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Tag: Generic drugs

  • Merck charged with blocking generic competition

    Merck charged with blocking generic competition

    Paige Minemeyer reports for FierceHealthcare on a lawsuit filed by two insurers against Merck for using its power to block generic competition to its cholesterol drugs, Zetia and Vytorin. A third insurer filed a separate lawsuit alleging the same. Until Congress steps in to negotiate drug prices, pharmaceutical companies will game the system every which way they can to protect and increase their profits.

    What is the allegation against Merck? After many years of marketing a drug without competitors, Merck lost its exclusivity for Zetia, a cholesterol-lowering drug. As a result, Merck should have lost its monopoly pricing power for Zetia since generic drugs could be sold that worked as well as Zetia. But, to keep its monopoly pricing power and its enormous profits, the plaintiff insurers claim that Merck paid a generic competitor not to sell a generic version of Zetia for five years. This practice of pharmaceutical companies is called “pay for delay.”

    The insurers argue that, as a result of Merck’s pay-for-delay agreement with the generic competitor, the insurers overpaid hundreds of millions of dollars for their enrollees’ cholesterol-lowering drugs.  They further argue that Merck profited from its wrongful behavior to the tune of billions of dollars.

    The generic drug manufacturer also reaped significant revenue for delaying production of a generic drug like Zetia.  Merck paid it handsomely to hold off. But, the insurers and their enrollees paid big time.

    What is to be done? The way to fix this pay-for-delay problem and all the other gaming that the pharmaceutical corporations engage in to maximize profits is for the government to regulate drug prices. Regulating drug prices would also save tens of thousands of lives a year, enabling people who currently go without lifesaving medicines because they can’t afford them to fill their prescriptions.

    At this moment, the Democrats in Congress are trying to find a way to bring down drug prices. But, so many Democrats, along with Republicans, are in the pockets of the pharmaceutical companies. It’s still not clear what they will be able to accomplish.

    Here’s more from Just Care:

  • One way to lower the cost of biologics

    One way to lower the cost of biologics

    Peter B. Bach and Mark R. Trusheim offer a proposal to lower the cost of biologics in an op-ed for The New York Times. The authors recognize that “competition” will never lower the price of biologics, or most other drugs for that matter. Their solution is to set the price of biologics at  the cost of manufacturing them plus 10 percent once their patents expire.

    Biologic drugs are made using living cells and can be self-administered by injection or administered by a doctor. They cost the US billions of dollars a year; but, they can extend people’s lives significantly. Herceptin, which helps people with breast cancer, and Humira, which helps people with rheumatoid arthritis, are two examples.

    Because pharmaceutical companies are granted patents on new biologics, they can set prices for these drugs sky high. The patent life is supposed to allow the manufacturers to profit from their innovations. And, it is supposed to end and lead to competition that drives down prices over time.

    Bach and Trusheim explain that the problem with biologics is that they are not simple to manufacture. Competition, therefore, is not as likely in the biosimilars (generic alternatives to biologics) marketplace as in the regular prescription drug marketplace. Moreover, to the extent there have been competitive biosimilars, they have not successfully lowered the drug’s price. So, the price of biologics remain sky high.

    Just to say it, competition is woefully lacking in the prescription drug marketplace writ large. In today’s world, there are many generic drugs that are still priced well-above what they should be priced. Competition in the prescription drug market often does not work to bring down prices.

    Through legislation, Congress has tried to create a competitive market for biologics and has failed. More than eight in ten biologics that could have biosimilar competitors do not. Biologics need to be affordable.

    Bach and Trusheim propose that Congress require pharmaceutical companies to lower the prices of their biologics once their patents expire to 10 percent above their production cost. That reform would reduce the price of biologics significantly. Good luck getting this law enacted and, if enacted, figuring out manufacturing costs for each biologic.

    That said, the Washington Post reports that HR3, the prescription drug pricing bill that passed the House in 2019, has a chance of getting passed in this Congress. It would lower the price of 350 of the most commonly used prescription drugs (50-250 a year) in Medicare and private insurance. The price of a drug would be no more than 120 percent of what six other wealthy nations pay (Australia, Canada, France, Germany, Japan and the United Kingdom) over the next ten years. For some inexplicable reason, it would not lower drug prices for the uninsured.

