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Specialty Drug Trend of 18.4% Dwarfs Traditional Drug Trend of -1.5%

March 11, 2013 By: Nadia Category: HealthCare, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: Drug Channels, 3/6/2013

Express Scripts just released the latest iteration of its long-running Drug Trend Report. This year’s report includes both Express Scripts and legacy-Medco covered lives, so it’s the most comprehensive look at pricing and utilization.

Study findings

  • Specialty drug trend of 18.4% dominated traditional drug trend of -1.5%.
  • Drug trend for traditional drugs fell to a record-low -1.5%, due largely to the growing substitution of less-expensive generic drugs.
    • Utilization increased by 0.6%, but costs decreased by 2.2%.
  • Drug trend for specialty drugs was 18.4%, consistent with its high growth rate over the past six years.
    • Utilization decreased by 0.4%, while costs increased by 18.7%.
  • Specialty spending is concentrated in a few conditions. For traditional drugs, treatments for the top three conditions of diabetes, high blood cholesterol, and high blood pressure–accounted for 30% of total per-member, per year (PMPY) spend.
  • For specialty drugs, treatments for the top three conditions–inflammatory conditions, multiple sclerosis, and cancer–accounted for 58% of total PMPY spend.
  • Trend reflects two primary components
    • Change in Utilization (the total quantity of drugs obtained by plan members)–Utilization varies with changes in the number of plan members on drug therapy, the degree to which plan members are adherent to their drug therapy, and a change in the average number of days of treatment.
    • Change in Unit Costs–Unit costs vary with:
      • 1) the rate of inflation in brand-name drugs prices,
      • 2) shifts to different drug options within a therapeutic class,
      • 3) a shift in mix of therapeutic classes utilized by plan members, or
      • 4) the substitution of generic drugs for brand-name drugs.

 

Research on Savings from Generic Drug Use

March 09, 2012 By: Nadia Category: HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: US Government Accountability Office, January 31 2012

What GAO Found

Our review identified articles that used varying approaches to estimate the savings associated with generic drug use in the United States. One group of studies estimated the savings in reduced drug costs that have accrued from the use of generics. For example, a series of studies estimated the total savings that have accrued to the U.S. health care system from substituting generic drugs for their brand-name counterparts, and found that from 1999 through 2010 doing so saved more than $1 trillion. A second group of studies estimated the potential to save more on drugs through greater use of generics. For example, one study assessed the potential for additional savings within the Medicare Part D program—which provides outpatient prescription drug coverage for Medicare—and found that if generic drugs had always been substituted for the brand-name drugs studied, about $900 million would have been saved in 2007. A third group of studies estimated the effect on health care costs of using generic versions of certain types of drugs where questions had generally been raised about whether substituting generic drugs for brand-name drugs was medically appropriate. Unlike the other two groups which focused on savings on drugs only, these studies compared savings from the lower cost of generic drugs to other health care costs that could accrue from their use, such as increased hospitalizations. The studies had mixed results regarding the effect of using these generics in that some found they raised health care costs, while others found they led to cost savings.

Why GAO Did This Study

Prescription drug spending in the United States reached $307 billion in 2010—an increase of $135 billion since 2001—and comprised approximately 12 percent of all health care spending in the country. Until the early 2000s, drug spending was one of the fastest growing components of health care spending. However, since that time, the rate of increase has generally declined each year, attributable in part to the greater use of generic drugs, which are copies of approved brand-name drugs. Generic versions of brand-name drugs become available to consumers when brand-name drugs’ patents and periods of market exclusivity expire and generic manufacturers obtain approval to market their drug. The competition that brand-name drugs face from generic equivalents is associated with lower overall drug prices, particularly as the number of generic manufacturers grows and price competition among them increases. On average, the retail price of a generic drug is 75 percent lower than the retail price of a brand-name drug.

Increased use of generic drugs can partly be attributed to the regulatory framework that was established in the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act. The Hatch-Waxman Act facilitated earlier, and less costly, market entry of generic drugs, while protecting the patent rights of brand-name drug manufacturers, to encourage continued investment in research and development. When the act was enacted in 1984, the generic utilization rate—which is the share of all drugs dispensed that are generic—was about 19 percent. Today it is about 78 percent for drugs dispensed in retail settings, such as independent, chain, and mail-order pharmacies, as well as in long-term care facilitates. The generic utilization rate is expected to continue to grow over the next few years as a number of blockbuster drugs come off patent through 2015.

