Bill Targets Pharma Tactics to Delay Generics

The Senate Judiciary Subcommittee held a hearing on S. 3056, the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act. The bill would allow generic-drug companies to bring actions in federal court to get the drug samples they need to develop generic versions of brand drugs. It would authorize judges to award damages. Proponents say that the bill would prevent brand drug manufacturers from abusing risk evaluation and mitigation strategies to block generic competition. It would encourage more development of generic and biosimilar drugs and reduce drug costs. “This legislation will help bring generics to market faster, which is key to reducing drug costs,” said Pharmaceutical Care Management Association (PCMA) president and CEO Mark Merritt.

The bipartisan legislation was introduced by Senators Charles Grassley (R-IA), Patrick Leahy (D-VT), Amy Klobuchar (D-MN), and Mike Lee (R-UT). The legislation is supported by a broad group of stakeholders, including the Generic Pharmaceutical Association, the Academy of Managed Care Pharmacy, Public Citizen, Consumers Union, and the Blue Cross Blue Shield Assn. PCMA also suggests these solutions to bring down drug prices:

  • Accelerate FDA approvals of drugs that face little or no competition.
  • Make copay coupons an illegal kickback for all insurance that receives any federal subsidy.
  • Modernize the Medicaid pharmacy to make it more like the commercial market and Medicare Part D.
  • Create new incentives for physicians to prescribe biosimilars.

PBMs Say They Increase Competition and Reduce Rx Costs

Testifying before the House Committee on Oversight and Government Reform, Pharmaceutical Care Management Association (PCMA) president and CEO Mark Merritt outlined ways to increase competition and lower prescription drug costs. The Committee is examining methods and reasoning behind recent drug price increases at a hearing titled, Developments in the Prescription Drug Market.

PBMs administer prescription drug plans for more than 266 million Americans who have health insurance from a variety of sponsors including: commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program, state government employee plans, managed Medicaid plans, and others.

PBMs are projected to save employers, unions, government programs, and consumers $654 billion—up to 30%—on drug benefit costs over the next decade according to new research. PBMs reduce drug costs by doing the following:

  • Negotiating rebates from drug manufacturers.
  • Negotiating discounts from drugstores.
  • Offering more affordable pharmacy channels.
  • Encouraging use of generics and more affordable brand medications.
  • Managing high-cost specialty medications.
  • Reducing waste and improving adherence.

Merritt said, “There is a growing use of bait-and-switch copay assistance marketing programs that encourage patients to ignore generics and start on more expensive brand drugs.” Unlike programs for the poor and uninsured, copay offset programs are designed to encourage insured patients to bypass less expensive drugs for higher cost branded drugs. Such practices are considered illegal kickbacks in federal programs and have long been under scrutiny by the Health and Human Services Office of Inspector General (OIG).

PCMA outlined several potential solutions for high drug prices that policymakers could consider, including:

  • Accelerating FDA approvals of “me-too” brands against drugs that face no competition.
  • Accelerating FDA approvals of generics to compete with off-patent brands that face no competition.
  • Creating a government watch list of all the off-patent brands so potential acquirers are aware that policymakers can monitor these situations.
  • Making copay coupons an illegal kickback for all insurance that gets any federal subsidy.

CMS Backs Down on Medicare Advantage Drug Overhaul

Responding to a storm of complaints from patient groups and a letter from 30 bipartisan Congressional representatives, the Centers for Medicare and Medicaid Services (CMS) backed down on a plan to overhaul drug coverage under the Medicare Advantage (Part C) and Part D prescription drug program.  The CMS’ proposed rule would have ended the protected status of antidepressants and immunosuppressant drugs (transplant drugs) starting in 2015 and anti-psychotic drugs potentially in 2016.

In a letter to Congress, CMS Administrator Marilyn Tavenner says that CMS now plans to only finalize proposals related to consumer protections (ensuring access to care during natural disasters), anti-fraud provisions that have bipartisan support (strengthening standards for prescribers of prescription drugs), and transparency (broadening the release of privacy-protected Part D data) after taking into consideration the comments received during the public comment period. Pharmaceutical Care Management Association (PCMA) president and CEO Mark Merritt said, “CMS was wise to reconsider its proposed Part D rule that would have destabilized the program, increased costs, and disrupted coverage for millions of seniors.”

Proposed Medicare Part D Rule Would Increase Medicare Costs

Eliminating preferred pharmacy networks in Medicare Part D would increase premiums by about $63 annually for over 75% of Part D enrollees. It would also raise program costs by $24 billion over the next 10  years, according an actuarial study by The Pharmaceutical Care Management Association (PCMA). “CMS’ proposal to eliminate preferred pharmacy networks will make it harder and more expensive for seniors to access prescription drugs,” said PCMA president and CEO Mark Merritt.