    Here’s more from Just Care:

  • Medicare spent $1.7 billion on brand-name drugs though generics were available

    Medicare spent $1.7 billion on brand-name drugs though generics were available

    In yet another example of private health insurers driving up Medicare spending, a new report in JAMA shows that in 2017 Medicare Part D prescription drug insurers spent nearly $1.7 billion on brand-name drugs even though generic alternatives were available. The cost to people with Medicare was millions of dollars more out of pocket.

    The JAMA study found that Medicare would have saved almost $1 billion if Part D insurers had simply paid for generics rather than brand-name medicines prescribed. To be clear, it is sometimes not advised for people with certain conditions to switch from a brand-name drug to a generic version of the drug. Moreover, not everyone reacts well to generic substitutes. But, in most cases, generic drugs have the same treatment effect as brand-name drugs.

    More specifically, Medicare would have saved $977 million in 2017 if doctors had prescribed generics instead of all of the brand-name medicines they prescribed. And if Medicare patients had sought generics instead of brand-name drugs, Medicare Part D would have saved another $673 million. In total, people with Medicare spent an additional $270 million out of pocket on brand-name drugs that they could have saved had they taken the generic substitutes.

    The study authors looked at Medicare Part D data for 2017, covering 169 million prescriptions. They found that three in ten brand-name drug prescriptions filled were at the request of doctors or patients. Of note, every state in the nation has a law in place encouraging pharmacies to dispense generic drugs.

    According to one of the study’s authors, physicians can prescribe brand-name drugs whenever they please, even when generic substitutes are available. They are not penalized in any way for so doing. In fact, many drug companies reward physicians in a variety of ways when they prescribe brand-name drugs.

    In addition, pharmaceutical companies can and do handsomely reward the middlemen who distribute brand-name drugs–Pharmacy Benefit Managers–and put them on insurance company formularies. Insurers also often benefit. As a result, insurers are inclined to cover brand-name drugs, sometimes even more so than generic substitutes.

    Something’s got to give. An increasing number of Americans cannot afford their prescriptions and end up not filling them. When insurers cover brand-name drugs rather than a generic substitute, it drives up costs for everyone in Medicare and taxpayers. In 2019, Medicare spent nearly $100 billion on prescription drugs under Medicare Part D alone. (Medicare Part D covers drugs purchased at the pharmacy. Medicare Part B covers drugs administered by a doctor, such as chemotherapy drugs.)

    Medicare for All would bring down drug costs for everyone. Short of that, Congress could simply import drug prices from abroad.

    Here’s more from Just Care:

  • New nonprofit manufactures low-cost generics

    New nonprofit manufactures low-cost generics

    Congress has not done the job it should be doing to ensure adequate supplies of essential medicines, much less fair prices. So, Civica Rx, a nonprofit generic drug company, was established two years ago to ensure adequate supplies of essential generic drugs as well as fair drug pricing. Civica Rx is already making 20 generic drugs and saving hospitals millions of dollars. 

    Civica’s goal is to make quality generic prescription drugs accessible and affordable to everyone. At this time, however, the drugs it manufactures are only available to hospitals and not directly to individuals. Civica Rx was established by a group of health systems, including Intermountain Healthcare and the Mayo Clinic.

    To be sure, if the federal government were undertaking this work, we could have the ability to produce hundreds of drugs at a fair price for all Americans. During the Obama administration, the US Department of Health and Human Services invested hundreds of millions of dollars in four facilities to produce vaccines and other essential medicines. But, the plants have not been working as expected for reasons that are unclear.

    Right now, Civica is focused on ensuring adequate supplies of COVID medicines for hospitals. Civica, unlike most pharmaceutical companies, stockpiles drugs so that they are available when there are spikes in demand.

    Civica currently supplies generic drugs to more than 50 health systems. These health systems include 1,200 hospitals and three in ten hospital beds in the nation.

    In two years, Civica says it has sold hospitals nine million generic medicines and helped treat three million patients. Eleven medicines Civica manufactures treat COVID-19 patients.

    Civica will shortly be producing 40 different medicines. And in the next three years, Civica plans to manufacture 100 different prescription drugs. At the same time, it is working to build the country’s capacity to manufacture more drugs.

    What’s more, Civica now plans to make its drugs available to individuals through retail pharmacies. People who use the generic drugs that Civica offers should see lower drug costs.

