers have misused REMS programs to block generic drug manufacturer access in two different ways. First, a brand-name manufacturer may prevent a potential generic competitor from getting access to samples for bioequivalence testing by using the REMS program with ETASU to limit who can access or purchase the drug. More than half of drugs with REMS programs have limited distribution, which restricts access for generic manufacturers. Without access to samples of brand-name products, generic manufacturers cannot conduct bioequivalence testing, which is required for FDA approval of a generic.

Second, if a brand-name drug is subject to an FDA-mandated REMS, then the generic competitor drug is also.1  Shared REMS programs are generally required by statute to be implemented for the brand-name drug and the generic versions. Negotiations between manufacturers for a shared REMS program include confidentiality, product liability concerns, antitrust concerns, and access to a license for REMS program elements that are patented. Brand-name manufacturers can intentionally delay establishing a single, shared REMS program, which blocks the generic drug from the market. As of January 26, 2018, 10 of the 72 REMS programs were shared.

In addition to FDA-mandated REMS programs, manufacturers may voluntarily institute a REMS program or create a limited distribution system to control who may access their drug by allowing dispensing from a limited number of specialty pharmacies. For example, an investigation by the Senate Aging Committee found that Turing Pharmaceuticals put a limited distribution system into place in order to block competitors’ access to samples and significantly increase the drug price. (Daraprim was not subject to an FDA-mandated REMS program.) The anticompetitive behaviors associated with REMS programs and limited distribution systems are estimated to cost patients more than $5 billion each year.

Potential Impact

The CREATES Act would enable a generic manufacturer facing one of these delay tactics to bring an action in federal court for injunctive relief (i.e., to obtain the sample it needs, or to enter into court-supervised negotiations for a shared safety protocol). The CREATES Act would expedite legal review and change the burden from proving a violation of antitrust law to one in which the generic manufacturer would need to only prove that sufficient quantity of samples were being withheld by the brand-name manufacturer. In addition, the CREATES Act would permit the generic manufacturer to work with the FDA to establish its own REMS with ETASU that are comparable to the brand-name manufacturer’s REMS program.

The Congressional Budget Office (CBO) has not officially scored the CREATES Act, but has estimated that similar legislation would save the federal government more than $3 billion over 10 years.2

Taking these steps to counter brand-name manufacturer tactics to delay generic competition could help address one of the factors driving high prescription drug prices. Such action also may serve as an important opening for further conversations on how we can regain the balance of incentives for drug innovation and competition that was established under the Hatch-Waxman Act.

 

Moody’s: Proposed changes to 340B program will hurt the finances of nonprofit hospitals

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , • Leave a comment

http://www.fiercehealthcare.com/finance/moody-s-proposed-changes-to-340b-program-will-hurt-finances-nonprofit-hospitals?utm_medium=nl&utm_source=internal&mrkid=959610&mkt_tok=eyJpIjoiTURSbU5qazJZbU5sWlRKayIsInQiOiJJTnUxcUsyUm42Y3FjKzBZZXkzQytVR09NYzB0TzNZXC9rXC9YNnBFNXowa0duZGM1SU4yRGJYM2EraXk2TitOa3lwODlWVFNEXC9rc001WUJvcXNjc1U5ZDlYb3FWclNEUjBwbnNlNHc4RVwvc3dGWDVQclJtMDYyZXU4ZmJBNU1lcVkifQ%3D%3D

drugs

Inpatient drug costs will continue to rise for nonprofit and public U.S. hospitals, but the pace of drug price increases will likely slow down amid growing scrutiny of drug manufacturers’ pricing practices.

But even with the slowing rate of price increases, the rising drug costs and potential changes to Medicare 340B payments for outpatient drugs would further reduce hospital margins, according to a new report from Moody’s Investors Service.

Pharmaceutical costs have outpaced hospital revenue growth in recent years, contributing to weaker operating margins, Moody’s finds. “Price increases in recent years were extraordinarily high for certain branded hospital inpatient drugs, but drug manufacturers are pulling back on these increases,” said Diana Lee, a Moody’s vice president. “On the generic drug side, we expect that some of the pressure will ease as the U.S. Food and Drug Administration approves more generic drugs for the first time.”

