New data shows that the Affordable Care Act’s (ACA) efforts to close the coverage gap have saved Part D beneficiaries $8.9 billion on prescription drugs. Beneficiaries who reach the coverage gap, also known as the “donut hole,” must pay full price for prescription drugs until they reach catastrophic coverage. So far, the ACA has created rebates and discount programs to fully close the donut hole by 2020. Since the ACA was enacted, more than 7.3 million beneficiaries reached the coverage gap, including 3.4 million this year (since October 2013).
ProPublica recently analyzed the prescribing habits of practitioners nationwide, and identified 913 doctors who disproportionately chose brand drugs over generics. In 2011, this group of doctors could have saved Medicare Part D $300 million by prescribing more like their peers, and the top prescriber alone could have saved the program $5 million. Within this group, 48% have received at least $1,000 since 2009 for promoting medications, compared with 15% among a sample of other practitioners.
Fueling such prescribing habits is the Low Income Subsidy (LIS), which charges qualified patients (more than 11 million in total) no more than $6.60 for brands and $2.65 for generics. Conversely, other Part D beneficiaries typically pay $40 to $85 for brands versus less than $5 for generics. Thus, doctors have less incentive to be cost-conscious when writing prescriptions for LIS beneficiaries. According to a MedPAC study, if LIS beneficiaries were prescribed generic drugs in the same proportion as other Part D beneficiaries, the program could save $1.3 billion a year in just seven drug categories.
Revising the LIS’ copays, (i.e., lowering the copay for generics and increasing it for brands) would create incentives to shift to generics and generate savings for Part D. Also, the ProPublica authors believe that measures should be put in place to track prescribing habits and reward/punish prescribers based on cost-effectiveness. Finally, Medicare Part D can adopt practices already being used by organizations such as the Department of Veterans Affairs (VA), which requires additional approval for brand drug use when a suitable generic is available. In 2008, brand-name use among Part D beneficiaries was 2 to 3 times higher than that of the VA. Similarly, private insurance companies such as Kaiser Permanente and Southwest Medical Associates have promoted generics by increasing co-pays on brands and controlling which drugs doctors can prescribe. These cost-cutting measures do not require a sacrifice in care quality when suitable generics are available- at insurance companies with low brand-drug use, patients taking generics are still meeting and exceeding national success rates for lowering cholesterol and controlling diabetes.
Several researchers from the Center for Disease Control calculated drug-poisoning age-adjusted death rates (AADR) at the county level from 1999 to 2009. They found that the number of counties with annual drug-poisoning AADRs greater than ten per 10,000 rose from 3 to 54 percent. Drug-poisoning AADRs grew by 394 percent in rural areas and 279 percent in large central metropolitan counties, though the highest rates were observed in large central metropolitan counties during the measurement period. Together, the three maps show the spread and growing frequency of drug poisoning deaths between 1999 and 2009.
Last week, the American College of Cardiology and the American Heart Association released new guidelines that aim to greatly increase the use of cholesterol-lowering statin drugs. Currently, such medications are recommended for individuals with a 20% chance of heart attack in the next decade, totaling approximately 36 million Americans. The new guidelines lower this threshold, recommending statins to individuals with a 7.5% risk of a stroke or heart attack within the next decade. This is the first time that those at risk for stroke have been explicitly included in the population set to benefit from statins. Altogether, the new guidelines aim to prescribe statins to as many as 70 million people, almost doubling the current population of statins users.
Some researchers have questioned the benefits of statins for patients with lower risk of heart disease and stroke, and whether these benefits would outweigh the side effects of statin therapy. The new guidelines will also have a huge impact on the pharmaceutical industry; Americans spent $21.3 billion on cholesterol-lowering drugs in 2010.
The FDA recently approved the first single-entity hydrocodone drug, Zohydro ER, citing the need for a stronger, extended-release painkiller for those in chronic pain. Critics of this decision cite the potential for increased prescription drug abuse; hydrocodone is the most prescribed drug in the nation and consistently one of the most abused according to the Drug Enforcement Agency. Before Zohydro ER, hydrocodone could only be found mixed with other analgesics in medications such as Vicodin. The FDA’s decision came as a surprise since its panel of outside advisers voted 11-2, with one abstention, against the approval of Zohydro last year. Also, the day before the approval, the FDA supported new regulations to prevent prescription drug abuse, including changing hydrocodone from a Schedule III to Schedule II drug (see previous post). Zohydro ER will be regulated as a Schedule II drug, and the FDA has required further study to assess the risk for abuse, but critics are still wary of the consequences of a pure, stronger hydrocodone drug.
Last week the FDA released several initiatives to prevent and address prescription drug shortages through improved notification and communication channels. Between 2010 and 2012, there were 546 shortages in the US, most of which the FDA attributes to quality and manufacturing issues, as well as a lack of inputs from suppliers. In 2010, shortages reached an all-time high, leading President Obama to issue an Executive Order in 2011 to address the issue. The new FDA measures include expanding early reporting requirements for manufacturers, launching a smartphone app to give consumers real time information on prescription drug shortages, and clarifying emergency roles and responsibilities for manufacturers.
A simple survey of pharmacies in the Twin Cities for the price of a 30-day supply of a generic breast cancer drug revealed large variations- from $11 at Costco to $455 at Target. However, Target is willing to match the price of other pharmacies, and would charge only $11 if the customer provided proof of Costco’s price. How is this possible?
According to Lisa Gill of Consumer Reports, the prices of newer generic drugs can vary greatly. She collected price quotes for five recently released generic drugs from over 200 pharmacies, discovering that large chains such as Target and CVS charged up to 10 to 15 times more than Costco and smaller retailers. After purchasing generic drugs wholesale, pharmacies have different policies on how much to mark-up the price. Costco, for example, adds a small mark-up to the wholesale price it paid. Other retailers take the price of the equivalent brand drug and reduce it by a certain percentage to price the generic version. Interestingly, small independent retailers offered some of the lowest prices even though they most likely pay higher wholesale prices than big chains.
Of the 200 pharmacies studied, the most surprising finding was that some were receptive to bargaining. Through requesting price matches or simply asking for a lower price, consumers could save significantly on generic drugs. These divergent pricing practices place a large burden on the consumer to shop around and even bargain for the lowest prices on generic drugs. Consumers are unlikely to expect such large pricing variations, and are unaccustomed to negotiating prices at the pharmacy.