Eisai cuts Aricept prices to foster Asian sales

The PhRMA argument is that the US should pay for R&D in order to allow them to sell drugs at a discount in other countries. The opposing argument is that R&D is being done in other countries such that the US should not have to carry the load for the world. Of interest is the article below that indicates that PhRMA applies the same marketing economics to building markets in other countries that they do in the US. We expect that an international market for information will make the differences between prices in various countries more transparent and drive price concessions. The drug market is now very much international and must be viewed through a prism that is wider than the US experience.

Eisai has become the latest drugmaker to cut prices in an effort to push sales in emerging markets. On the heels of similar moves by GlaxoSmithKline and Sanofi-Aventis, the Japanese company is cutting prices on its Alzheimer's remedy Aricept in at least six Asian countries.

The idea is to ratchet up demand by opening the door to less prosperous patients, says Eisai's Yasushi Okada, who heads up operations in Asia, Oceania and the Middle East. "With the current prices, only a part of the wealthy people can afford to buy our products," Okada tells Bloomberg. "I want to increase the patient accessibility of the medicines in Asia."

Okada tells the news service that he expects growth in sales volume to outweigh the price cuts, delivering overall sales growth. And that's the aim of GSK and Sanofi as well. GSK has announced major price cuts in emerging markets, with prices tiered according to the target population.

In some GSK markets, prices will be less than two-thirds of those in Europe; in the 50 poorest nations, they'll be 25 percent of Western prices, Bloomberg points out. Meanwhile, Sanofi announced early this year that it would follow suit, cutting prices in Southeast Asia by as much as half.

Okada wouldn't say just how much Eisai plans to cut the price tags on Aricept. In the coming quarters, however, we'll be able to see how the cuts affect sales in those markets. For 2008, Aricept's global revenues amounted to $3 billion; the company loses patent protection in the U.S. in November, so it stands to lose revenues here to generic competition. All the more reason to grow sales in emerging markets.

Craig S. Stern, PharmD, MBA
President
Pro Pharma Pharmaceutical Consultants, Inc.

Medical Interests Spent $876 Million on Reform

The following article is of interest to us because it shows that lobbying interests have a significant impact on the results of health care legislation. Although this is not surprising, the amount of money spent to move legislation to a particular interest group is huge. Perhaps the new emphasis on social networks will change the economics of lobbying and allow smaller interests to make an impact as large as PhRMA and other lobbyists. Time will tell.

When President Barack Obama declared in his first address to Congress that health care reform “must not wait,” he sparked a lobbying spree that kept medical stakeholders hustling while fattening the bottom lines of K Street firms.

Medical interests alone shelled out more than $876 million in lobbying expenses during the 15 months beginning in January 2009 and ending in March, when Congress passed the sweeping overhaul.

Those stakeholders, including the drug industry, doctors, hospitals and manufacturers of medical products, were responsible for one out of every five dollars doled out on lobbying during that period, according to a CQ MoneyLine analysis of lobbying disclosure reports filed with Congress.

While health care has historically been an issue that has drawn intense lobbying, even some veterans of Capitol Hill expressed astonishment at the big bucks lavished during the 15-month slog.

“That is an astounding amount of money,” said Ralph Neas, president of the National Coalition on Health Care, which pushed for passage of the overhaul. Neas, who began his career in Washington in the 1970s as an aide to then-Sen. Edward Brooke (R-Mass.), said that in his time here, “I can’t think of anything that remotely comes close to that amount of lobbying.”

But there was much at stake for medical interests as lawmakers put together the bill, which will affect millions of Americans and their employers in the years ahead.

“This is the most important domestic legislation in at least 45 years,” Neas said, referring to the creation of Medicare and Medicaid in the mid-1960s.

Tony Podesta, president of the Podesta Group, which ranked second among K Street firms in fees paid to work on health care reform during this period, said lobbying on the issue is far from over.

Podesta said his firm was still picking up clients with a stake in how the measure is implemented and in any corrections Congress might make. Even companies that are not directly involved in health care are affected by the new law, which includes corporate tax changes related to retirees’ health benefits, sets up insurance exchanges and mandates all individuals purchase health insurance.