While the Hatch-Waxman Act has helped to increase the number of generic alternatives to brand-name drugs, other factors influence whether providers and consumers use generic drugs. For example, third-party payers—including private health insurance plans and public programs such as Medicare— use strategies such as tiered copayments to encourage the use of less expensive drugs within a therapeutic class, which are often generics. Also, perceptions of the safety and efficacy of generic drugs may affect their use. Thus, use of generic drugs—and the savings realized—can vary by payer as well as across therapeutic classes. You asked us to identify research completed on estimates of cost savings from the use of generic drugs in the United States. This report summarizes the findings of peer-reviewed articles, government reports, and studies by national organizations, including trade and nonprofit organizations, on this topic.

For a complete copy of the GAO report, visit: www.gao.gov/assets/590/588064.pdf

Drug Makers Raised Prices Sharply in ’09

April 20, 2010 By: Nadia Category: Medtipster, Prescription News

www.Medtipster.com Source: Wall Street Journal, April 20, 2010

Drug companies sharply raised prices last year, ahead of increased rebates they must pay to Medicaid and other expenses tied to the federal health overhaul passed last month.

Prices for brand-name pharmaceuticals rose 9.1% last year, the biggest increase in at least a decade, according to pharmacy-benefit manager Express Scripts Inc., which included the recent number in its annual drug-trend report. The boost for specialty drugs, a category that is largely biotech products, was even sharper: 11.5%. In 2008, the price rise had been 7.4% for traditional pharmaceuticals, and 9.4% for specialty drugs.

Some individual drugs saw double-digit increases in the first quarter compared with a year earlier, including 12.1% on Zetia, a cholesterol drug from Merck & Co., and 13.6% for Cymbalta, an antidepressant from Eli Lilly & Co., according to data from Credit Suisse. The firm, which tracks the pricing of brand-name drugs made by the biggest U.S. manufacturers, found wholesale prices went up 7.8% in the first quarter, compared with a year earlier.

The increases were “exacerbated by the health-care reform debate,” said Steve Miller, senior vice president and chief medical officer of Express Scripts, although drug makers disputed that notion.

An Eli Lilly spokesman said its pricing policies last year weren’t affected by the health bill, and such decisions take into account benefits for patients as well as “marketplace conditions and recovery of our R&D costs.”

But Lilly did caution shareholders Monday that rebates to Medicaid, as well as other provisions in the law, would lower its 2010 revenue by $350 million to $400 million, and 2011 revenue by $600 million to $700 million.

A Merck spokesman said its “price adjustments are independent of health-care reform,” and are instead driven by an approach that aims to “ensure patient access and enable Merck to invest in research and development.”

Zetia’s pricing for most of last year was controlled by an independent joint venture involving Merck and Schering-Plough Corp., which are now merged, the company added. Both Merck and Lilly said the pricing numbers didn’t reflect the effects of rebates and discounts granted to many health-care payers.

The health law will also require the drug industry to knock off half the price paid by Medicare beneficiaries in their “doughnut hole” coverage gap starting in 2011, among other expenses, though the pharmaceutical companies will also benefit from an influx of newly insured consumers that will kick in later.

The effects of the price increases on overall drug spending are being tempered by the availability and aggressive promotion of cheaper generic alternatives, among other factors.

In its report, which reflects the drug benefits it administers for corporate clients, Express Scripts also said drug spending went up only 6.4% in 2009, slightly more than last year but lower than five years earlier.

Indeed, a report this month from IMS Health said that the number of prescriptions dispensed for generic drugs rose 5.9% last year, but those for branded drugs fell 7.6%.

Overall spending on prescription drugs rose just 5.1% according to IMS, which looks at different data than Express Scripts.

Another reason for price increases is probably that insurers, employers and pharmacy-benefit managers have become “much more difficult gatekeepers,” said Credit Suisse analyst Catherine Arnold. Discounts and rebates used to promote branded drugs precipitate price increases to offset those marketing costs.

