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Medicare ‘doughnut hole’ relief could be offset by higher prescription drug prices

September 21, 2010 By: Nadia Category: HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: The Washington Post – 9.21.2010

If you’ve ever seen a sale advertising 50 percent off, you might have wondered if the retail price was ratcheted up to make the discount possible.

Patient advocates are watching to see if a similar tactic undermines one of the most widely publicized benefits of the health-care overhaul that President Obama signed in March.

Beginning next year, at the expense of pharmaceutical companies, millions of senior citizens in the Medicare coverage gap known as the “doughnut hole” will receive 50 percent discounts off the price of brand-name prescription drugs.

The government does not control the underlying prices; the law leaves that to the market.

“There is legitimate concern that some manufacturers will steeply increase the price of drugs in order to offset the cost of the discount to the manufacturers at the expense of both consumers and the Medicare program itself,” the Center for Medicare Advocacy and the Medicare Rights Center said in a letter to the agency that oversees the federal health insurance program.

That agency, the Centers for Medicare & Medicaid Services, announced in August that the average monthly premium for Medicare prescription drug plans will rise next year by a dollar, to $30.

Officials at the agency and at the Pharmaceutical Research and Manufacturers of America (PhRMA), an industry group, said the average premium increase indicates that there has been no spike in prescription drug prices.

Competition in the drug market will serve as a restraint, they said.

“I am confident we will continue to see very low price growth” for the Medicare drug program, said Jonathan Blum, deputy administrator of the government’s Center for Medicare.

But others are worried about the long-term outlook. UnitedHealth Group, which sells prescription drug insurance, has expressed concern “that Manufacturers have not agreed . . . to protect the underlying pricing of the drugs.”

In a June letter to the Health and Human Services Department, UnitedHealth took the extraordinary step of calling for price controls, saying the government should “require Manufacturers to maintain a ceiling on prices that would preserve the value of the discount for beneficiaries.”

“I don’t think all savings will be lost. But they can certainly recoup some of those savings by increasing prices,” said John M. Coster, senior vice president for government affairs at the National Community Pharmacists Association.

The doughnut hole has been a financial abyss for many senior citizens since Medicare prescription drug coverage was first offered in 2006.

For 2010, beneficiaries enter the coverage gap when their prescription tab hits $2,830, including both their share and the amounts paid by insurance. Once in the gap, they are responsible for 100 percent of the cost and must spend $3,610 of their money before qualifying for catastrophic coverage, which typically pays 95 percent of the cost.

Some people in the doughnut hole forgo their medicine; others take less than the proper dosage.

The health-care law will close the coverage gap by 2020, Obama has said. To do that, it provides a combination of federal rebates and subsidies, and also requires drugmakers to foot the cost of the 50 percent discounts.

According to the consulting firm Avalere Health, the discounts will reduce drugmakers’ revenue by $32 billion over 10 years.

Despite that provision, the pharmaceutical lobby served as a key ally to Obama and congressional Democrats in the health-care battle.

For the industry, the outcome could have been worse. The legislation did not include proposals that posed a potentially greater threat to drugmakers – for example, empowering the federal government to negotiate prices.

And, by shrinking the number of uninsured, the legislation will expand the market for prescription drugs.

For drugmakers, offsetting the doughnut-hole discount would not be as simple as raising the price unilaterally.

There are different measures of prices, and the ones that will be discounted by 50 percent are the product of negotiations between retail pharmacies and intermediaries such as insurance plans. However, those negotiated prices are influenced by the ones that manufacturers set higher up the chain.

“I think you can say any price adjustments are independent of the discount,” Merck spokesman Ronald Rogers said by e-mail.

“What I can say is that all of the competitive market forces that were in place previously remain in place,” said PhRMA Senior Vice President Richard Smith.

But the government is trying to establish much lower prices than market forces alone produced.

As new drugs are introduced, manufacturers will probably factor the doughnut discount into their pricing, said Daniel N. Mendelson, chief executive of Avalere.

Some of the most expensive drugs taken by people in the doughnut hole face minimal competition from generics or brand-name alternatives, making them particularly susceptible to price inflation, said Brit Pim, vice president of government programs development at benefits manager Express Scripts. Those include “specialty medications” for complex diseases, he said.

