The Official Medtipster Blog

www.Medtipster.com Source: www.post-gazette.com, 12.16.2010

Generic-drug companies, led by Teva Pharmaceutical Industries, would face fewer factory inspections and save as much as a year developing products in exchange for paying fees for the first time under a Food and Drug Administration proposal.

The plan grew out of talks between the FDA and drug makers to speed reviews of low-cost copies of medicines, according to Russell Wesdyk, scientific coordinator in the FDA’s Office of Pharmaceutical Science.

Generic-drug reviews take 15 months longer on average than evaluations of brand-name products, according to the Generic Pharmaceutical Association, a Washington lobbying group. Inspections take as many as 12 months to complete, especially for products made outside the U.S., said Richard Stec, vice president of global regulatory affairs with Perrigo Co., an Allergan, Mich.-based member of the trade group.

“Getting the inspection scheduled in a timely manner is probably the biggest challenge both for FDA and for industry,” Mr. Stec said.

The FDA may waive “preapproval inspections” done after companies submit generic-drug applications, Mr. Wesdyk said last Thursday. Instead, it would rely on periodic inspections that focus on firms’ broader manufacturing practices.

The agency would still carry out preapproval inspections under the proposal when drugs are made with untested technologies or produced at a site the FDA hasn’t inspected.

More generic-drug companies are moving operations outside the U.S., making it harder for the FDA to keep pace, Janet Woodcock, director of the agency’s Drug Center, said during a September meeting to discuss the fees. The FDA inspects U.S. plants once every 30 months, compared with once every nine years for foreign plants, a September Government Accountability Office report states.

The FDA receives 800 to 900 generic-drug applications each year, compared with about 100 applications for new brand-name drugs, Mr. Wesdyk said.

The volume of work means “even with additional resources, it would be very difficult to do the number of preapproval inspections,” said Peter Beckerman, a senior adviser in the FDA’s Office of Policy, who is leading the generic-drug user fee negotiations for the agency.

Brand-name drug makers have paid the FDA fees since 1992 to help fund faster reviews.

The FDA hasn’t presented the proposal to generic-drug companies, Mr. Stec said. In addition to the Generic Pharmaceutical Association, groups involved in the fee talks include the Generic User Fee Coalition — consisting of Perrigo; Teva, Hospira of Lake Forest, Ill.; and Apotex of Toronto — and Mylan, which developed its own fee proposal.

The Generic Pharmaceutical Association and the User Fee Coalition have agreed on a system that would set targets for drug reviews and deal with the backlog of applications through separate funding, Mr. Stec said. He declined to discuss other details.

Mylan, based in Canonsburg, has pressed for a plan in which manufacturers and suppliers of active ingredients pay inspection fees in addition to fees for new applications. Mylan President Heather Bresch said her company’s proposal would generate $30 million for the FDA to standardize the frequency of inspections in the U.S. and overseas.

“You’ve got to level the playing field,” Ms. Bresch said in an interview in Washington last month. “I’m just realistic about the economic situation. Our industry is going to have to subsidize the globalization of the FDA.”

The generic-drug association and the user-fee coalition are considering Mylan’s proposal and want to reach a consensus early next year, Mr. Stec said.

The FDA plans to begin discussions with the industry early next year, Mr. Wesdyk said. Any agreement would have to be approved by Congress.

www.Medtipster.com Source: Seeking Alpha.com – 12.14.2010

Four years ago, Walmart (WMT) launched its four dollar generic drug program. Target (TGT), Costco (COST), K-Mart (SHLD), and others implemented similar plans soon after.

Many experts expected a direct challenge to mail-order pharmacies, and head-to-head price competition. Some believed the pricing initiative doomed the traditional pharmacy benefit management (“PBM”) business model.

Not only have the major PBMs survived, they’ve thrived—and once again deflected a substantial market challenge. Shares in Medco Health Solutions (MHS) and Express Scripts (ESRX) have more than doubled. Both now trade at or near all-time highs. (The CVS Caremark (CVS) price is flat, but the company has navigated an unfulfilling merger that has so far diluted the value of the legacy Caremark operation.)

Traditional PBMs, however, should not rest too comfortably, according to a recent white paper by Milliman*, the actuarial consultancy. The paper, entitled “The Value of Alternative Pharmacy Networks and Pass-Through Pricing”, explores the emergence of transparent retail pharmacy networks that build on Walmart’s and other large retailers’ aggressive cost-cutting capabilities.