Also, as drugs go generic, companies mark up the prices of the brand-name versions, assuming that patients who stick with those “are the people for whom price doesn’t matter,” said Mark McClellan, who formerly oversaw the Medicare and Medicaid programs for the Bush administration and is now at the Brookings Institution.

Express Scripts, which is based in St. Louis and has 36 million people in its commercial client group, said the actual drug-spending increase — as opposed to the price markup — was 4.8% for traditional pharmaceuticals, to $800.23 per member per year, and 19.5% in specialty drugs, to $111.10 per member per year.

Big increases in spending occurred in several areas, including diabetes, driven by the growing number of people diagnosed with the disease, and antiviral drugs, due to flu concerns.

The pharmacy-benefit manager said its clients were able to help keep the increase in check through use of generics and other moves. But it argued that, across the entire U.S. market, there could be significantly greater health-care savings tied to how drugs are taken.

The company estimated the savings at $163 billion a year, which could be achieved with greater use of generics and better adherence by patients prescribed drugs, both tactics that Express Scripts pitches to clients as among services it can provide.

Prices Rising For Brand-Name Drugs In Coverage Gap

March 18, 2010 By: Nadia Category: Medicine Advice, Medtipster, Prescription News, Prescription Savings

Medtipster Source:  The Henry J. Kaiser Family Foundation – www.kff.org
Medicare Part D 2010 Data Spotlight: Prices for Brand-Name Drugs in the Coverage Gap
This analysis finds prices for some commonly used brand-name drugs rising in 2010 for beneficiaries who reach the coverage gap (or “doughnut hole”), with increases since 2006 far exceeding the growth in inflation.

The Part D benefit’s coverage gap generally requires enrollees to pay the full cost of their drugs after their total drug spending exceeds their initial coverage limit ($2,830 in 2010) until they reach the threshold for receiving catastrophic coverage ($6,440 in 2010).  In 2007, an estimated 3.4 million Part D enrollees reached the coverage gap.

Using data posted on the government’s Medicare.gov website, the analysis looks at prices for commonly used brand-name drugs without a generic substitute for enrollees in stand-alone prescription drug plans.  The prices reflect the amount that enrollees would pay for a 30-day supply after they reach the coverage gap and before catastrophic coverage begins.  

The spotlight is one in a series analyzing key aspects of the Medicare Part D drug plans that will be available to beneficiaries in 2010. These spotlights were prepared by a team of researchers at Georgetown University, NORC and the Kaiser Family Foundation.

Find generic equivalants and alternatives for commonly used brand-name drugs at www.medtipster.com.

Think Generics First!

March 10, 2010 By: Tylar Masters Category: Prescription Savings

Generic drugs are a safe and effective alternative for many reasons.

Not only individuals who require inexpensive health care alternatives commonly opt to use generics, but for economic reasons, everyone should think generics first. Generic drugs use the same active ingredients and carry the same side effects as their brand name counterpart. Generics and brand-name drugs are identical in their safety, purpose, effectiveness, and administration method. By identical, it could be defined as the drugs have identical active components or employ a bioequivalent composition of the brand-name equivalent. They are deemed bioequivalent if their pace and accessibility after being given in an identical quantity have like effects. Having parallel effects, both medicine forms have the same effects and amount of effectiveness.

You may ask, if brand name and generic medicines are so similar, why are brand name drugs more inexpensive than generic drugs? The expensive price of branded drugs stem from their research, process, and promotion. Since the brand name drug is recently made, a copyright is provided to grant them sole rights in selling the medicine. When these branded medicines are nearing their patent termination, other manufacturers go to the Food and Drug Administration to permit them to manufacture the generics.

Generic drug manufacturers don’t have a patent, thus the logic for their lesser price. Other generics can have a patent for the composition but not for the active ingredient. Because the generic manufacturers only have to apply and have no initial R&D prices, they can offer the drug at a smaller cost. Economics also have a function in the generic drug’s cheaper value. Since more producers can produce a generic version, there is higher competition in the economy. For one manufacturer to have a lead against the other, they must sell the medicine at a less expensive cost. With more customers, they can opt to have sales at a cheaper value.

Since generic drugs get their smaller prices from economic factors, it’s evident that a medicine’s value does not determine its quality. Some people are under the misconception that generic drugs have a smaller cost because they’re not as effective. Prior to reaching such a conclusion, you need to do research and comprehend the costing process behind it. The Food and Drug Administration makes certain that generic producers adhere to their criteria. These criteria are implemented to branded and generic medicine companies. Anyone with this price misreading should also know that 50 percent of the generics produced are done by branded manufacturers. Don’t be alarmed if the generic version applies a different combination of inactive ingredients. The differences also stem from a copyright issue. US copyright laws require that generics cannot look identical as the brand-name equivalent. Nonetheless, the generic will still use the same active ingredient process and mix to cause identical efficacy and results.

Pharmacy Benefit Manager Fees Must Be Reported on Schedule C

February 22, 2010 By: Nadia Category: Medtipster, Prescription News

Source: U.S. Department of Labor, 2/2010

The Department of Labor published FAQs to supplement FAQs published in July 2008, and to provide further guidance in response to additional questions from plans and service providers on the requirements for reporting service provider fees and other compensation on the Schedule C of the 2009 Form 5500 Annual Return/Report of Employee Benefit Plan. Inquiries regarding these supplemental FAQs may be directed to EBSA’s Office of Regulations and Interpretations at 202.693.8523.

The new FAQs — numbers 26 and 27 — note that PBMs perform many services for which they are compensated, including services as a third-party administrator, claims processor, and developer of the plan’s formulary and pharmacy network. The FAQs make clear that fees for these services would be reportable as direct compensation on Schedule C.

Q26: Pharmacy Benefit Managers (PBMs) provide services to plans and are compensated for these services in various ways. How should this compensation be reported?

PBMs often act as third party administrators for ERISA plan prescription drug programs and perform many activities to manage their clients’ prescription drug insurance coverage. They are generally engaged to be responsible for processing and paying prescription drug claims. They can also be engaged to develop and maintain the plan’s formulary and assemble networks of retail pharmacies that a plan sponsor’s members can use to fill prescriptions. PBMs receive fees for these services that are reportable compensation for Schedule C purposes. For example, dispensing fees charged by the PBM for each prescription filled by its mail-order pharmacy, specialty pharmacy, or a pharmacy that is a member of the PBM’s retail network and paid with plan assets would be reportable as direct compensation. Likewise, administrative fees paid with plan assets, whether or not reflected as part of the dispensing fee, would be reportable direct compensation on the Schedule C. Payments by the plan or payments by the plan sponsor that are reimbursed by the plan for ancillary administrative services such as recordkeeping, data management and information reporting, formulary management, participant health desk service, benefit education, utilization review, claims adjudication, participant communications, reporting services, website services, prior authorization, clinical programs, pharmacy audits, and other services would also be reportable direct compensation.

Q27: PBMs may receive rebates or discounts from the pharmaceutical manufacturers based on the amount of drugs a PBM purchases or other factors. Do such rebates and discounts need to be reported as indirect compensation on Schedule C?

Because formulary listings will affect a drug’s sales, pharmaceutical manufacturers compete to ensure that their products are included on PBM formularies. For example, PBMs often negotiate discounts and rebates with drug manufacturers based on the drugs bought and sold by PBMs or dispensed under ERISA plans administered by a PBM. These discounts and rebates go under various names, for example, “formulary payments” to obtain formulary status and “market-share payments” to encourage PBMs to dispense particular drugs. The Department is currently considering the extent to which PBM discount and rebate revenue attributable to a PBM’s business with ERISA plans may properly be classified as compensation related to services provided to the plans. Thus, in the absence of further guidance from the Department, discount and rebate revenue received by PBMs from pharmaceutical companies generally do not need to be treated as reportable indirect compensation for Schedule C purposes, even if the discount or rebate may be based in part of the quantity of drugs dispensed under ERISA plans administered by the PBM. If, however, the plan and the PBM agree that such rebates or discounts (or earnings on rebates and discounts held by the PBM) would be used to compensate the PBM for managing the plan’s prescription drug coverage, dispensing prescriptions or other administrative and ancillary services, that revenue would be reportable indirect compensation notwithstanding that the funds were derived from rebates or discounts.

