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Tag: PBM

  • Trump abandons plan to lower drug prices for people with Medicare

    Trump abandons plan to lower drug prices for people with Medicare

    President Trump has abandoned his latest plan to lower prescription drug costs for people with Medicare. And, knowing that the cost of prescription drugs is a top policy issue for Americans, Democrats are speaking out.

    Trump had said he wanted to make sure that prescription drug discounts secured by Pharmacy Benefit Managers–the middlemen who negotiate with pharmaceutical companies for lower prices on behalf of health insurers–are passed along to people with Medicare.

    Several presidential candidates have plans to lower prescription drug prices for people with Medicare, including Kirsten Gillibrand and Amy Klobuchar. Many plans seek to allow the government to negotiate Medicare drug prices. Of course, the issue with these proposals is that they may drive up prices for everyone else. And, even if they do not, that’s what the pharmaceutical industry will claim.

    Some proposals seek to allow people to import drugs from abroad. Millions of Americans already do so. That should not be illegal. PharmacyChecker.com verifies pharmacies abroad from which people can buy their drugs. And, although it is still illegal to import drugs from abroad, the FDA has never prosecuted anyone for importing drugs for personal use.

    Of course, importation is a band-aid solution, and we need to lower drug prices for everyone in this country, not simply people with Medicare. A recent Kaiser report reveals that one in 50 people with Medicare are spending more than $3,200 a year out-of-pocket on their prescription drugs, way more than many of them can afford. People with job-based coverage are also forced to spend thousands of dollars on their medicines or go without them.

    The simplest solution is international reference pricing, which would ensure that Americans do not pay more than people in other wealthy countries for our drugs. Senator Sanders has proposed international reference pricing as has Congressman Ro Khanna.

    Here’s more from Just Care:

  • Pharma suit dismissed in California: State can require notice of drug price hikes

    Pharma suit dismissed in California: State can require notice of drug price hikes

    Ed Silverman reports for StatNews that a federal judge in California dismissed a Pharma lawsuit which attempted to block a state consumer protection law. The law requires drug makers to disclose and justify some price hikes in advance.

    The judge ruled that the court had no authority to hear the case based on Pharma’s submissions. The judge further ruled that Pharma had failed to demonstrate any potential harm from the law. The judge did give Pharma the ability to refile its lawsuit if it could show harm.

    Pharma claims the California law is unconstitutional, violating free speech and interstate commerce. Pharma also blamed the Pharmacy Benefit Managers (PBMs)–the middlemen who decide which drugs an insurer will cover and at what copay level–for increases in the list price of drugs. And, it claimed the law should hold the PBMs accountable.

    The 2017 California law obligates pharmaceutical companies to let health insurers and government health plans know at least 60 days in advance of a 16 percent hike or more, over two years, in the list price of all drugs that cost more than $40. The pharmaceutical companies are also obligated to explain why they are raising the price of these drugs.

    The law may be working to keep at least some drug prices down. A few pharmaceutical companies let California health plans know that they were not going to raise prices on some drugs or they were going to raise prices less.

    Here’s more from Just Care:

  • Drug companies can make out like bandits regardless of drugs’ value

    Drug companies can make out like bandits regardless of drugs’ value

    Two recent exposes reveal how easy it is for pharmaceutical companies to raise prices on what should be low-cost drugs and make out like bandits. The reason: Doctors can prescribe virtually all drugs at any price; and, in most cases, insurers cover them, regardless of their value. So, drugmakers can effectively pay doctors to prescribe their high-priced drugs over less costly ones that are as effective.

    Evan Hughes explains in The Pain Hustlers for The New York Times that “Selling drugs is a relationship business.” He details how a small pharmaceutical company, Insys, identified and targeted doctors whom Insys knew to be big opioid prescribers. And, it persuaded these doctors to prescribe the Insys high-priced opioid. To clinch the deal, the drugmaker offered the doctors the ability to serve on their “speakers’ program” for a tidy sum of money.

    The “speakers’ program” provided doctors with a forum to promote the opioid to other doctors; it also could be little more than a group dinner. Either way, it enabled the pharmaceutical company to justify monetary payments to the doctors. And, it led to a large number of sales and nearly $100 million in revenue for Insys in the year after it got one doctor to prescribe its opioid drug. Hughes writes, “The drug was so expensive that a single clinic, led by a motivated doctor, could generate millions of dollars in revenue.”

    Lesley Stahl for CBS News tells the story of how the inflated cost of one prescription drug in Rockford, Illinois, a suburb of Chicago, busted the city’s health budget, keeping it from hiring policemen and firefighters. Rockford self-financed the cost of drugs for its employees.