However, the government’s proposed reduction of Medicare Part B outpatient drug reimbursement to 340B hospitals by roughly 30% would hurt hospital margins.

“Hospitals and health systems of varying size and across the rating spectrum have noted anecdotally that they have benefited from cost savings from this discount drug program,” Lee says. “In some instances, the savings and income gained from this program can be meaningful relative to total operating cash flow. While about half of hospitals in the nation are 340B providers, those that have limited financial flexibility would be most exposed to possible changes to the 340B program.”

Hospitals and industry trade groups have urged the Centers for Medicare & Medicaid Services to withdraw its proposal to cut the drug payments to hospitals in the federal drug discount program. Hospitals use the savings to waive copays and provide drugs and other services for free or reduced costs to low-income patients.

Last week a bipartisan group of more than 220 members of the House of Representatives also told CMS in a letter (PDF) they oppose the proposal.

“This program is a lifeline for the hospitals that serve our most vulnerable patients. These arbitrary cuts will do nothing to improve patient care, or address rising costs in the Medicare program. Instead they simply jeopardize access to the treatments and services that 340B hospitals provide,” said Rep. Mike Thompson (D-Calif.) in an announcement. “There is robust bipartisan agreement that CMS should go back to the drawing board to prevent harm to patients across the country.”

Rep. David P. McKinley (R-W.Va.) said CMS’ proposal was “misguided.” “Our letter shows strong bipartisan opposition to this proposed rule, and hopefully will convince CMS to change course. We must address the high costs of drugs, but this is not the way to do it,” he said.

Meanwhile, the Health Resources and Services Administration has once again delayed (PDF) the effective date of a different 340B final rule that would set drug price ceilings and penalties for drug manufacturers that knowingly overcharge hospitals for drugs purchased under the program. The Department of Health and Human Services said it has delayed the effective date to July 1, 2018, to give more time to make changes to facilitate compliance. “After reviewing the comments received from stakeholders regarding objections on the timing of the effective date and challenges associated with the complying with the final rule, HHS has determined that delaying the effective date to July 1, 2018, is necessary to consider some of the issues raised.”

Climbing Cost Of Decades-Old Drugs Threatens To Break Medicaid Bank

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , • Leave a comment

http://khn.org/news/climbing-cost-of-decades-old-drugs-threatens-to-break-medicaid-bank/

Skyrocketing price tags for new drugs to treat rare diseases have stoked outrage nationwide. But hundreds of old, commonly used drugs cost the Medicaid program billions of extra dollars in 2016 vs. 2015, a Kaiser Health News data analysis shows. Eighty of the drugs — some generic and some still carrying brand names — proved more than two decades old.

Rising costs for 313 brand-name drugs lifted Medicaid’s spending by as much as $3.2 billion in 2016, the analysis shows. Nine of these brand-name drugs have been on the market since before 1970. In addition, the data reveal that Medicaid outlays for 67 generics and other non-branded drugs cost taxpayers an extra $258 million last year.

Even after a medicine has gone generic, the branded version often remains on the market. Medicaid recipients might choose to purchase it because they’re brand loyalists or because state laws prevent pharmacists from automatically substituting generics. Drugs driving Medicaid spending increases ranged from common asthma medicines like Ventolin to over-the-counter painkillers like the generic form of Aleve to generic antidepressants and heartburn medicines.

Among the stark examples:

  • Ventolin, originally approved in 1981, treats and prevents spasms that constrict patients’ airways and make it difficult to breathe. When a gram of it went from $2.58 to $2.90 on average, Medicaid paid out an extra $54.5 million for the drug.
  • Naproxen sodium, a painkiller originally approved in 1994 as brand-name Aleve, went from costing Medicaid an average of $0.72 to $1.70 a pill, an increase of 136 percent. Overall, the change cost the program an extra $10 million in 2016.
  • Generic metformin hydrochloride, an oral Type 2 diabetes drug that’s been around since the 1990s, went from an average 10 cents to 13 cents a pill from 2015 to 2016. Those extra three pennies per pill cost Medicaid a combined $8.3 million in 2016. And cost increases for the extended-release, authorized generic version cost the program another $6.5 million.

“People always thought, ‘They’re generics. They’re cheap,’” said Matt Salo, who runs the National Association of Medicaid Directors. But with drug prices going up “across the board,” generics are far from immune.