More information to follow via our blog at www.medtipster.com

Does Your Employer Prescription Plan Cost You… Nothing At All?

February 03, 2010 By: Tylar Masters Category: Free Prescriptions, Prescription News, Prescription Savings

Generic drugs save people hundreds or even thousands of dollars each year, but did you know you could be paying absolutely nothing out of pocket, and your employer’s cost could be significantly reduced – both at the same time.

By now you’re familiar with Medtipster.com. We encourage generic drug purchasing over brand name drugs because they are just as effective, and cost less. You also know where to find your generic prescription at the lowest cost, right in your neighborhood.

If you have insurance, the cost of a generic for you could be a $15 co-pay, and your employer eats up the remainder of the cost, which is an average of $17.00. If you’ve found your generic on a $4 generic program by using Medtipster.com, you pay $4, and your employer pays nothing. We know you love Medtipster.com, but now we want your employer to love Medtipster.com too!

Free prescriptions have been our thing lately, in case you haven’t noticed. Thousands of Michigan residents have received free prescriptions since the beginning of December 2009. We are almost ready to take this free prescription giveaway nationwide, but first, we thought of another way to encourage generic drug purchasing, and you don’t have to be a Michigan resident to take advantage of this program. It’s called the Medtipster MVP.

With this program, employers partner with Medtipster.com to essentially give their employees free prescription cards, redeemable at pharmacies that employees themselves locate on Medtipster.com. The idea is to encourage generic drug purchasing over brand name drugs, and to reduce current and future healthcare costs to the employer.

It works like this example:

Sandy takes Zocor.

Sandy works for ABC123 Inc. and they have partnered with Medtipster.com.

ABC123 informs Sandy that her prescription is available for free if she logs on to the company website portal.

Sandy locates her generic equivalent at her neighborhood pharmacy, then prints out her custom ID card from the company’s privately labeled Medtipster.com site.

Sandy takes her ID card to this participating pharmacy and receives her prescription for Zocor generic equivalent for free.

Because the participating pharmacy has Zocor on a $4 generic program, Medtipster sends ABC123 an invoice for $4, plus a small administration fee.

Looking back at the example in the second paragraph above, this saves the employer an average of $17 per employee’s generic prescription. If you work for a company that employees 1,000 people, and half of those employees take a monthly generic prescription, they spend on average $102,000 each year covering “remaining” costs of their employees’ prescriptions. With the Medtipster MVP, the same company would spend an average of just $24,000 each year, for the SAME generic prescriptions! That’s $78,000 A YEAR!

$78,000 A YEAR.

I like to repeat myself when it sounds that good.

If you would like to see your employer save this kind of money every year, and get free prescriptions, let us know what you think. Let us know who we should talk to at your company about implementing this program. Let’s save some money, and change the way we think about prescription plans.

Do You Have Questions About Generics!

July 01, 2009 By: PharmaSueAnn Category: Medtipster, Prescription Savings

A recent survey out of California indicates that about 30% of “… respondents did not know or believe that generics have the same active ingredients and effectiveness as brand name drugs.”

Generics can a be a cost effective opportunity to lower you overall health care costs. If you are uncertain if a generic is right for you. PharmaSueAnn says: Contract you local neighborhood pharmacist to discuss your personal needs.

Do You Have Questions About Generics!

June 23, 2009 By: PharmaSueAnn Category: Medtipster, Prescription Savings

A recent survey out of California indicates that about 30% of “… respondents did not know or believe that generics have the same active ingredients and effectiveness as brand name drugs.”

Generics can a be a cost effective opportunity to lower you overall health care costs. If you are uncertain if a generic is right for you. PharmaSueAnn says: Contract you local neighborhood pharmacist to discuss your personal needs.

Generic Drugs $ave Billions

June 02, 2009 By: PharmaSueAnn Category: Medtipster, Prescription Savings

You can save money on generics too!!!

A recent analysis from the Generic Pharmaceutical Association revealed that generic drugs saved the U.S. healthcare system more the $734 Billion dollars in the last decade.

Don’t miss out on the savings, look for generic savings and therapeutic generic alternatives to your Brand Name drugs. It is as simple as 1-2-3 at Medtipster.

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