Milliman calls these new business models Alternative Pharmacy Networks, or “APNs”. The paper presents analysis that estimates cost savings of between four and 13 percent beyond a traditional PBM service for an average employer with 10,000 lives.

Even though pharmacy costs are small as a percentage of total employer health care costs (medical benefit costs can be at least four times as great), the savings are real, especially against a tough economic environment. For large corporations employing tens of thousands, scale advantages could produce even bigger percentage savings.

Because the APN creates a transparent marketplace, it bestows employers, or plan sponsors, an intangible benefit of eliminating the traditional PBM’s information advantage. The APN takes away what the PBM knows about drug pricing and how it leverages this.

Most important, the APN is an emerging model. Only a few large employers such as Caterpillar (CAT) utilize it. One catalyst—beyond sponsors seeking additional savings—could be small PBMs reinventing themselves. The three big PBMs—Medco, Caremark and Express Scripts—are powerful players. Their aggressive strategies and market consolidation leave little room for others to compete.

APNs, Miliman states, feature two characteristics: one, substantially lower drug prices and dispensing fees than traditional pharmacies; two, ‘pass-through’ attributes including rebates that flow from manufacturer to employer and a PBM that collects no spread or drug cost differentials. (Instead of rebates and spreads, the PBM makes money on a flat administrative fee.)

Whereas, in the traditional model, PBMs negotiate price with plan sponsors, the APN model allows in-network pharmacies to compete for consumers on price and service. Control, in effect, shifts to the employer (the payer), and, depending on how the employer arranges the APN, the consumer.

So why haven’t APNs gained greater momentum? There are several reasons. Perhaps the most important is the resilience of mail order, the traditional PBM’s core franchise. Mail order is a distinct class of trade, the Milliman paper notes, which means PBMs can purchase drugs from manufacturers at prices lower than wholesalers or retail pharmacies. It also allows for price arbitrage strategies not available to retailers.

The traditional model also wins on market inertia. While the APN does offer real savings, traditional PBMs can argue that they too create savings, and have been doing so for years. Sponsors focus more on trend than details anyway, and new contracting means hassle. Moreover, sponsors care much more about the medical side of the ledger, since it’s the principle contributor to price inflation.

No doubt, if the number of employers weighing the APN option accelerates, then the PBM universe could rebalance. The odds of the traditional model collapsing appear slim, however.

For small PBMs and new entrants, the APN model does finally establish a vehicle that can compete against the big three PBMs.

More than existing share, revenue that the APN does claim will likely constitute new share in a growing marketplace of aging baby boomers and new-to-market oral specialty pharmaceuticals.

The big three PBMs have consistently shaped and dominated the pharmacy distribution chain. As time passes, their biggest risk may not be the APN, but their own success in building behemoth businesses that ultimately limit maneuverability.

*Medtipster.com Note: Medtipser.com, LLC. operates as an Alternative Pharmacy Network (APN) and offers a unique APN employer product saving an average of 10% over a traditonal pharmacy benefit manager.

www.Medtipster.com Source: Medtipster Client Data: August 1, 2009 – November 30, 2010

Medtipster.com, working with it’s employer sponsored benefit plan members, found that offering a waiver of generic drug co-payments led to more switches to generics from their brand equivalents and that plan members were more likely to remain on their generic drugs after the switch was made.

The waiver program resulted in savings of about $500,000. to the sponsor and about $750,000. to the plan members during the observation period.

To improve generic dispensing rates, Medtipster offered plan members using brand medications in 40 therapeutic classes up to two co-pay waivers if they switched to a preferred generic drug. Information about the waiver was mailed to plan members, alerting them that all they needed to do was switch within six months of receiving the communication.

Members who took advantage of the waivers early in the six-month period were able to use it twice, while members who acted later in the window were only able to use the waiver once.

The recently enacted health care reform law has a provision in it that will allow Medicare Part D plan sponsors, beginning with the 2011 plan year, to reduce or waive the first co-pay for a generic drug when a plan member switches from its corresponding brand product.

Medtipster examined how many of the plan members remained on the generic drug after receiving one or two co-pay waivers. Findings among the top four therapeutic classes (HMG CoA reductase inhibitors, antihypertensive combinations, proton pump inhibitors and beta blockers cardio-selective) showed that plan members who took advantage of two co-pay waivers had higher generic dispensing rates in the fill immediately after the waivers and had higher sustained GDRs during the months after the generic dispensing conversion program began compared to those only using one waiver.