Historically, generics tend to drive costs lower over time, and Medicaid’s overall spending on generics dropped $1.6 billion last year because many generics did get cheaper. But the per-unit cost of dozens of generics doubled or even tripled from 2015 to 2016. Manufacturers of branded drugs tend to lower prices once several comparable generics enter a market.

Medicaid tracks drug sales by “units” and a unit can be a milliliter or a gram, or refer to a tablet, vial or kit.

Old drugs that became far more expensive included those used to treat ear infections, psychosis, cancer and other ailments:

  • Fluphenazine hydrochloride, an antipsychotic drug approved in 1988 to treat schizophrenia, cost Medicaid an extra $8.5 million in 2016. Medicaid spent an average $1.39 per unit in 2016, an increase of 347 percent vs. the year before.
  • Depo-Provera was first approved in 1960 as a cancer drug and is often used now as birth control. It cost Medicaid an extra $4.5 million after its cost more than doubled to $37 per unit in 2016.
  • Potassium phosphates — on the market since the 1980s and used for renal failure patients, preemies and patients undergoing chemotherapy — cost Medicaid an extra $1.8 million in 2016. Its average cost to Medicaid jumped 290 percent, to $6.70 per unit.

A shortage of potassium phosphates began in 2015 after manufacturer American Regent closed its facility to address quality concerns, according to Erin Fox, who directs the Drug Information Center at the University of Utah and tracks shortages for the American Society of Health-System Pharmacists.

When generics enter a market, competition can drive prices lower initially. But when prices sink, some companies inevitably stop making their drugs.

“One manufacturer is left standing … [so] guess who now has a monopoly?” Salo said. “Guess who can bring prices as far up as they want?”

According to a Food and Drug Administration analysis, drug prices decline to about half of their original price with two generic competitors on the market and to about a third of the original price with five generics available. But if there’s only one generic, a drug’s price drops just 6 percentage points.

The increases paid by Medicaid ultimately fall on taxpayers, who pay for the drugs taken by its 68.9 million beneficiaries. And those costs eat “into states’ ability to pay for other stuff that matters to [every] resident,” said economist Rena Conti, a professor at the University of Chicago who co-authored a National Bureau of Economics paper about generic price hikes in July. The manufacturers’ list prices for the drugs named here also rose in 2016, according to Truven Health Analytics, which means customers outside Medicaid also paid more.

Conti said that about 30 percent of generic drugs had price increases of 100 percent or more the past five years.

Medicaid spending per unit doesn’t include rebates, which drug manufacturers return to states after they pay for the drugs upfront. Such rebates are extremely complicated, but generally start at the federally required 23.1 percent for brand-name drugs, plus supplemental rebates that vary by state, Salo said. Final rebate amounts are considered proprietary, he noted. “All rebates are completely opaque … [it’s] “black-box stuff.”

Fox said drug prices could also jump when a pharmaceutical product changes ownership, gets new packaging or just hasn’t had a price increase in a long time.

Recently named FDA Commissioner Scott Gottlieb has made increasing generic competition a core mission. Plans include publishing lists of off-patent drugs made by one manufacturer and preventing brand-name drugmakers from using anti-competitive tactics to stave off competition.

Doctors, pharmacists and patients don’t always receive warning when a price hike is about to occur, Fox said.

“Sometimes, we will get notices. Other times, it’s like a bad surprise,” she said, adding that the amount of wiggle room for alternatives depends on the drug and the patient.

Following some price hikes, doctors can use fewer units of a drug or switch it out entirely, she said.

Ofloxacin otic, long used to treat swimmer’s ear, became so expensive when generic manufacturers exited the market that doctors started using eye drops in patients’ ears, Fox said.

When old drugs get more expensive, hospitals try to eliminate waste by making smaller infusion bags and keeping really expensive drugs in the pharmacy instead of stocked in readily available shelves and drawers. But that’s not always possible.

“These drugs do have a place in daily therapy. Sometimes they’re life-sustaining and sometimes they’re lifesaving,” said Michael O’Neal, a pharmacist at Vanderbilt University Medical Center. “In this case, you just need to take it on the chin, and you hope one day for competition.”