Pharmaceutical Prices and Patents Impacted by Trade Policy

The federal government is currently negotiating two trade deals that could have great significance for drug pricing. Negotiations for the Trans-Pacific Partnership (TPP) have been ongoing for several years and the Obama Administration is seeking to wrap up the 11-country deal by the end of 2013. While the agreed-to text of the TPP is secret, leaked negotiating offers and past experience with similar treaties with Australia and Korea, as well as recent cases under NAFTA, raise big concerns.

The TPP as well as the Trans-Atlantic partnership, which begins negotiations next month, will likely contain provisions that would empower foreign pharmaceutical corporations to directly attack our domestic patent and drug-pricing laws in foreign tribunals. Already under NAFTA, which does not contain the new rules proposed for TPP, drug firm Eli Lilly has launched such a case against Canada, demanding $100 million for the government's enforcement of its own patent standards - see Fact sheet on NAFTA patent case. In Australia, where a trade agreement similar to what is proposed in the TPP has regulated drug pricing for several years, a recent report shows price hikes as a result. Read more on Australia's experience and the public health community's concerns about the TPP here. Closer to home, the Maine Citizen Trade Policy Commission's 2012 assessment of trade impacts focussed on the potential that the TPP would increase drug prices generally and limit the operation of state Medicaid and other programs that negotiate or set reference prices. See also NLARx Executive Director Sharon Treat's analysis of the leaked text and its implications for state medicaid programs.

What can state legislators do? Get involved! Call your members of Congress and ask if they have reviewed the TPP text and understand the implications. Likely, they have not as the text is kept under wraps and only recently has at least one member - Congressman Alan Grayson - been able to read it. Here is a resolution adopted by NLARx in 2011 on trade and pharmaceutical policy; it remains relevant and could be a model for resolutions in state legislatures.

 

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State Legislators Have Mixed Results Regulating Compounding Pharmacies

 

Although according to the National Conference of State Legislatures (NCSL) 23 bills regulating compounding pharmacies have been introduced in 15 states, few of these bills have been enacted and signed into law. Maryland, Virginia and Georgia are three states that have chaptered laws beefing up standards and oversight. Many of these bills languish or died in committee; in Maine, the governor vetoed legislation unanimously supported in committee. Maybe these bills will get another look when the insurance industry starts putting pressure on legislators and governors; Harvard Pilgrim is making it harder to get reimbursed for compounded drugs.

Fortunately state action is not limited to passing new laws. Read this article in Politico, which discusses the aggressive activity of the Iowa pharmacy board reaching outside that state to inspect compounding pharmacies across the country. New Jersey's attorney general recently hired pharmaceutical experts to help in its investigation of the compounding industry, according to the Star Ledger.

The NCSL database is a useful, though somewhat out of date summary of state action (last updated April 15).

As NCSL points out, some of the issues addressed in the state bills include clarifying which compounded drug orders meet the state-regulated standard and which cross into a manufacturing regulatory category; updating definitions for compounding, wholesale, specialty and hospital-based pharmacies, and clear language about "sterile" and "non-sterile" compounding; inspection of facilities; enforcement responsibilities; funding; and transparency of records.

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Generic Drugs & the Courts

Pay-to-Delay will Get Day in Court While Generic Manufacturers Shielded  The Supreme Court has a mixed record when it comes to pharmaceutical policy, and this year's opinions continue the trend.  On the one had, the Court has ruled in favor of consumers in FTC v. Actavis. For years, NLARx and its legislative members have been weighing in opposing pay-to-delay schemes. We have signed amicus briefs, written letters, and passed resolutions.  Finally, a Supreme Court decision will allow the Federal Trade Commission to challenge these deals in court on a case-be-case basis. While we would have preferred a flat-out decision that these deals aren't legal as against the pubic interest, the decision is a step in the right direction. Consumers, state governments and other purchasers or payors are expected to save. Read more here. Meanwhile in Europe, drugmakers are fined for these anti-competitive deals.    Note that these pay-to-delay deals are only one strategy drug manufacturers use to keep brand name drugs at the top of preferred drug lists and generics out of the hands of consumers. Other strategies contributing to the high cost of medicine include "evergreening" - patent extensions for minor changes in drug formulas; read more here.   While the Supreme Court's Actavis decision may benefit consumers seeking to purchase less expensive generic drugs, apparently its "buyer beware" when it comes to safety. Of particular concern to state legislators is the Supreme Court's decision in Mutual Pharmaceutical Co. v. Bartlett that FDA approval of a generic prescription drug preempts a state-law damages claim premised on the drug's design defect. Read more in Public Citizen's Consumer Law & Policy Blog and in Forbes.

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Psychotropic Drugs and Children

Interest remains high on the issue of over-prescribing psychotropic drugs to kids. The National Conference of State Legislatures recently released the useful Child Welfare Legislation Update: Oversight and Management of Psychotropic Medications for Children and Youth in Foster Care (January 2013), which reports on the status of state guidelines through 2012 and provides links to useful resources.

Those interested in this issue may want to review the reports commissioned by the District of Columbia collecting and analyzing data of payments to doctors in the District. A study released in July,
"Impacts of Pharmaceutical Marketing on Healthcare Services in the District of Columbia,Focus on Use of Antipsychotics in Children" showed that drug companies making antipsychotic drugs gave a disproportionate amount of gifts and payments to District psychiatrists who treat Medicaid patients. Close ties between the drug companies and psychiatrists might have led to inappropriate prescribing for Medicaid patients, and particularly for children, according to D.C. Council Member David Catania, a longtime NLARx board member, who held a hearing on the issue in November. The District recently released its 2013 report on drug marketing costs which found $83.7 million on spending for payments to doctors overall.

In 2013, at least three states have pending legislation relating to prescribing these drugs to children:

• Texas, where HB 473 requiring pre-approval to prescribe psychotropic drugs to young children has been voted favorably out of committee; watch the committee hearing here (at the 28 minute mark) and read the Grits for Breakfast Blog here, quoting testimony that "About 49,000 prescriptions for antipsychotic and neuroleptic drugs are currently given to children under five years old through the Texas Medicaid program, many of whom are in foster care..."
• New Mexico, where Senate Joint Memorial 44 seeks investigation of the "deleterious effects of overmedication of children in the state."
• Maine, where LD 716 directs the Department of Health and Human Services to adopt a program regarding prescription medications for children that consists of a prescription medication protocol, monitoring and prior authorization for reimbursement under the state Medicaid program.

Pharmacy Benefit Managers Scrutinized

Every year, more states regulate PBMs. Even Maine, which repealed a sweeping PBM law in a party-line vote in 2011, continues to address concerns that PBMs can be unfair and coercive, see LD 44, recently reported out of committee unanimously in amended form. Other states enacting or considering PBM legislation, in addition to the Maryland specialty drug bill discussed above, include Oklahoma, Oregon, North Dakota, California, and New York. The New York bill is particularly of interest because it establishes a fiduciary duty on the part of the PBM, which was a central component of the repealed Maine law. Though challenged by the PBM industry in the courts, the fiduciary responsibility established in Maine law was upheld by the federal courts with the US Supreme Court refusing review.

Out-of-Control Specialty and Oral Cancer Drugs Get Legislators' Attention

Here's a report everyone should read: "Clear Evidence Of US Specialty Drug Price Collusion Ignored For Years," a study of specialty drug prices and PBMs. State legislators have focussed on specialty drug issues in several ways. Maryland House bill 736

requires the State Board of Pharmacy to specify the prescription drugs that may be considered specialty drugs by a PBM, which would be prohibited from requiring a specialty drug to be dispensed by mail order and must instead allow any licensed pharmacy or pharmacist to fill a prescription for a specialty drug if the pharmacy or pharmacist meets specified requirements.

More typical are bills to require insurance coverage of oral cancer drugs. Legislatures in 19 states and the District of Columbia enacted such "parity" laws in 2012, and this trend has continued in 2013. Massachusetts recently enacted this legislation, SB 2363, signed into law by Governor Patrick over the objections of business groups concerned about treatment costs of as much as $115,000 per patient per year. LD 627, still in committee in Maine, is typical of bills being introduced across the country.

States Address Compounding Pharmacies

The National Conference of State Legislatures has put together a handy summary of state action on compounding pharmacies in 2013, as well as a compendium of existing laws and other resources on the issue. According to NCSL, as of March 10, 2013 there have been 16 bills related to the regulation of compounding pharmaceuticals proposed in 11 states.

Virginia's legislation and Utah's legislation has passed through committee and been sent to their respective Governors. House Bill 3161 and senate bill 183 are similar and pending in South Carolina; you can research S. Carolina bill status here. Bills are also pending in California, and the Massachusetts House and Senate. Three bills are pending in Minnesota, and House and Senate bills are in committee in New Jersey. The New Hampshire bill has been reported positively out of committee in amended form, and the Oklahoma bill has passed the House and been sent to the Senate. Maine's legislation will be printed next week. Mississippi's legislation died in committee and Hawaii's legislation may also not be enacted according to this database.

Compounding pharmacies, unfortunately, continue to be in the news; last week the FDA warned of another recall, this time of Avastin compounded by a Georgia pharmacy, reported here.

As NCSL points out, some of the issues addressed in the state bills include clarifying which compounded drug orders meet the state-regulated standard and which cross into a manufacturing regulatory category; updating definitions for compounding, wholesale, specialty and hospital-based pharmacies, and clear language about "sterile" and "non-sterile" compounding; inspection of facilities; enforcement responsibilities; funding; and transparency of records.

For more information:

Sharon Anglin Treat, Executive Director
207-622-5597
streat@reducedrugprices.org

www.reducedrugprices.org