For example, 94.9 percent of members using beta blockers filled the next prescription with a generic following the use of two waivers, compared to 59.5 percent who used only one waiver. Members who used two waivers had a sustained generic dispensation rate of 89.5 percent, compared to 58.5 percent who only used one waiver.

The drug that showed the highest difference in sustained GDR between the use of two waivers and one waiver was AstraZeneca’s high blood pressure medication Toprol XL (metaprolol succinate), which had sustained GDR of 91.5 percent for members using two waivers, compared to 62.5 percent for members who used only one waiver.

Of the top 10, the drug that had the lowest difference was AstraZeneca’s cholesterol lowering drug Crestor (rosuvastatin), which had a sustained GDR of 82.7 percent for members using two waivers versus 78.1 percent for members who used one waiver.

www.Medtipster.com Source: Boston Globe, 12.3.2010

Patients who don’t take their medications are a well-documented problem in medicine. If doctors are to spot patients who might stop complying with prescriptions, it’s vital to have a fuller understanding of why and how it happens.

As many as 40 to 60 percent of those with chronic conditions like high blood pressure, heart failure, or diabetes don’t take their medicines regularly. The reasons vary – some patients never fill their prescriptions; others feel better and stop their drug regimens; in still other cases, side effects or the burden of too many pills discourage patients from refilling their prescriptions. Whatever the motive, failing to take needed drugs leads to worse health and higher spending, as patients land in the hospital for preventable conditions that cost the health care system hundreds of millions of dollars a year.

But a new study this month in the Annals of Internal Medicine, by researchers at Brigham and Women’s Hospital and Harvard Medical School, shines the spotlight on another contributor: Patients not picking up prescriptions that have already been filled.

The analysis, funded by CVS Caremark, looked at over 10 million prescriptions filled over a 3-month span in 2008 and found that 3.3 percent were never picked up. The number seems small, but translates to 110 million abandoned prescriptions per year in the United States. It costs a pharmacy an estimated $5 to $10 to prepare, then return to the shelves, an unclaimed medication, so the authors estimate the problem could be costing more than $500 million a year. CVS Caremark has a clear interest in bringing that number down – but so do patients and doctors.

The problem could worsen as technology evolves: Prescriptions sent electronically were 65 percent more likely to be left behind, probably because they bypass the step of having the patients hand- deliver a slip to the pharmacist. As electronic prescribing continues to take hold nationwide, insurers should be vigilant that prescription fill rates may reflect compliance less accurately than with traditional prescriptions.

Not surprisingly, prescriptions with $40 to $50 copays were the most likely to be abandoned. According to William Shrank, the study’s main author, this means that during economically hard times “even insured patients are experiencing sticker shock, and walking away from the pharmacy, without filling essential medications.”

Doctors are unlikely to know their patients’ copays for drugs, but taking the time to talk about drug costs would help them identify those who might never pick up their prescriptions. Down the road, those extra minutes of chat time at the office become multiple dollars saved at the hospital bedside.

www.Medtipster.com Source: usnews.com, 11.30.2010

TUESDAY, Nov. 30 (HealthDay News) — Patients have better outcomes when pharmacists are part of patient-care teams, according to a new review.

The researchers analyzed 298 studies and found that inclusion of pharmacists in patient care led to improved outcomes in a number of important areas, such as better diabetes control, lower blood pressure and lower cholesterol.

Pharmacist participation in patient care was also associated with a nearly 50 percent decrease in adverse drug reactions, fewer medication errors, improved patient compliance with drug regimens, and higher overall quality of life scores.

The findings were published in a recent issue of the journal, Medical Care.

“Pharmacist-provided direct patient care has favorable effects across various patient outcomes, health care settings, and disease states,” Marie Chisholm-Burns, of the University of Arizona College of Pharmacy, and colleagues wrote in a news release from the journal’s publisher.

Most of the studies included in the review focused on outpatient venues such as medical clinics. But the studies that looked at hospitalized patients also found benefits of pharmacist care, including a lower risk of hospital readmission, said the review authors.

“Incorporating pharmacists as health care team members in direct patient care is a viable solution to improve U.S. health care,” they concluded.