Reprinted from DRUG BENEFIT NEWS, biweekly news and proven
cost management strategies for health plans, PBMs, pharma companies and
employers.
By Lauren
Flynn Kelly, Editor
December 5,
2014 Volume 15 Issue 23
As the prices of many generic drugs
continue to experience increases due to shortages, reduced competition and
other potential factors, the federal government is putting the pressure on the
generic pharmaceutical industry. Sen. Bernie Sanders (I-Vt.), chairman of the
Senate Subcommittee on Primary Health and Aging, on Nov. 20 convened a Senate
hearing to investigate the “skyrocketing” prices of generic drugs at which
three generic drugmakers were no-shows.
And The Wall Street Journal last
month reported that the U.S. Department of Justice issued subpoenas to two
producers of generic digoxin, a congestive heart failure treatment that has
severely spiked in price.
Three generic pharmaceutical
manufacturers — Marathon Pharmaceuticals, Lannett Co., and Teva Pharmaceutical
Industries — were invited to testify at the Nov. 20 hearing but declined to
participate. Sanders and Rep. Elijah Cummings (D-Md.), ranking member of the
House Committee on Oversight and Government Reform, had sent letters on Oct. 2
to those companies and 11 others seeking information on escalating prices of
certain generic drugs.
The letters cited data from a survey of
group purchasing organizations conducted by the Healthcare Supply Chain
Association showing price increases of 300% or more in recent months for 10
generic drugs. For example, the average market price for a bottle of 100 pills
of albuterol sulfate to treat asthma and other lung conditions was $11 in
October 2013, compared with a whopping $434 in April 2014.
The Generic Pharmaceutical Association,
however, argued on Nov. 20 that citing a mere 10 drugs out of more than 12,000
“safe, affordable generic medicines” lacks perspective and fails to recognize
the “thousands of generics [that] have seen significant price erosion over time
due to the competitive nature of the marketplace.”
But Sanders explained during the
hearing that he and Cummings are not just concerned about a handful of drugs.
“While we are focusing on 10 individual drugs that have seen extraordinary
price increases, what we are also seeing in the industry is that many other
generic drug prices are rising as well,” he said. “There appears to now be a
trend in the industry where a number of drugs are going up at extraordinary
rates.”
According to a new analysis of National
Average Drug Acquisition Cost (NADAC) data collected and published by CMS,
Pembroke Consulting, Inc. finds that half of all retail generic drugs rose in
price when comparing November 2014 data (dated Nov. 5, 2014) with the previous
year’s file (dated Nov. 7, 2013). Out of a sample size of 2,370 drugs, 9% of
products had cost increases of more than 100% (see chart, below). The Pembroke
data, which was posted to the Drug Channels blog on Nov. 18, also demonstrate
quarterly changes in acquisition cost, and show more than one-third of generic
drugs rose in price in the third quarter of 2014. Of the top 10 drugs with the
largest percentage increases in NADAC per unit from July to November, eight
jumped by more than 1,000%.
During the hearing, witnesses discussed
various factors that could be pushing up prices, such as a backlog of more than
3,000 generic drugs awaiting FDA approval and the 2012 implementation of a
generic drug user fee to supplement the costs of reviewing generic drug
applications and inspecting facilities.
Rob Frankil, a Sellersville,
Pennsylvania, pharmacist, testified on behalf of the National Community
Pharmacists Association (NCPA) that pharmacists have no advance notice of these
price increases and that PBMs are taking up to six months to update their
reimbursement rates to pharmacies, “putting pharmacies underwater on these
drugs.” According to a recent survey of more than 1,000 NCPA pharmacies that
experienced large spikes in generic drug prices in the past six months,
respondents pointed to commonly used drugs such as pravastatin for high
cholesterol and levothyroxine for hypothyroidism, added Frankil.
Scott Gottlieb, M.D., a resident fellow
at the American Enterprise Institute who most recently served as deputy
commissioner for medical and scientific affairs at the FDA, suggested to
Congress that most of the generic drugs experiencing high cost increases are
“low volume drugs,” although there are some examples of high volume drugs. “To
get a more accurate picture of what’s happening in the market overall, you need
to adjust the price increases based on script volume,” he suggested. Regardless
of which types of products are increasing, Gottlieb suggested one culprit is
higher manufacturing costs due to increased FDA oversight and the agency’s
“abrupt” imposition of new quality standards.
In an effort to “cushion the impact” of
rising generic costs, Sanders on Nov. 20 proposed new legislation that would
require generic manufacturers whose prices outpace the rate of inflation to pay
extra rebates to Medicaid. The Medicaid Generic Drug Price Fairness Act
proposes to extend a requirement of the Social Security Act that brand-name
manufacturers whose drug prices increase at a rate faster than inflation pay an
additional rebate to Medicaid.
GPhA immediately fired back, calling
the effort “misguided” and a threat to patient access. “Unfortunately, the
newly proposed legislation makes it clear that the hearing was not intended to
be a meaningful examination of ways to ensure savings,” said GPhA President and
CEO Ralph G. Neas in a Nov. 20 statement. He also recommended that Congress
focus on ways to encourage competition among generics manufacturers, such as
through the “timely review” of generic drug applications and by countering the
misuse of Risk Evaluation and Mitigation Strategy (REMS) programs that GPhA
alleges some brand companies are using as a way to keep generics out of the
market.
View a replay of the hearing at http://tinyurl.com/m5qsye6.
To view the Pembroke analysis, visit www.drugchannels.net.
http://aishealth.com/archive/ndbn120514-03?utm_source=Real%20Magnet&utm_medium=Email&utm_campaign=60310271
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