Express Scripts found that in 2009, the average price for specialty medications rose 13.5 percent.

Almost Half of Americans Took a Prescription Drug in Past Month

September 03, 2010 By: Nadia Category: HealthCare, Medtipster, Prescription News

www.Medtipster.com Source: Health Blog – Wall Street Journal Blogs, By Katherine Hobson – 9.02.10

The government today released some new stats on prescription-drug use through 2008. The headline finding: Over the previous decade, the proportion of Americans (of all ages) reporting they took a prescription drug in the past month rose to 48% from 44%.

Some other key findings:

The percentage of people reporting the use of multiple prescription drugs in the last month also rose, to 31% for two or more prescriptions and 11% (a near-doubling of the previous 6%)) for five or more drugs.

As you’d expect, prescription-drug use varied by age, with about 20% of kids under 12 and 90% of older Americans (defined as age 60 and over — sorry, Mom!) reporting the use of at least one drug in the past month.

Among the 60-plus crowd, more than 76% used at least two drugs in the past month and 37% used at least five. Of that finding — which stems, of course, from the fact that older folks often have multiple diseases — the report says that “excessive prescribing or polypharmacy is also an acknowledged safety risk for older Americans, and a continuing challenge that may contribute to adverse drug events, medication compliance issues and increased health-care costs.”

The type of drugs used most often were asthma meds for kids, central nervous system stimulants (such as those used to treat ADHD) for teens, antidepressants for the middle-aged and cholesterol-lowering drugs for older people.

The Pharmaceutical Research and Manufacturers of America (PhRMA), the trade association for drug makers, said in a statement that “as we learn more about disease, prescription medicines are justifiably playing an increasingly important role.” The group noted that many patients still lack access to needed medications, and that in many cases early interventions and improved compliance would improve health outcomes. “The best solution for all patients is to strike the right medical balance between proper and effective use of prescription medicines and other therapies and interventions,” it said.

A few months back, the pharmacy-benefits manager Medco issued its own figures for prescription-drug use and spending, covering 2009. It reported that use among adults held fairly steady, edging up slightly among those over 65 and dropping a bit for those aged 50-64 — but use among those 19 and under rose by 5%.

Generic Drug Prices Drop, Brand Prices Continue Rising

May 25, 2010 By: Nadia Category: HealthCare, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: FDAnews.com – Washington Drug Letter, 5.25.2010

AARP: Generic Drug Prices Drop, Brand Prices Continue Rising

The prices of brand-name prescription drugs most often used by Medicare beneficiaries increased nearly 10 percent over the 12-month period ending in March, an AARP report says.

While generic drug prices fell during the April 2009 to March 2010 period, the average price of top brand drugs used by Medicare beneficiaries rose 9.7 percent, continuing an upward trend in annual drug price increases, according to the AARP Public Policy Institute Rx Watchdog Report released last week.

Prices of generic drugs most widely used by Medicare beneficiaries dropped 9.7 percent while prices for widely used specialty drugs rose by 9.2 percent.
“These trends resulted in an average annual rate of increase of 5.3 percent for manufacturer drug prices during the 12 months ending with the first quarter of 2010 despite an extremely low rate of general inflation for all consumer goods and services,” the report says.

Drug companies raised the price of about two-thirds (90 of 144) of specialty drugs studied in the one-year period. Two of the 144 specialty drugs had a drop in price, and both were generics. For an individual taking one specialty medication, the average annual increase in cost of therapy rose by $2,760 during the study period.

AARP’s analysis echoes that of pharmacy benefit managerExpress Scripts’ 2009 Drug Trend Report, released last month. Prices of drugs in the most popular therapeutic classes increased 9.1 percent in 2009, according to that report.

PhRMA, however, said the AARP report is misleading and based on incomplete information. The report fails to take into account discounts and rebates generally negotiated between drug manufacturers and payers, which can significantly lower the cost of brand-name medicines, ultimately benefiting patients, Senior Vice President Ken Johnson said.

“Also, the report’s conclusions ignore the reality that prescription medicines represent a small and decreasing share of growth in overall health care costs in the United States,” Johnson said. “Not only is the current rate of growth for prescription medicines historically low, but the recent decline in drug spending growth has contributed to the lowest rate of total health care growth in almost 50 years.”

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