    One Rockford employee needed Acthar, a drug that treats, among other things, infantile spasms, a rare and fatal condition, for his baby twins. The drug has been on the market, unchanged since 1952. And, 16 years ago, it cost $40 for a dose. Now, the same drug costs more than $40,000.

    Achtar’s manufacturer, Mallinckrodt, which bought the drug in 2014, settled charges of price fixing and anti-trust violations with the FTC for $100 million. But, that’s a small penalty. Mallinckrodt has revenues of over $1 billion a year.

    The price hikes began when Questcor bought the right to produce the drug. Questcor also bought Acthar’s competitor drug, Synecthen, eliminating the competition in the US. Synecthen sells for $33 in Canada. Questcor raised the price of Achtar to $32,000 a vial.

    Questcor also marketed Achtar for use by older adults with a variety of health conditions, including rheumatoid arthritis, without any clinical evidence of its efficacy. Achtar had been approved for these other uses in 1952, but back then approval did not require a showing of efficacy.

    Dr. Peter Bach explains that there are better and less expensive drugs available for older adults with these conditions. But, Mallinckrodt pays doctors millions to prescribe its drug over the less expensive ones. So, they do. Medicare now spends more than $500 million a year on Achtar.

    Express Scripts, the Pharmacy Benefit Manager (PBM), Acthar’s exclusive distributor, is also charged with bringing down the price of Acthar. But, it appears not to have done its job. It could have used its leverage to reduce Acthar’s price had it asked another company to manufacture a generic version of the drug. When employees in Rockford needed  another drug that had experienced a 500-fold price spike, from $13.50 to $750, in one day, Express Scripts had found a generic manufacturer to produce that drug for a low price.

    But Express Scripts, like its two large rival Pharmacy Benefit Managers, is conflicted. It makes more money the more doses of Acthar it sells at a high price. Dr. Bach notes that the heart of the problem is that every entity in the drug distribution chain, pharmacies, hospitals, doctors (and insurers, though Bach does not mention them) all have incentives to sell higher-priced drugs.

    So long as Congress does not insist that we pay no more than what other wealthy countries pay for their drugs, Americans, both the taxpayers and the people who need costly drugs, will pay too high a price for them.

    ___________

    Now available: The Ten Should-Do’s for Your Health, Purse and Peace of Mind, Chapter One of Aging, Schmaging, by Diane Archer. For $5, you can help yourself and the people you love, and you can help support Just Care.

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  • Medicare encourages doctors to use costliest cancer drugs 

    Medicare encourages doctors to use costliest cancer drugs 

    The Trump Administration has identified one problem with Medicare payment rates for drugs. StatNews reports that CMS Chief Seema Verma critiqued Medicare regulations that encourage doctors to use the costliest cancer drugs as well as incentivize pharmaceutical companies to charge a high price for cancer drugs.

    You can be sure that pharmaceutical companies give doctors a strong financial incentive to use their most costly cancer therapies. In exchange, Pharma may pay for their vacations, dinners and speaking fees. But, Medicare gives doctors a second incentive to prescribe the highest-cost cancer drugs. It pays them more to use them.

    Medicare pays doctors for the cost of chemotherapy drugs plus six percent for administering these drugs. The higher the cost of the drug, the more the doctors earn.  It should go without saying that ease of administration has nothing to do with the amount Medicare pays doctors.

    Why would Medicare pay a doctor $6,000 to administer a $100,000 drug therapy, much less $30,000 to administer a $500,000 drug therapy. Why would Medicare pay different amounts for the same drug therapy depending upon whether it is administered in a hospital or an outpatient clinic? It is all about the influence of the pharmaceutical companies and big Pharma.

    In a recent speech, CMS chief Seema Verma posed these questions and critiqued Pharmacy Benefit Managers (PBMs) for having a conflict of interest. They allegedly negotiate lower drug prices for insurers. But, they also pocket money from the drug manufacturers to promote their costly drugs. According to Verma, they may keep some of the drug discounts they achieve for themselves.

    Here’s more from Just Care:

  • CVS Caremark accused of $1 billion in Medicare drug fraud

    CVS Caremark accused of $1 billion in Medicare drug fraud

    Pharmacy benefits managers (PBMs)–middlemen who determine the list of approved drugs for health insurers and pay pharmacy claims– argue that they drive down drug prices. But, they also can drive drug prices up in a host of ways. StatNews reports on a whistleblower lawsuit that charges CVS Caremark, a pharmacy benefit manager, of reporting higher than actual generic drug prices to the federal government, defrauding taxpayers, Medicare and older adults and people with disabilities.

    According to the Aetna actuary who filed the lawsuit, CVS Caremark overcharged people with Medicare enrolled in a Part D drug plan and the federal government for generic prescription drugs. Put differently, the price CVS Caremark paid pharmacies for generic drugs allegedly was less than it charged Aetna’s Medicare Part D plans. CVS Caremark pocketed the overpayments.

    CVS Health claims the allegations of fraud are “without merit,” but, the whistleblower in this lawsuit discovered that people with Medicare in other Part D plans were paying less for generics than CVS Caremark was charging Aetna Part D plan members. Why would CVS Caremark not have been able to achieve the same low generic prices for Aetna’s Part D plan members as other Part D plans were able to get for their members? And, CVS Caremark charged Aetna Part D plan members significantly more–25 to 40 percent more.

    CVS is currently in the process of buying Aetna. Had it owned Aetna at the time the lawsuit was filed, in 2014, Aetna’s actuary likely would have had no reason to look into the price discrepancy between what its members paid for generics and what other Part D plan members paid. Aetna would have benefited from the overcharges.

    If Congress stepped in and allowed the federal government to negotiate prescription drug prices for everyone–effectively to set drug prices no higher than the average price of the seven wealthiest countries in the world–not only would it bring down drug prices for everyone by nearly 60 percent, but these types of taxpayer and consumer fraud would not be possible.

    If you want Congress to rein in drug prices, please sign this petition. 

    Here’s more from Just Care:

     

  • GAO: Drug prices continue to skyrocket

    GAO: Drug prices continue to skyrocket

    At the request of Senator Bernie Sanders and Congressman Elijah Cummings, the Government Accountability Office recently issued a report on pharmaceutical company profits and drug prices. The GAO found that drug spending has nearly doubled since the 1990s mostly because drug prices continue to skyrocket and because of increased use of costly drugs. It shows that research and development costs do not explain or justify high drug prices.

    Why are drug prices so high? Drug patents are responsible in significant part for high drug prices, affording drug companies monopoly pricing power. Consolidation in the drug industry and lack of adequate competition in the generic drug market are also to blame.

    The GAO analyzed pharmaceutical company revenue, profit margins, and merger and acquisition deals worldwide between 2006 and 2015. It found a 45 percent increase in drug and biotech sales revenue in that period, from $534 billion to $775 billion in 2015 dollars.

    Two out of three drug companies also increased their annual average profit margins, with the largest 25 companies, seeing annual profits of between 15 and 20 percent. These margins are two to five times higher than the annual average profit margin of the largest 500 non-drug companies, which was between 4 and 9 percent.

    There is concerning industry consolidation. Ten pharmaceutical companies generated 38 percent of sales. But, within certain therapeutic classes, fewer companies controlled even more of the market. And, market pressure is leading large drug companies to acquire smaller ones to drive greater profits. Lack of competition in the drug industry, particularly for generics, fueled higher drug prices. Based on the data, the GAO also found a link between industry mergers and lack of innovation.

    While drug company profits have increased dramatically, research and development spending has not, rising just over eight percent to $89 billion from $82 billion between 2008 and 2014. The U.S. government spends about $28 billion a year on research. Tax benefits to drug companies for research and development of orphan drugs helped foster their investments.

    The FDA approved between 179 and 263 drugs each year. Between 23 and 35 of these drugs were treatments for unmet medical needs or to “help advance patient care.” The GAO does not explain this term, which may mean simply new ways of dispensing old drugs and nothing innovative from a treatment perspective.

    The GAO explains that insured consumers are often less price conscious with prescription drugs than they are with products for which they have to pay in full and that can promote price inflation and drive up spending. In addition, doctors may not be aware of low-cost alternatives they could prescribe or they simply may be inclined to prescribe the most expensive drug, which can further drive up spending. And, Medicare is often required to pay for even the expensive drugs that may offer no added value, which drives up spending further still.

    The GAO does not discuss incentives of health insurers and pharmacy benefit managers to promote high-priced drugs over lower-cost alternatives. But, there’s every reason to believe that fees to PBMs to promote high-priced drugs on insurer formularies over lower-cost alternatives are also in some way responsible for driving up drug spending.  Insurers are likely benefiting from this arrangement or they would be doing something to stop that practice.

    Senator Sanders and Congressman Cummings sent a letter to President Trump alerting him to the GAO report and urging him to make good on his promise to the American people to address skyrocketing prescription drug costs.

    If you want Congress to rein in drug prices, please sign this petition.