The study examines the sections of CMS’ proposed rule on preferred pharmacy networks. More than 75% of Part D beneficiaries are enrolled in plans that feature preferred pharmacy networks.
Key findings from the study include the following:

• As of February 2014, more than 75% of prescription drug plans (PDP) enrollees are in plans with preferred pharmacy networks; these enrollees could be adversely affected by the elimination of plans utilizing preferred pharmacy networks.
• The preferred pharmacy networks provision would increase premiums for the affected population by an average of about $63 per year for the 2015 plan year.
• The rule could increase cost sharing among PDP enrollees by an average of $80 to $100 per year.
• Since the rule would inflate the national average benchmark for Part D plans, CMS would pay an additional $64 in direct subsidies per beneficiary, per year in 2015, for a total increased payment of nearly $1.5 billion in 2015 across all PDP enrollees (based on Part D enrollment of about 23 million beneficiaries).
• Over a 10-year period, the increased cost of eliminating preferred pharmacy networks is estimated to be about $990 per affected enrollee, and the cost would be about $24 billion to CMS in the form of higher direct subsidy payments.

In addition, a recent poll found that seniors in plans with preferred pharmacy networks are overwhelmingly satisfied, citing lower costs and convenient access to pharmacies and other benefits, according to a survey from Hart Research Associates. The survey found that 85% of seniors surveyed are satisfied with their preferred network plan. In addition, the survey found that four in five seniors would be disappointed if their preferred network plan is eliminated.

Medicare Preferred Pharmacy Networks Offer Big Savings

Preferred pharmacy networks will reduce federal Medicare Part D costs up to $9.3 billion during the next 10 years, according to a study by Milliman for the Pharmaceutical Care Management Association (PCMA). “It was never in question that seniors love low-premium, low-copay Part D plans with preferred pharmacy networks. Now this game-changing study shows that preferred pharmacy networks save the federal government billions as well,” said PCMA President and CEO Mark Merritt.

The study includes these major findings:
* Preferred pharmacy network plans are expected to reduce federal Medicare spending by about $870 million in 2014.
* Over the next 10 years, preferred pharmacy network plans are expected to reduce federal Medicare spending by $7.9 to $9.3 billion.
* The largest two-year decrease in federal direct subsidies in the history of the Part D program coincides with the rapid adoption of preferred pharmacy network plans and the increased use of generic drugs.
* Post point-of-sale price concessions cause a greater reduction in federal Part D costs than equivalent drug discounts at the point-of-sale.

Separately, Part D seniors in plans with preferred pharmacy networks are overwhelmingly satisfied, citing lower costs, convenient access to pharmacies and other benefits, according to a survey from Hart Research Associates. The survey found that 85% of seniors surveyed are satisfied with their preferred network plan. In addition, the survey found that four in five seniors would be disappointed if their preferred network plan is eliminated.

According to a recent analysis of Part D data, more than 70% of Medicare Part D plans will feature a preferred pharmacy network in 2014. There are more drugstores in the U.S. than McDonald’s, Burger Kings, Pizza Huts, Wendy’s, Taco Bells, Kentucky Fried Chickens, Domino’s Pizzas, and Dunkin’ Donuts combined, creating a highly competitive environment.

Seniors Appreciate Part D Preferred Pharmacy Plans

Eighty-five percent of seniors say they are satisfied with Medicare Part D plans that offer preferred pharmacy networks. They cite lower costs, convenient access to pharmacies, as well as other benefits, according to a survey from Hart Research Associates by the Pharmaceutical Care Management Association (PCMA). More than 40% of Part D seniors are enrolled in plans with preferred networks. Eighty percent of those in preferred pharmacy plans say they would be very upset if their plan were no longer available.

“Seniors see Medicare Part D preferred networks as a ‘win-win’ because they offer good value without sacrificing access to convenient pharmacies,” said Geoffrey Garin, president of Hart Research Associates.

The study also reveals the following:
• The cost of premiums (50%) and copays (48%) are the most important considerations for seniors in selecting their preferred pharmacy plan.
• Seniors are very satisfied with the convenience of pharmacies (81%), the number of pharmacies in their network (74%), and the prescription medications available through their plan (75%).
• Cost is the top factor for seniors regardless of income, age, number of medications, and distance from their drugstore.
• Only 8% listed the number of pharmacies in the network as an important consideration.

For more information, visit www.pcmanet.org.

Last Updated 09/22/2021

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