“We just did a briefing for non-health care clients on the bill,” Podesta said. “We had really good attendance.”

Prescription for Reform

Within the health care industry, drug companies racked up the biggest lobbying tab, spending $253 million. They were followed by hospitals, which spent $108 million, and doctors and surgeons, who spent $59 million.

Thomas Mann, a political scholar at the Brookings Institution, said one difference between this health care push and the last time the issue came up, during the Clinton administration, was that many in the health care industry supported the overhaul legislation.

“A good percentage of that lobbying budget was spent on behalf of reform,” Mann said.

Indeed, the drug companies, led by the Pharmaceutical Research and Manufacturers of America, early on reached a deal with Democrats that involved providing tens of billions of dollars in drug subsidies for seniors. In return, name-brand drug companies protected their right to exclusively market groundbreaking biologic drugs over a 12-year period.

The hospital associations also reached a deal with the Democrats to provide $155 billion over 10 years to defray costs for uninsured Americans. The American Medical Association, with a $26.2 million lobbying budget for the stretch, endorsed the legislation, although many medical specialists opposed the overhaul efforts.

Smaller health care interests also joined in on the lobbying. Medical laboratories spent $1.5 million, and acupuncture advocates paid $34,000 to sway lawmakers to include the ancient treatment in the reforms.

Health insurance companies criticized the legislation as not doing enough to control costs. The industry’s chief lobby, America’s Health Insurance Plans, spent $11.5 million on lobbying over the five quarters.

Rolling in Capital

The health care industry’s lobbying easily outpaced other sectors with interests on Capitol Hill, including energy and natural resources, finance and insurance, and communications and technology, the CQ MoneyLine analysis found.

Even as other sectors scaled back during the recent economic downturn, health companies continued to pump big bucks into influencing Congress.

During 2009, health care lobby spending peaked in the fourth quarter, when both the House and Senate approved their separate versions of the legislation.

At the beginning of this year, health care spending dipped as prospects of passage seemed doomed after the Jan. 19 election of Republican Sen. Scott Brown (Mass.) to replace Democratic icon and health care champion Sen. Edward Kennedy.

However, Democrats regrouped, and two months later Congress approved the sweeping health care bill along party lines.

The health care industry was not alone in its interest in the legislation.

During the 15-month stretch, about 2,700 clients, ranging from big-box stores such as Wal-Mart to high-tech firms such as Microsoft, listed health care as one of their lobbying issues, the analysis found.

The U.S. Chamber of Commerce spent $148 million on lobbying activities during this period, much of it on an aggressive media campaign to defeat the Democratic health plan.

Companies and trade associations that named health care as one of their priorities paid $333 million to outside firms to advocate on the issue. As big as they are, the health care lobbying expenditures do not reflect the millions of dollars spent by many outside groups on grass-roots and television ads both for and against the health care bill.

“The real winners in the health care debate were the lobbyists who were laughing all the way to the bank, even in a tough economy,” said Steve Ellis, vice president of Taxpayers for Common Sense.

‘Drinking From a Fire Hose’

For K Street firms, the health care measure allowed them to expand their business.

The law firm Holland & Knight, which ranked ninth among firms in health care fees, fortuitously purchased in early 2009 a small shop that specialized in health care.

“We’ve been drinking from a fire hose,” said firm partner Rich Gold, noting Holland & Knight’s $4.7 million in health care lobbying fees over the past 15 months. He said business has slowed since the bill was signed, but he expects it to pick up as clients seek information about the new law. He said the firm had already prepared webinars for medical device companies and hospitals explaining the new law.

“It’s been a while since we’ve seen something of this scope and magnitude,” said Linda Tarplin, a founding partner of Tarplin, Downs & Young. Her firm ranked 10th among lobbying shops in health care business during the five-quarter period, collecting $4.5 million in revenues.

But Tarplin also noted that her firm, which is different than the others on the top 10 because it specializes exclusively in health care, finds health care issues “are always important and will remain front and center as the new health care reform law is implemented.”

Serdar Tumgoren contributed to this report.

Craig S. Stern, PharmD, MBA
President
Pro Pharma Pharmaceutical Consultants, Inc.

Diabetes Drugs Raise Risk of Fractures in Women

The issue of TZD (e.g., Avandia, Actos) and their link to bone fractures has been discussed for several years. It seems to be a class issue, meaning that no drug in the category is exempt, although some may produce more fractures than others. A recent utilization study by Henry Ford Health System further emphasizes this problem. Below are excerpts published by Healthcare Daily Data Byte in regards to this issue.

A Henry Ford Hospital study finds women with type 2 diabetes who take a commonly prescribed class of medications to treat insulin resistance may be at a higher risk for developing bone fractures. To determine the relationship between thiazolidinedione (TZD) use and in patients with type 2 diabetes, researchers conducted a retrospective study from January 2, 2000 to May 31, 2007 of 19,070 Henry Ford patients. During the study period, 4,511 patients had at least one prescription filled for a TZD. The researchers used electronically maintained medical claims data to identify non-traumatic bone fractures. The increased risk in women appeared after approximately one year of TZD use. TZDs, such as pioglitazone and rosiglitazone, help keep blood glucose levels on target by decreasing insulin resistance and making body tissues more sensitive to insulin's effects. TZDs also cut down on the amount of glucose made by the liver in patients with type 2 diabetes.

"Fractures are just one of a growing number of problems associated with these medications. Henry Ford and other researchers have previously found that this class of medications also can increase risk of congestive heart failure hospitalization," says study senior author L. Keoki Williams, M.D., M.P.H., center for health services research and department of internal medicine at Henry Ford Hospital. Dr. Williams also notes that there are other medication options available to treat insulin resistance in patients with type 2 diabetes. "TZDs may put some patients at increased risk for other health issues, and I encourage patients to talk with their physician about other suitable options," says Dr. Williams. "If the physician feels the patient should be placed on a TZD, routine screening for bone loss and prophylactic therapy to prevent bone loss and fractures may also be needed."

Research Study Source: http://www.henryfordhealth.org/body.cfm?xyzpdqabc=0&id=46335&action=detail&ref=1056

Accountable Care Organizations: A New Health Care Delivery Model That May Improve Quality and Affordability

ACO’s require quality management with a high degree of data analytics targeted to applicable populations of patients. It is of note that the Pro Pharma Quality Management Program™ has had 6 years of remarkable success achieving the outcomes of an ACO without the formal trappings. For those who are interested in the Pro Pharma Quality Management Program™, we are posting a separate blog with slides used by Dr. Stern in a national presentation in San Antonio last year.

At the heart of the ACO issue is the notion that the continuum of care can be managed. The organization able to do so would be rather large and complete with most specialties and facility types. Ingenix is pushing the consultancy from their unique ability (part of United Health's empire that has United Health and Redden Anders actuaries among other assets) to manage data and reporting from their SLC location.

I've had chats with Pivot Health and others....most are wondering how an ACO would function and if it would be much different than an HMO; perhaps a new model will be forthcoming. On the other hand, experience shows we are certainly able to assist with the issues of managing patients along the medical axis of the care continuum.

Be well out there,

Paul Ridgely
Senior Field Management Consultant
Pro Pharma Pharmaceutical Consultants, Inc.


"Most of our assumptions have outlived their uselessness."
— Marshall McLuhan


Now law, the Patient Protection and Affordable Care Act of 2010 provides new incentives to stakeholders across the health care system – from health plans to physicians and hospitals – to consider new care delivery models that have the potential to both enhance the quality of care and reduce costs.

One promising idea – the creation of Accountable Care Organizations (ACOs) – is facilitated under the Medicare Shared Savings Program provision of the health reform legislation. ACOs are comprised of groups of providers that share the risk and assume accountability for their patients’ health across the continuum of care. These organizations also monitor treatment outcomes and costs, and receive incentives for efficiency and adherence to evidence-based medicine protocols.

“Studies have shown that medical errors in our current system contribute to 100,000 preventable deaths annually, with billions in associated costs,” according to Eric Cahow, senior director, Government Programs Management and Strategy at Ingenix Consulting. “Currently, more than half of chronically ill patients in the United States do not receive care consistent with evidence-based guidelines. With more than 16 percent of our gross domestic product consumed by health care services, it is clear that we need to consider new ideas.”

The Patient Protection and Affordable Care Act of 2010 states that an ACO “promotes accountability for a patient population and coordinates items and services under [Medicare] parts A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery.”

Under the statute, ACOs may include group practices, individual practitioners, hospitals, partnerships or joint venture arrangements between hospitals and ACO professionals, as well as other groups deemed appropriate by the Secretary of the Department of Health & Human Services. To serve Medicare recipients, ACOs are required to have a minimum of 5,000 Medicare fee-for-service beneficiaries; those that meet quality-of-care goals and reduce patient costs receive a share of the savings they earn for the Medicare program.

ACOs provide needed incentives to promote change

ACOs can help participating organization achieve their clinical and financial performance objectives. However, before joining or forming an ACO, providers should have a clear understanding of where and how they fit into the health care system.

Fee-for-service is the predominant model in the U.S. health care system. This means providers are paid for every unit of service, similar to piecework in a garment factory, Cahow explained, and a provider’s revenue increases as utilization increases. As such, there are few incentives to coordinate across the silos of primary care, specialty care and hospital care.

“The ACO model creates different incentives for primary care physicians to drive proactive care management,” said Cahow. For example, if reducing utilization is the goal, he noted, an ACO may incent providers – including hospitals – with bonus payments when they achieve a pre-determined benchmark such as lower hospital admissions while sustaining or improving the quality of patient outcomes.

All can benefit from ACO model :

All participants in an ACO – health plans, employers, providers and patients – are accountable for their own contributions to health and wellness, treatment decisions and payment. In Cahow’s view, “health plans and insurers must commit to tracking quality outcomes, establishing fair measures of those outcomes and rewarding providers for achieving them. Employers must consider programs and working conditions that optimize employee health. And individuals must commit to taking more responsibility for their own health-related behaviors and the costs associated with them. All of this can be built into the ACO’s structure.”

However, moving to an ACO model can be challenging. Adversarial relationships between some stakeholders are one of the primary obstacles to ACO success. “For ACOs to work well, each organization has to operate on a foundation of trust, transparency and good communication,” Cahow suggested.

Performance measurement is one of the linchpins to building this foundation, equalizing relationships between provider participants and payers, who can access qualitative and quantitative clinical performance and utilization data on their ACO partners. For example, ACOs can provide reports on the utilization of MRI services or the percentage of diabetic patients admitted through the hospital. “Facilitating access to this type of data across a group of ACO participants may support collaborative solutions to achieving group objectives,” said Cahow.

“Transformational improvement is the foremost objective to establishing an ACO,” said Cahow. “This requires committed physician leadership, an enduring culture focused on quality and a strong level of comfort with innovation and systems integration.”

Establishing an ACO requires planning, support

Evaluating whether or not an organization is a good fit for ACO participation involves careful planning, analysis and technical and management support. Ingenix Consulting already is supporting number of ACO development projects, with advanced analytics to assess clinical and financial performance in the current system, and consulting expertise to inform design, implementation and operation.

“Ingenix Consulting provides management consulting to help players determine if an ACO is right for them,” Cahow said. “If so, we can help them establish the right relationships and provide the actuarial, financial and care management support they need to get started.”

Although health care reform may seem daunting, he continued, now is the time to engage and evaluate opportunities to participate in health care delivery models that may become part of the backbone of the future health care system.

“Participating in an ACO involves taking some risks,” noted Cahow. “Investment choices are always difficult. But with the legislative call to action, change is no longer just over the horizon. Ingenix Consulting can help clients decide where they want to go and how to take those first steps toward achieving their long-term goals.”

===============

1 Sec. 3022, Patient Protection and Affordable Care Act, Pub. L 111-148.

Article location: http://www.ingenix.com/thoughtleadership/innovations/04292010/

Craig S. Stern, PharmD, MBA
President
Pro Pharma Pharmaceutical Consultants, Inc.

Rx per 1000 Patient Ratios are Greatest for Those with Part D Coverage

The following table identifies benchmark utilization for Medicare Part D. The data is from SDI and applicable to 2009. The data may be useful to compare plan utilization /1000 for the MMA Part D book of business. We would be interested if others have compared their numbers to these and found agreement/lack of agreement.

Note: There is no way to vet or validate this information, but we have no reason to believe that it is inexact. The Total column is directly from SDI and does not appear to sum all of the values in each row.

U.S. prescription drug sales hit $300 bln in 2009

This article provides benchmarks for drug spend 2008/2009. Be aware that you can find different benchmarks depending on the source. For example, the IMS figures come from sterilized ambulatory prescription data, while AARP and the National Association of Chain Drug Stores (NACDS) often provide different information from other sources. It is a good practice to ask for the source of data before quoting the results.



(Reuters) - U.S. prescription drug sales climbed by 5.1 percent to $300.3 billion in 2009, easily outpacing the 1.8 percent growth rate seen in 2008, according to data collected by IMS Health.

HEALTH

While the growth rate was far stronger than that seen the previous two years, it still represents historically low levels, said IMS, a leading provider of prescription drug data.

Over the past 50 years, the U.S. prescription growth rate dipped below 5 percent only three times, including in 2007 and 2008.

"Despite the severity of the economic environment, the demand for prescription pharmaceuticals remained strong," Murray Aitken, senior vice president of IMS Healthcare Insight, said in an interview.

"Patients continued their therapies, perhaps more than many had expected, and as a result we saw an increase in spending, taking the market to $300 billion," Aitken added.

Helping to fuel the growth was a 7.5 percent rise in demand for specialty pharmaceuticals used to treat complex, chronic conditions that now make up 21 percent of U.S. market value.

Sales of targeted biotechnology medicines, such as Roche's cancer drugs Avastin and Herceptin, grew by 9 percent in 2009.

Prescriptions dispensed through retail channels, such as pharmacies, through mail-order and at long-term care facilities, grew 2.1 percent - twice as fast as in 2008 - to 3.9 billion prescriptions.

Tempering the total dollars spent on U.S. prescriptions was a rise in the use of cheaper generic medicines, which in 2009 accounted for 75 percent of all dispensed prescriptions, up from 57 percent five years earlier. Despite their relatively inexpensive cost, generics still accounted for $74 billion in 2009 sales.

The total number of generic prescriptions dispensed in the United States increased 5.9 percent in 2009, while those for branded drugs fell by 7.6 percent

The shift toward generics is likely to accelerate by 2012, when several major products, including the world's two biggest-selling medicines - the cholesterol fighter Lipitor and the blood clot preventer Plavix - face competition from cheap generics. Lipitor is sold by Pfizer Inc and Plavix by Bristol-Myers Squibb Co and Sanofi-Aventis.

"We still see that when a product goes generic almost all of the prescriptions, 90 percent or so, are dispensed in their generic form," Aitken said.

Antipsychotics remained the top-selling class of medicines in the United States with $14.6 billion in sales, about equal to 2008 revenue.

Acid reflux drugs, such as AstraZeneca's Nexium, were the second-biggest therapeutic class by sales at $13.6 billion, with prescriptions up 5 percent.

Lipid regulators, which include cholesterol and triglyceride lowering drugs, were still the largest class by prescriptions, growing 5 percent to 212 million prescriptions dispensed. But U.S. sales declined 10 percent to $13.6 billion as the majority of cholesterol fighters are now available as generics, pushing the class to third in sales.

Antidepressants ranked fourth in 2009, growing 3 percent to $9.9 billion, IMS said.

"The thing that surprised us compared with what we might have expected a year ago was how the overall demand held up during a year that in many other parts of the economy we saw declines in demand," Aitken said.

"The higher growth than the prior year we think is notable and underscores the resilience of pharmacotherapy in today's healthcare equation."



COMMENTS

Apr 01, 2010 2:54pm EDT

Consumers of health and life insurance should understand that prescriptions purchased at the drugstore could harm your chances of getting insurance coverage.

According to BusinessWeek, an untold number of people have been rejected for medical coverage for a reason they never could have guessed: Insurance companies are using huge, commercially available prescription databases to screen out applicants based on their drug purchases.

https://www.annualmedicalreport.com/prescription-analytics-corporate-databases-track-whats-in-your-medicine-cabinet/

Health experts, like Doctor Kate Atkinson of Amherst, worry that insurance companies make incorrect assumptions by analyzing prescription records, because many drugs have multiple uses. Dr. Atkinson told the Washington Post, “I had a patient on Amitriptyline for migraines and they were denied life insurance because it’s also an antidepressant. I had to explain it wasn’t being used for depression.” Another patient was on Prozac — not for depression, but for menopausal hot flashes. “I wrote an appeal letter, and they still wouldn’t give it to her.”

“When an insurer makes an online query about an applicant, Ingenix or Milliman’s servers scour the data and within minutes or less return reports to a central server at the company. The server aggregates the information going back as far as five years, including the drugs and dosages prescribed, dates filled and refilled, the therapeutic class and the name and address of the prescribing doctor. Then comes the analysis. One software tool provides insurers a “pharmacy risk score,” or a number that represents an “expected risk” for a group of people, such as 30- to 35-year-old women who have taken prescription drugs…Higher scores imply higher medical costs.”

We commonly receive questions about average pricing contract language. The following is a response to the usual contract language.

PBM contract language often refers to the use of average, rather than per-claim, pricing for drugs. The average pricing issue does not preclude the fact that there are other pressing and relevant issues that need to be addressed from both the contract and audit/accounts payable screening of invoices pre-payment. These issues are the plan/purchaser’s (“plan”) responsibility, and are not open to the discretion of the PBM, but rather to how the plan/purchaser requires implementation of the business rules for claim adjudication. The following summarizes those issues that are not resolved regarding the average pricing language.

Ø Average pricing does not address contract requirements for –

o Situations where the AWP is inflated above Medicaid, above manufacturer published AWP, and above the reference database published AWP – all of these lead to both individual and average higher costs while discount guarantees are met.

o Situations where the generic MAC price is inflated above the FUL and the Medicaid MAC. This makes the average a larger number, but allows for the discount guarantees to be met.

o Drugs coded as brand that should be generic, generic drugs that should be on the MAC, multisource that don’t exist in benefits – these all implicate generic pricing as they are incorrectly priced so they affect all generic average prices.

o Situations where the U&C (e.g., $4 programs) is inflated above pharmacy published prices. This results in the plan paying more than a cash paying patient and improves the average making it easier to meet the AWP guarantee.

Ø Formulary coding, quantity limits, early refills, and COB for Medicare are responsibilities assigned to the plan. The amendment for average pricing does not implicate these benefit issues. The responsibility for benefit definition and what the PBM should use as business rules for claim adjudication are also assigned to the plan. As a result, the PBM cannot modify or apply rules that are other than what the plan requires without plan approval.

Ø Invalid claim administration where claims include invalid identifiers for doctors, pharmacies, drugs, and expired drugs

Ø Retrospective audits do not remove the responsibility for reviewing and remedying plan ongoing issues with the above listed items. Further, issues identified in the bimonthly/monthly invoices require reconciliation at each invoice period, and do not allow for future settlements for claim history outside of the invoice period. The plan has the discretion and the authority to define and ensure that the PBM is complying with plan current business rules for claim adjudication. This is not applicable to average versus per-claim pricing. As the fiduciary, the contract does not allow the PBM to make those decisions without the express approval of the plan.

Ø The retrospective audit process does not address the following issues that are not applicable to average pricing – reconciliation of each invoice, performance guarantees and applicable financial penalties (e.g., level of satisfaction with account client management, pharmacy network training to Count benefits and business rules), rebate reconciliation, network pharmacy audit results, and review of pharmacy network agreements for validation of pass-through pricing.

Note: The lack of oversight of average pricing allows a Pharmacy in the retail network to be paid at different AWP discounts and dispensing fees for brand drugs. This applies across the retail network and disadvantages a pharmacy for some drugs and advantages them for others. While this is not a direct contract with the plan, this is the source for potential pharmacy complaints and lack of compliance with the COB claims. This results in a decision for the plan to determine what parity rules they require for management of their retail network.

Craig S. Stern, PharmD, MBA
President
Pro Pharma Pharmaceutical Consultants, Inc.