    Here’s more from Just Care:

     

  • Pharma profits from patenting OTC drugs

    Pharma profits from patenting OTC drugs

    Given that taxpayers contribute significantly to both the development of drugs and drug spending, you would think that there would be some federal controls on drug prices. Instead, the US allows drug companies to profit at taxpayer expense in a wide variety of ways, many of which we have described on Just Care. (You can read about Pharma coupons here, Pharma evergreening here, Pharma pay for delay here, Pharma tax breaks here.) Did you know that the US also allows pharmaceutical companies to profit handsomely from patenting OTC (over-the-counter) drugs?

    The FDA has approved brand-name prescription drugs that are simply a combination of over-the-counter medications. Put differently, pharmaceutical companies can combine two over-the-counter medications that can be purchased at little cost at the drug store into one patented brand-name prescription that can cost thousands of dollars. And, because doctors can prescribe virtually any drug they please and insurers often have incentives to pay for most drugs prescribed, pharmaceutical companies need only market these drugs to doctors and patients to reap large rewards.

    Here are just a few examples of drugs doctors should rarely if ever be prescribing. The vast majority of us should be buying their key ingredients over the counter if we need them:

    • Vimovo: A patented drug from Astra Zeneca, which was purchased by Horizon Pharma, that can cost over $3,000 a prescription, even though you can buy naproxen (Aleve) and esomeprazole magnesium (Nexium), its two key ingredients, over the counter for about $40. Marshall Allen reports in The Atlantic that Vimovo’s net sales have exceeded $455 million since 2014.
    • Duexis: A patented drug from Horizon Pharma for arthritis and ulcers that can cost $1,435 a prescription, even though you can buy its two key ingredients, ibuprofen (Advil) and famotidine (Pepsid), over the counter at little cost. Horizon Pharma offers an online coupon, which buys down people’s cost for the drug to as little as $0, to encourage people to use it rather than the low-cost OTC drug alternatives. Allan further reports that Duexis’ net sales have exceeded $465 million.
    • Treximet: A patented drug from GlaxoSmithKline for migraines that can cost $822 a prescription, even though you can buy its two key ingredients sumatriptan and naproxen over the counter at little cost. Glaxo offers an online coupon to encourage people to buy it rather than the low-cost OTC drug alternatives.
    • Zegerid: A patented drug from Santarus for acid reflux that can cost $2,950 a prescription, even though you can buy its two key ingredients omeprazole and sodium bicarbonate over the counter at little cost. The drug company offers an online coupon to encourage people to buy it rather than the low-cost OTC drug alternatives.

    Of course, Pharmacy Benefit Managers (PBMs) and health insurers that want to add value for consumers could refuse to cover these drugs. But, so long as they are getting big rebates from drug makers for making them available to their members, they have a powerful financial incentive to include them on their formularies. In short, so long, as Congress allows PBMs and insurers to collect these rebates, PBMs and insurers likely will make them available, driving up drug spending and adding negative value to our health care system.

    If you want Congress to rein in drug prices, please sign this petition.

    Here’s more from Just Care:

  • Why won’t insurers cover some generic drugs?

    Why won’t insurers cover some generic drugs?

    Some people are finding that they cannot fill their prescriptions for generic drugs at the pharmacy; their insurers will only cover the brand-name versions. Why won’t health insurance companies cover some generic drugs? It appears that insurers and the pharmacy benefit managers (PBMs), who set up their list of approved drugs, can benefit financially when they require their members to take brand-name drugs rather than generics.

    We all know that in almost every case, generics are the equivalent of the brand-name drugs. They must have the same active ingredients and must be the “bioequivalent” of the brand name drug, delivering the same strength ingredients at the same time. They must have the same purity and stability and come in the same form—e.g., tablet, liquid—as brand name drugs. And, they must have the same therapeutic effect as brand name drugs with the same risks and benefits.

    But, the New York Times and Pro Publica report that the insurer practice of requiring people in some cases to use brand-name drugs has been around for some time and is becoming increasingly common. Since forcing people to take the brand-name drug does not lower costs for consumers and can increase their out-of-pocket costs, it stands to reason that PBMs and their insurer clients make more money by requiring people to use brand-name drugs. PBMs are responsible for designing the list of approved drugs or “formulary” for insurers.

    Humana is one of the insurers that, in some cases, only covers brand-name drugs when a generic is also available.

    To be clear, pharmaceutical companies are also responsible for this bizarre state of affairs. They are handing over a lot of money to the PBMs and the health insurers to keep their brand-name drugs on their formularies and to steer their members to their higher-cost drugs.