    Here’s more from Just Care:

  • States charge 26 drugmakers with illegally driving up the price of generic drugs

    States charge 26 drugmakers with illegally driving up the price of generic drugs

    In America, we lock people up when they don’t respond to a bench warrant issued because they failed to pay their medical bills. We deny people health care based on their ability to pay.  But, there’s little chance we will punish the CEOs of 26 pharmaceutical companies if states prevail and the companies are found to have illegally driven up the price of generic drugs.

    Stat News reports that 51 states and territories have charged Pfizer, Novartis, Sandoz, Teva and others with price-fixing, manipulating the market for more than 80 generic drugs. They forced Americans to pay more for their generic drugs. The Connecticut press release explains: “These generic drug manufacturers perpetrated a multibillion-dollar fraud on the American public so systemic that it has touched nearly every single consumer of topical products.”

    It’s no surprise that these pharmaceutical companies chose to put their profits ahead of the public good. That’s what they virtually always do. It will be a surprise, however, if the executives in charge of these companies, some of whom are defendants in the case, face more than a slap on the hand. Eight executives have been sued individually.

    The states’ allegation is of a “vast, systemic conspiracy” among pharmaceutical companies between 2009 and 2016. The pharmaceutical companies deny it. Novartis has already settled one suit regarding price-fixing of generic drugs between 2013 and 2015 for $195 million.

    The US pays two or three times what other wealthy countries pay for drugs because Congress gives drug companies monopoly pricing power, in the form of patents, for brand-name drugs, even when they are variants of drugs long on the market. The generic drug market is supposed to be competitive. But, because of a variety of practices, and alleged price-fixing, generic drug prices are far higher than they should be.

    Insurers are sometimes paid well to keep generic drugs off of their formularies. When a drugmaker or Pharmacy Benefits Manager–a middleman–wants to promote particular brand-name drug alternatives, they offer insurers incentives not to put the generic drugs on their formularies. People then do not have access to lower-cost generics unless they pay cash for them.

    There are so many ways pharmaceutical companies flout the law in order to drive up their profits with impunity, at a huge cost to Americans. Most of their abuses cannot happen in other wealthy countries because prices for drugs are regulated by the government. Why Congress gives pharmaceutical companies in the US license to set prices for brand-name drugs is beyond comprehension.

    The US House of Representatives has passed a bill that would regulate the price of a number of drugs in the US. It’s a start. We need regulation of all drug prices. But, the Republican-led Senate is not considering even the House’s modest attempt to regulate prescription drug prices.

    Here’s more from Just Care:

  • CVS charged with healthcare fraud

    CVS charged with healthcare fraud

    Just a couple of years ago, a whistleblower charged CVS with $1 billion in Medicare drug fraud. Now, CVS has been sued for overcharging Blue Cross Blue Shield for generic drugs. Healthcare Dive reports that Blue Cross Blue Shield  is seeking millions of dollars in damages.

    Blue Cross Blue Shield claims that, for more than ten years, CVS charged it a higher price for certain drugs than CVS was charging the general public for these drugs if they were paying cash for them. CVS denies the charges against it. It says they are without merit.

    While Blue Cross Blue Shield had negotiated the price it paid for these generic drugs with CVS, Blue Cross claims it should have benefited from the lower price that CVS charged people who paid cash for them. Put differently, Blue Cross argues that the cash price should be the highest price it pays. And, it says that CVS used a discount program to keep Blue Cross from knowing the cash price.

    The CVS membership program provides discounts on certain generic drugs to anyone who signs up. It also gives discounts to people who do not sign up, according to the Blue Cross lawsuit. The Blues argue that this membership program set the true cash price for the drugs, also referred to as the “usual and customary [U&C] price.” By concealing these prices in the membership program, insurers, including the plaintiffs, were not alerted to, and did not pay the lower U&C, or cash price. 

    According to the lawsuit, CVS “tried to find a way to both broadly offer discounts to retain critical pharmacy customers, including cash paying customers, and also avoid the unprofitable result of reporting the discounted prices as the U&C price.”  

    CVS argues the membership program prices were not the U&C prices. And, its membership program prices were neither concealed nor fraudulent.

    Blue Cross Blue Shield is not the only company that has filed suit against CVS for fraudulent overcharges. The Sheet Metal Workers union and the state of Mississippi have also sued CVS for this behavior.

    Here’s more from Just Care:

  • Trump administration drug proposals will keep prices high

    Trump administration drug proposals will keep prices high

    Nicholas Florko reports for Stat News on minor and arguably risky efforts by the Trump administration to drive competition in the Medicare Part D prescription drug marketplace through the promotion of biosimilars and generic drugs. The administration’s drug proposals will keep prices high. To bring down drug costs, Congress should set prices at the average of what other wealthy countries pay for them.

    One administration proposal would give bonuses to Medicare Part D drug plans if they steered their members towards generic drugs. Right now, drugmakers pay insurers to push their costly drugs, so the insurers tend to do so. Another proposal recommends that insurers create a special low-cost tier in their formularies for lower-cost medicines.

    Promoting the use of generic drugs or biosimilars, which are generic versions of biologicals made from living cells, should not be controversial. They make sense. But, for a host of reasons, patient advocates, pharmaceutical companies, health insurers and pharmacists are pushing back against these proposals. 

    Of course, health insurers should not need to be incentivized to promote generics and biosimilars. But, they are not doing so in many instances where they should be. So, the Centers for Medicare and Medicaid Services (CMS) has proposed that it would factor in the frequency with which Part D insurers have patients taking generics and biosimilars as part of their star-rating, which in turn affects the amount of money CMS pays them.

    One issue is that insurers receive rebates, money back from pharmaceutical companies, when they put certain brand-name drugs on their formularies and promote them. The insurers say that sometimes these rebates make brand-name drugs less costly than generic drugs. So, they argue that pushing generics could drive up costs.

    The pharmaceutical companies argue that biosimilars are not identical to biologics. So, it would be wrong to push the biosimilars in many cases.

    What’s particularly troublesome about the fights over these proposals is that the insurance and pharmaceutical industries seem to win them with the argument that they will drive up costs because pharmaceutical companies will respond with higher prices for drugs. The fact is that any attempt to “save” money can be met with higher brand-name drug prices since Congress has given pharmaceutical companies the power to set prices through the patent system.

    For brand-name drugs, pharmaceutical companies control the price. Insurers will pay an agreed upon high price because they will benefit financially–with a rebate–from the pharmaceutical companies. So long as drugmakers can set the price and insurers can pocket rebate dollars–they can also keep the amount of the rebates secret–there’s no way for the American public to see lower drug prices.

    The simplest and fairest solution in a global marketplace is for the federal government to establish drug prices in the US that are on average what other wealthy countries pay for their drugs. Although President Trump at one point argued that Americans should not be paying higher drug prices than people in other wealthy countries, it appears he has since been swayed otherwise.

    Here’s more from Just Care:

  • How should we address drug shortages?

    How should we address drug shortages?

    It’s hard to believe, but some prescription drugs are hard to come by. A new federal report by the Food and Drug Administration (FDA) attributes these drug shortages to a combination of low profitability and a “broken” health care marketplace. The FDA’s market-based recommendations for addressing these drug shortages likely means we can expect them to continue.

    These days, more than 150 prescription drugs are in short supply in the US. Both generic drugs and brand-name drugs can be hard to come by. They include anesthesia drugs such as lidocaine, palliative care drugs such as bleomycin for patients with cancer, drugs for septic shock such as norepinephrine, and vaccines. Medical supplies, such as sterile water, can also be unavailable.

    To be clear, drug shortages mean treatment delays or changes in treatment regimens for patients. This can jeopardize their health. One study found that more than half of hospitals (56 percent) reported they had delayed or changed patient treatment  because of drug shortages. 

    Unfortunately, the problem is not getting better. In fact, it’s getting worse. An increasing number of drugs are in short supply. Moreover, shortages of drugs tend to last longer and longer.

    As unfortunate, no one is keeping good data on the issue. We need good evidence of the number of drugs unavailable at any given time and the consequences of their lack of availability. As the report says, we need to know the frequency, persistence and intensity of drug shortages if we are going to best prevent them.

    Most of the 163 drugs that are hard to get are generic drugs that have been on the market for decades. But, more than 50 are brand-name drugs. The reason that about half of these drugs are so hard to get is quality-control problems where the drugs are manufactured.

    The FDA report recommends that the price of these drugs go up to address the shortages. It suggests that there be quality ratings of these drugs as a possible way to help pharmaceutical companies command higher prices for them.

    Notably, the authors did not recommend government intervention to ensure these drugs are available, even though some of these medications are critical for saving lives. Vincristine, for example, is a cancer drug, that treats a variety of common childhood cancers. Pfizer, which makes the drug, says it is addressing the shortage.

    Here’s more from Just Care:

  • Medicare Part D plans often don’t cover new generic drugs

    Medicare Part D plans often don’t cover new generic drugs

    According to Stat, the Association for Accessible Medicines–the trade association for generic drugmakers–issued a report revealing that less than half of new generic drugs are available to patients with Medicare Part D drug coverage. These drugs cost less than their brand-name drug equivalents and would save patients and taxpayers billions of dollars a year. What’s going on?

    Researchers studied the fate of the 115 newly FDA-approved generic drugs between 2016 and 2018. They found that in the first year after a new generic is approved, no more than one in four Medicare Part D plans, and as few as one in ten Part D plans, include the drug on their formularies, their list of covered drugs. In the second year, no more than one in three Medicare Part D plans include the drug on their formularies. It generally takes close to three years before a new generic drug makes it onto half or two-thirds of Medicare Part D formularies.

    Even after a new generic drug has been on the market for three years, about four in ten Medicare Part D plans do not include it on their formularies.

    The report also indicates that Medicare Part D insurers that do cover these newly approved generic drugs tend to charge copays for them that are equivalent to brand-name drug copays. In fairness, some newly approved generic drugs cost almost as much as their brand-name equivalents. But, as a general rule, generic drugs should have lower copays than brand-name drugs.

    In their second year on the market, generic drug prices tend to fall by around 45 percent. Still, only a small percentage of Medicare Part D insurers–nine to 13 percent more–included new generic drugs on their list of covered drugs.

    The Association for Accessible Medicines believes that the brand-name drugmakers are providing financial incentives to Pharmacy Benefit Managers (PBMs)–the middlemen who decide which drugs to put on a formulary–to exclude new generics from the Part D plan formulary. The brand-name drugmakers can legally do so, it appears. To increase their market share, they simply offer “rebates” or kickbacks to the PBMs if they do not cover the competitor generic drug.

    The Association for Accessible Medicines also finds fault with the structure of the Medicare Part D drug benefit. At the point at which people fall into the coverage gap or “donut hole,” brand-name drugmakers must offer a 70 percent discount on their drugs. But, the discount amount is included as part of the out-of-pocket costs people with Medicare must spend before Medicare covers 95 percent of costs. At that point, Part D plans have less liability for their drug costs. Consequently, Part D plans have a financial incentive to get people out of the donut hole by having them use brand-name drugs.

    What’s the solution? Congress should prohibit brand-name drug makers from providing financial incentives to PBMs and Part D plans to exclude coverage of generic drugs. Part D plans should be required to cover these generic drugs at generic drug copay levels. AAM claims people with Medicare would save $4 billion a year from this fix; taxpayers would also save.

    Here’s more from Just Care:

  • Medicare could have saved billions had enrollees used more generics

    Medicare could have saved billions had enrollees used more generics

    Stat reports on new findings in the Annals of Internal Medicine revealing that Medicare and older adults would have saved billions had more people used generic drugs instead of brand-name drugs. Why aren’t more older adults taking generic drugs when they’re available?

    Generic drugs must have the same active ingredients in the same strength as brand-name drugs. They also tend to cost a lot less than brand-name drugs. But, Medicare does not require people to take generics when available, and many doctors prescribe brand-name drugs, even though they cost more. Pharma does its best to incentivize doctors to prescribe brand-name drugs.

    Differences in cost between generics and brand-name drugs can be substantial. For example, in the six years between 2011 and 2017, Medicare spent more than $13 billion on Nexium, which treats acid reflux. Had Medicare paid for Prilosec instead of Nexium, it would have spent $700 million during that time period, literally a $12.7 billion savings. Savings to older adults would have been $690 million.

    Based on the available data, Nexium is no better at treating acid reflux, nor is it safer, than Prilosec. In fact, newer drugs present unknown safety risks that older drugs do not have. There is no data comparing the efficacy or safety of these two drugs.

    Medicare Part D insurers apparently have not steered enrollees towards generic drugs when available and appropriate, as much as they might have. In some cases, it may not be in their financial interest to do so. Rather, they may get paid by pharmacy benefit managers or drug makers to promote brand-name drugs. And, Medicare does not require them to encourage, let alone require, people to use generic drugs.

    In addition, the pharmaceutical industry has managed to shape state laws to maximize their profits. Pharmacies are often not permitted to substitute generics for brand-name drugs.

    Here’s more from Just Care: