Australia's Price Cuts Contrast Sharply With US Drug Costs

As US Drug Prices Increase, Australia's "PBS" Keeps Drug Costs Manageable
Will trade policy cause prices hikes?

An Australian government law effective April 1, 2012 will slash prices on 1000 brands of 60 popular prescription medicines by up to $14 a script. Not only will thousands of families pay less for prescription drugs, but taxpayers who subsidize the cost of the life-saving medicines through the national government's Pharmaceutical Benefits Scheme (PBS) will also save $1.9 billion over five years. The Sydney Morning Herald reports "Millions of patients will pocket average savings of $3 a pack on essential drugs to treat high blood pressure, cholesterol, diabetes, epilepsy, depression and pain. Sixty commonly prescribed drugs will be cheaper for patients, while taxpayers will save $1.9 billion - freeing up funds to subsidies new drugs for leukemia, arthritis and HIV for the first time."

Drug prices in Australia are already very low in comparison to in the US
because of the role of the Australian government in both subsidizing drug costs for its citizens and also establishing reference pricing under the national PBS. For example, 300 patients a year who are newly diagnosed with chronic myeloid leukemia will no longer face bills of $30,000 a year to buy the drugs dasatinib and nilotinib.

According to an article in the Courier Mail/Sunday Mail, "Drug companies hope those savings will also help the Government list new drugs on the taxpayer-funded PBS, with a swag of new treatments for cancer, arthritis and kidney failure set to join the taxpayer-subsidized medicines scheme."

The paper reports, "Because the price of the drugs will now fall below the co-payment for prescription medicine of $35.40, patients will secure big savings and pharmacists can compete on price. Pensioners and concession card holders will continue to pay $5.80 a script."

Such drug costs are almost shockingly low even without the price cuts from a US standpoint. A recent AARP report found that the retail price of the 514 drugs most widely used by Medicare recipients rose approximately 26% between 2005 and 2009. Although the price of generics decreased 31% during this same time period, brands increased 41% and specialty drugs increased more than 48%. Read the AARP report.

According to the Sunday mail article "The vast majority of prescription medicines are purchased by patients with concession cards who will continue to pay $5.80 a script,'' Pharmacy Guild of Australia spokesman Greg Turnbull said. "The average cost of the thousands of medicines on the PBS is about $48. So every time you pay $5.80 you are getting a massive saving.''

The price cuts also apply to super-expensive cancer and specialty drugs. For example, 300 Australian patients a year who are newly diagnosed with chronic myeloid leukaemia will no longer face bills of $30,000 a year to buy the drugs dasatinib and nilotinib.

Compare this to what Americans face. An April 2 article on US prices in FiercePharma reported that new cancer drugs are "more expensive than ever. Just look at some of the recently approved products in the category: Dendreon's prostate drug Provenge at $93,000; Pfizer's targeted lung-cancer treatment Xalkori at $115,000 a year; Bristol-Myers Squibb's melanoma drug Yervoy at $120,000 per year; and Roche's targeted melanoma med Zelboraf at $56,400 for a 6-month course."

Reuters reports on the implications of these high costs for developed and developing countries alike: "Cancer is a leading cause of death worldwide, accounting for 7.6 million deaths in 2008 and predicted to top 13 million in 2030, according to the World Health Organization. Some 70 percent of deaths occur in low- and middle-income countries.

For drugmakers, the disease is a rich seam of sales and profits. Cancer medicines overtook cholesterol fighters as the biggest-selling selling prescription drug class five years ago and sales are set to hit $85 billion in 2016, up from $58 billion last year and a mere $8 billion in 2000, according to consensus forecasts compiled by Thomson Reuters Pharma."

The Reuters article acknowledges that in the United States, "some cancer patients have abandoned medical care because of their bills or else face a significant risk of bankruptcy, according to studies presented at the American Society of Clinical Oncology last year."

Capping specialty drug costs. No wonder some states are rebelling, and putting limits on what insurance companies can charge for specialty drugs such as these new cancer drugs, with Maine recently enacting a $3500 annual out of pocket limit for specialty drugs. Link to LD 1691 The federal Affordable Care Act will also require prescription drug costs to be included within the overall deductible for medical costs in insurance policies beginning January 1, 2014. Read more.

Trade policy implications. Of course, this does little to address the underlying prices of these drugs, and there is widespread concern among NGOs concerned with access to medicines, academics, and US states that recent trade agreements with Korea and under negotiation with Pacific Rim countries (the Trans-Pacific Partnership or TPP) will lead to locking in these high "market-based" prices. In Australia, concerns have been raised that the TPP will interfere with the successful pricing strategies of the PBS. For more on this trade and pharmaceutical pricing, read about trade policy on the NLARx website.

Recent Action on Prescription Drug Policy in the States

More Action in the States: Vaccination Policy, Immunity, Joint Purchasing, Payments to Doctors & More

VERMONT VACCINATION POLICY DEBATE:
The House Committee on Health Care marked a significant policy shift last week, when a majority of the committee in a straw poll said it would oppose removing a philosophical exemption for parents who choose not to vaccinate their children.

The Senate passed, by an overwhelming majority, a bill that requires all children be vaccinated against a range of illnesses. The bill prevented parents from claiming "philosophical exemptions," which would allow them to refuse to vaccinate their child before sending them
to school.

The House committee, however, passed a bill that allows for those philosophical exemptions.

According to reporting by WCAX.com, "The bill they voted out will not directly address the decline in rates we've seen in Vermont. I am disappointed. I wish they could've done more," said Sen. Kevin Mullin, R-Rutland County, who is also Vice Chair of the NLARx Board of Directors.

But the bill saw fierce debate in the House, and last week a compromise that would have kept the exemption failed on a tie vote. It is unclear at this point whether it will make it to the House floor. Read the Vermont Digger story.

VERMONT MARKETING & DOC PAYMENT REPORT OUT:
Vermont's annual report from its Attorney General on drug company spending on payments to doctors and other medical providers is now out. The Vermont law is one of the models for the federal Physician Payment Sunshine Act which was part of the Affordable Care Act, the implementation of which remains delayed. Vermont's current report found in FY11, approximately 42% of the $5.6 million in expenditures were for clinical trials and research. Doctors received 23% of the expenditures, 12% went to professional, educational, or patient organizations and 5% to academic institutions; 12% of the expenditures went to all health care providers combined for educational materials.

Overall, 154 manufacturers of pharmaceuticals, biologics, and medical devices spent approximately $5.6 million in direct payments to Vermont doctors, hospitals, universities and others. That figure represents an overall spending increase of 17% from the $4.8 million reported the previous fiscal year. In particular, the amount spent on pharmaceutical marketing ($2.2 million) is about 22% higher than the $1.8 million reported in the previous fiscal year. This is in spite of the fact that Vermont has a law banning most gifts and payments to medical providers. Read more in the Vermont Digger.

ILLINOIS GOVERNOR QUINN SEEKS BIG CUTS:
Lawmakers are trying to figure out how to meet Governor Pat Quinn's goal of cutting the $14 billion Medicaid program by $2.7 billion, and are scrutinizing the big-ticket cost of the pharmaceuticals. More

OREGON'S EFFORT TO MAKE STATE DRUG PURCHASING MORE EFFICIENT FAILS AGAIN:

Oregon is not finding it easy to make state drug purchasing more efficient. For the second year in a row, legislation requiring state agencies to purchase their prescription drugs through the Oregon Prescription Drug Program (OPDP) was unable to overcome staunch opposition from the pharmaceutical industry and insurance lobbyists. This is in spite of the fact that a legislatively required study by the Department of Corrections showed the agency could save approximately $1.4 million based on half the drugs purchased by the department. In addition, Public Employees' Benefit Board could save $5.1 million. Read more in The Lund Report.

ARKANSAS MEDICAID FALSE CLAIMS ACT CASE GOES AFTER RISPERDAL MARKETING:
Bloomberg BusinessWeek reports that the state of Arkansas is in court charging a subsidiary of pharmaceutical company Johnson & Johnson improperly marketed an antipsychotic drug and lied to doctors for years about the risk of side effects.

Arkansas wants Janssen Pharmaceuticals Inc. fined for each of the 250,000 Risperdal prescriptions issued to the state's Medicaid patients from November 2002 through June 2006, an award that could range from $1.25 billion to $2.5 billion and would go toward the state's Medicaid fund.

The state claims that Janssen violated Arkansas' Medicaid Fraud False Claims Act by misrepresenting of the drug's side effects of diabetes and hormonal imbalance. The state also claims the company violated the Deceptive Trade Practices Act by lying about the drug's risks in a letter sent to Arkansas doctors. Read more

NORTH CAROLINA CONSIDERS DRUG COMPANY IMMUNITY:
A senate committee is considering legislation to immunize drug companies from liability for harm from FDA-approved drugs, after case filed involving Brittany Prewitt, 15, who was taking the drug Yaz to clear up her acne and collapsed while playing catch with her father. The family is suing Bayer, claiming the company suppressed information about dangers associated with Yaz. More

RHODE ISLAND BILL WOULD BAN COUPONS:
Rhode Island would join Massachusetts as the only states with a ban on coupons for prescription drugs if a bill currently pending passes. Read the bill.

State PBM Regulations Get New Life

We're not sure if it's the federal attention being paid to the proposed Medco-Express Scripts merger, state budget pressure, or the advocacy of pharmacists -- probably all three -- but states are taking a second look at PBM laws and there is more attention being paid to these middlemen than we've see in years. For instance, here's an editorial in the Houston Chronicle opposing the merger.

Pharmacists in Alaska turned out to support HB 259, complaining of abusive PBM audit practices. Utah legislation, HB 76, also focuses on these audit practices. The Mississippi Board
of Pharmacy is now implementing its PBM law passed last year.

House Bill 4122 is pending in Oregon, and PBMs have gone on the warpath with a big advertising buy and heavy lobbying. HB 4122 would require PBMs be regulated by the Oregon Board of Pharmacy, and force them to provide insurers and the Oregon Health Plan with information about the rebates and contracts the PBMs enter into with drug manufacturers. The transparency is intended to ensure that PBMs are passing on the savings they generate onto insurers and, eventually, health care consumers. The bill has bipartisan support, and is backed by the Oregon State Pharmacists Association, the Oregon Society of Health-System Pharmacists, and the National Association of Chain Drug Stores.

Bipartisan PBM legislation is also pending in Washington state - HB 2303 and SB 6096. These bills are quite comprehensive and have much in common with the Maine PBM law enacted in 2003 but recently repealed by the new Republican majority there. Unlike in Maine, though, PBM legislation has bipartisan support in most of the country, with Republicans and Democrats alike sponsoring the legislation.

Vermont is also considering PBM legislation, HB 674, posted here: http://www.leg.state.vt.us/docs/2012/Bills/Intro/H-674.pdf

Specialty Drug Costs Drive Legislation Capping Out of Pocket Insurance Costs

States across the country are considering legislation that would limit out of pocket costs for super-expensive specialty drugs for chronic diseases such as hemophilia, multiple sclerosis, and Crone's disease. These drugs can cost as much as $20,000 - $100,000 or more per year, and some insurance plans have started charging co-insurance of 50%. The experiences of patients can be very persuasive to legislators considering bills to cap such costs or otherwise regulate specialty tiers.

Pending legislation in Vermont, Senate Bill 221 which is sponsored by NLARx Board Vice Chairman Senator Kevin Mullin, would cap out of pocket prescription drug costs, including for specialty drugs, at $1,000 per insured individual and $2,000 per insured family. Vermont previously passed a moratorium on specialty drug tiers in insurance effective July 1, 2012 in order to give the Legislature time to consider a longer term solution to the issue.

Maine legislation, LD 1691, that would bar specialty drug tiers was amended in committee and voted out 9-4 in favor. The amended bill may still face an uphill battle on the floor. As amended, the bill would require specialty prescription drugs to be included within any cap on out of pocket spending in an insurance policy executed or renewed on or after January 1, 2013. The provision is similar to language in the Affordable Care Act that would become effective January 1, 2014. This and other legislation is being brought forward by the drug manufacturers; in the Maine instance by Pfizer, according to bill sponsor Rep. Stacy Fitts.

A bill analysis prepared last month by the nonpartisan legislative staff found that specialty tier legislation has also been enacted in New York (Chapter 536, NY Laws 2010), was killed in Maryland, and is pending in California (AB 310), Connecticut (Raised Bill 1084), Kansas (HB 2136), Nebraska (LB 1017) and Washington (HB 1876). Read the staff analysis here.

Read all of the NLARx February 29, 2012 Newsletter

Your Medicaid Program Can Save Money Without Hurting Patient Health

Tip of the Month: You Can Cut Medicaid Costs Without Harming Patients - Follow Alabama & Oregon's Lead

Consider using an Average Acquisition Cost (AAC) model for drug
pricing, which uses actual pharmacy invoices in determining average acquisition
costs to pharmacies. This approach enables states to get a better handle on the
"spread" and is more reflective of acquisition and dispensing costs
and also ingredient costs for certain specialty drugs.

Most states still use Average Wholesale Price (AWP) which has been
subject to much gaming by the industry, resulting in many fraud case brought by
state Attorneys General and earning the moniker "Ain't What's Paid."

The Centers for Medicare and Medicaid Services (CMS) is developing
a database of National Average Drug Acquisition Costs and is encouraging states
to adopt an AAC payment methodology based on this resource. CMS plans to
distribute its database at the end of 2011 based on a CMS survey of retail
pharmacies.

Alabama, the first state to
receive CMS approval for using AAC, has projected savings of $30.5 million in
the first year, or 6.1 percent of its current fee-for-service drug expenditures
of $500 million. The new method was announced September 22, 2010 and went into
effect March 23, 2011. Oregon expects
to save $1.6 million, or 1 percent of its $160 million fee-for-service Medicaid
drug expenditures. Idaho,
which is in the process of implementing AAC, expects to save $2 million in
state general funds and $4.6 million in federal funds, for a total of $6.6
million.

Medicaid Pharmacy
Reimbursement Reform:
Trends and
Recommendations

Presentation
Appendices:
Attachment 1 Pembroke
Pharmacy Market Share 2010 E
Attachment 2 updated
State reimbursement
Attachment 3a Kaiser
Medicaid P91
Attachment 3b Kaiser
Medicaid P92
Attachment 4 Takeda
2009

Speakers Mike
Winkelman, Pharmacy Consultant
Nell Geiser,
Change to Win Pharmacy Initiative Coordinator
Mr. Winkelman and Ms. Geiser discuss opportunities for states to
achieve a more transparent and accountable Medicaid pharmacy reimbursement
system that can result in significant savings. As states struggle to cut costs
while maintaining quality healthcare for vulnerable residents, now is the time
for lawmakers and agency officials to advance common-sense reimbursement
reforms.

Despite positive policy changes related to Federal Upper Limits
and Average Whole Price, many states are still losing out and paying
significantly more than other payors for pharmacy services. The result is that
providers sometimes retain unjustifiable profits, and there is no accurate way
to track that spread. In response, some states have successfully implemented
highly effective MAC lists, and others are testing new ground using Actual
Acquisition Cost, but state officials are still grappling with the question of
how best to ensure Medicaid is paying a fair and transparent price for
prescriptions. The presentation includes recommended guidelines for
reimbursement policy reform and estimates of projected savings if new
benchmarks are implemented.

Want to learn more?
Issue brief from Community Catalyst
Policy paper from Kaiser Family Foundation
Information from Alabama's Medicaid Program
Prescription Policy Choices website
NLARx website

Will the Drug Industry Get its Heart's Desire and Soon be Able to Market Off-Label and Every Other Way?

The pharmaceutical industry is getting ready to bootstrap from the Supreme Court's IMS v. Sorrell decision overturning New Hampshire's privacy rules on datamining to get rid of the pesky FDA rules limiting their marketing activities to approved uses of drugs. As the Wall St. Journal reported recently, industry attorneys are gearing up to challenge longstanding FDA regulations that have been the source of dozens of legal settlements and even criminal convictions for deceptive marketing, most recently when Glaxo Smith Kline agreed to pay $3 Billion to the US government earlier this week to settle civil and criminal charges in the marketing of Avandia. Read the Pharmalot post and this article on Par Pharma.

This should be no surprise to anyone participating in the symposium on the Sorrell decision held last month at New Hampshire Law School, co-hosted by the Vermont Law School, where legal scholars and practitioners both supporting and disparaging of the US Supreme Court's decision agreed on its breadth and the potential that further litigation could expand the scope of the First Amendment to limit FDA marketing rules. Law professor Kevin Outterson addresses this issue in his post "The Last Drug Company Settlement for Off-Label Promotion" in his blog The Incidental Economist.

By the way, the industry is not going be content with letting this issue percolate through the courts. Leaked US negotiating textfrom recent TPPA trade negotiations (see more on this below) would require countries to allow drug companies to post "true information" on their websites and link to any other website in existence - including social media where so many problems have already cropped up.

For more information:

Sharon Anglin Treat, NLARx Executive Director

207-622-5597

streat@reducedrugprices.org

See this Story in NLARx's Advertizing & Marketing News

Is anyone listening? Will the Feds Finally Do Something about Antitrust Problems in the PBM Industry?

There's plenty of attention being paid -finally!- to the super-concentration of the pharmacy benefit manager (PBM) marketplace, and the latest merger. The federal Trade Commission (FTC) is in the middle of an investigation of the proposed Express Scripts-Medco merger, which would create the nation's largest administrator of drug benefits if federal regulators sign off. The FTC investigation could last several more months (details are confidential). There are 33 state AG offices led by Pennsylvania that are looking into the merger, and there will be a Senate Judiciary hearing in early December. A House committee held a similar hearing last month and 14 members of Congressrecently signed a letter of concern to the Federal Trade Commission. The powerful industry isn't taking this lying down, and is out lobbying in force on Capitol Hill. Read this article about "dueling lobby days." Consumer groups as well as community pharmacists have led the fight against the merger, with a recent press conference and the formation of a national coalition, not to mention op-ed articles. No wonder Medco is championing robots over pharmacists! NLARx signed a letter with other national consumer groups opposing the merger earlier this year. Want to stay up to date on merger action and reaction? Go to a new website, http://r20.rs6.net/tn.jsp?llr=dxiucccab&et=1108455173285&s=0&e=001dnQC3_70n_JIq3I7-chWAcw7yLzl7QnI77l1TF4MqRSuJGjiikHDWmvfdjXbCYLNFu5lrnI-0VaVSpfYCACd0beHuTVu9Bii.

For more information:

Sharon Anglin Treat, NLARx Executive Director

207-622-5597

streat@reducedrugprices.org

See on Pharmacy Benefit Managers news page