    Of course, everyone ends up spending more as a result–taxpayers in the form of higher Medicare expenditures, consumers in the form of higher insurance premiums overall, and patients who need these drugs, when they are forced to pay out of pocket for them to meet their deductibles.

    If you find yourself being required to buy a brand-name drug instead of the generic, at a greater out-of-pocket cost, appeal to your health plan and report it to your local legislators. There is no justification for this practice, only greed.

    If you want Congress to rein in drug prices, please sign this petition.

    Here’s more from Just Care:

  • Pharmacy benefit managers can drive up your drug costs

    Pharmacy benefit managers can drive up your drug costs

    Pharmacy benefit managers (PBMs) are multi-million dollar businesses established to help insurers manage their pharmacy claims, Kaiser Health News explains. PBMs also decide which drugs will go on a health insurer’s formulary (list of approved drugs) and at what price. But, in the process, they can drive up your drug costs.

    PBMs are supposed to generate discounts on drugs for health insurers through bulk purchases. But, there’s a lot we don’t know about where those discounts go and whether they end up saving any money for consumers. PBMs are in the business of deciding which drug companies’ drugs an insurer will cover. They have a powerful incentive to establish formularies that allow them as well as their health insurer and/or pharmacy clients to maximize their profits.

    Three PBMs own 80 percent of the market, Caremark/CVS (owned by a pharmacy chain), Optum UnitedHealth (owned by a health insurer) and Express Scripts. They have leverage to bring down drug prices. Because drug companies want their business, the drug companies offer them discounts and rebates. But, who benefits in the process?

    PBMs pass on their negotiated prices to health insurers, taking a cut for themselves in the process. But, PBMs also generally receive a rebate for each drug they purchase from pharmaceutical companies, which PBMs may pocket in full or part for themselves. In essence, the drug companies will give PBMs an additional discount–a kickback of sorts–for agreeing to put a particular drug on an insurer’s formulary. No one knows how much that discount is or whether the consumer benefits at all from that rebate.

    It seems fair to believe that PBMs may choose to put drugs for which they get the biggest rebates on insurers’ formularies rather than drugs that are equally effective and less costly but for which PBMs get low or no rebates. That means that if the PBM is choosing between two equally effective drugs, it might choose the costlier drug, if the rebate is better on that drug, to the detriment of consumers.

    Do insured Americans benefit from PBMs? It’s not clear that they do. In fact, we know that some PBMs set the drug copays at prices higher than the actual cost of the drug and then split the extra money they make from the copay overcharge with insurers and/or pharmacies. And, PBMs impose a gag order on the pharmacists, forbidding them from letting their customers know that the actual price for the drug is lower than their copay.

    Why exactly is Congress not stepping in to regulate prices and protect consumers? If you want Congress to rein in drug prices, please sign this petition.

    Watch this video from Kaiser Health News to learn more about PBMs.

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  • Warning: Your drug copay may be higher than the drug’s cash price

    Warning: Your drug copay may be higher than the drug’s cash price

    It’s bad enough that lack of competition empowers drug companies to set prices sky high for so many important drugs. And, not surprisingly, one in four people in the U.S. say that they struggle to pay for the drugs they need. It turns out that, if you have drug coverage, your drug copay may be higher than the drug’s cash price, and your pharmacist won’t tell you.

    Bloomberg news reports that pharmacy benefit managers PBMs, which contract with pharmacies to pay for drugs on behalf of your health plan, force pharmacists to charge you the insurer’s copay, even when the pharmacy sells the drug for less.  These PBMs or at least Optum Rx and Catamaran, owned by UnitedHealth Group and Humana’s subsidiary PBM, forbid pharmacists from telling you that you’ll save money if you don’t use your insurance to get the drug.

    How does the deal between the PBM and the pharmacy work exactly? The pharmacy turns over the difference between the copay and the actual cost to the PBM. And, according to KARE11, the PBM shares in the profits with the health plan.

    For example, KARE11 found at pharmacy:

    • Doxycycline copay: $46.14 v. cash price $26.95.
    • Venlafaxine copay: $67.13 v. cash price: $24.99

    The extent to which the health plan benefits from these PBM “clawback” contracts is not clear.  But, we’re talking real money. Because of these deals between PBMs and pharmacists, consumers are handing over hundreds of millions of dollars to the PBMs. Not surprisingly, there are more than a dozen lawsuits against insurers contracting with PBMs that are leading people to pay more for their drugs than they should.

    If you are struggling to pay for your drugs, you might consider buying your drugs online or abroad, as millions of Americans are now doing.

    And, if you want Congress to rein in drug prices, please sign this petition.

    Here’s more from Just Care: