Keeping you updated on the latest Medicare and Part D news

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Medicare Part D Fraud

In “Let the Crime Spree Begin,” NPR and ProPublica explore the vulnerabilities in Part D policy that allow elaborate fraud schemes to flourish. One major issue is timing- Part D requires insurance companies to pay for prescriptions within 14 days, a requirement passed by Congress in 2008 after pharmacies complained about payment delays. As a result, insurers must cover suspicious claims without thorough investigation.

Furthermore, insurers are not allowed to block claims from suspect prescribers and pharmacies. Only after a doctor is formally excluded from Medicare by the inspector general, a process that can take months and a conviction, will Part D stop covering his/her prescriptions. This “pay and chase” approach contrasts with the authority insurance companies have for non-Medicare plans to review prescriptions and take action against fraud.

NPR and ProPublica investigated several instances of fraud, some involving single doctors and others involving a network of doctors, pharmacists, and other medical professionals. Some doctors were the victims of identity theft and had no connection to the millions of dollars prescribed under their provider ID. In each instance, the huge increase in prescriptions written by these doctors should have warranted immediate investigation. Changes in policy that give insurance companies more power to address fraud, and more swift and decisive action from Medicare fraud officials could reduce the vulnerabilities in the system.



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Physical Attributes of Generic Drugs

Generic drugs must be bioequivalent to a reference listed drug (RLD), but physical attributes also play a role in FDA approval. Last week, the FDA released draft guidance entitled “Size, Shape, and Other Physical Attributes of Generic Tables and Capsules.” The guidance encourages generic manufacturers to develop tablets and capsules of similar size to the RLD, and sets several benchmarks as to how much larger in dimension and volume a generic product can be relative to its RLD. In several instances, the FDA has not approved a generic drug due to physical attributes that could adversely affect patient outcomes (e.g., the generic version not as easy to swallow as the RLD, which could reduce adherence and drug release). Overall, the FDA aims to promote adherence and reduce medication error by encouraging similar physical appearances between brand and generic drugs.

The guidance will only apply to new generic drugs, not ones are already on the market. It places new restrictions on generic drug manufacturers, who need to mimic the physical attributes of a brand drug without infringing on intellectual property. Trade dress, a subset of trademark law, allows drug manufacturers to claim ownership of the physical characteristics of their product, such as size, shape, flavor, aroma, and color scheme. While public health concerns can trump trade dress in court, claims of trade dress have been a tool for drug manufacturers to delay generic competition.


More on Trade Dress

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New FDA Oversight of Compounding Pharmacies

Under the new Drug Quality and Security Act, the FDA gained the authority to regulate large-scale compounding pharmacies. After contaminated drugs from a compounding pharmacy in Massachusetts led to a deadly fungal meningitis outbreak in September 2012, the FDA demanded new regulations for large-scale compounding pharmacies. Traditional compounding pharmacies are allowed to mix and distribute individual prescriptions to order, and are regulated by the state. However, some compounding pharmacies now make specialized drugs on a large scale and distribute nationally. For example, the Massachusetts pharmacy responsible for the fungal meningitis outbreak had shipped over 17,600 potentially contaminated doses to 23 states. The FDA believes that these entities resemble drug manufacturers and cannot be regulated by state laws, which were written for small scale operations.

Large-scale compounding facilities can now register as “outsourcing facilities” with the FDA and submit to federal inspections and quality standards similar to those for drug manufacturers. This process is voluntary, so compounding pharmacies who chose not to register can continue to exist in a legal grey area between state and federal regulations. Currently, the FDA does not know how many compounding pharmacies exist in the US (the estimate is 700-1,000 operations), but plans to use complaints and state regulators to identify compounding pharmacies who do not register. The FDA also hopes that health care providers and hospitals will favor purchasing compounded products from registered pharmacies to encourage more facilities to accept FDA oversight.


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CVS and Cardinal Health Form Joint Venture

Pharmacy group CVS Caremark Corp and pharmaceutical distributor Cardinal Health Inc. have agreed to combine sourcing and supply chain operations for generic drugs. The 10 year joint venture, which will become operational as early as July 1 2014, will source and negotiate generic supply contracts for both companies. Combined, the two already major players will form the largest generic sourcing entity in the nation to attain more favorable purchasing agreements with generic drug manufacturers. 


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Why Did The FDA Approve Zohydro ER?

As discussed in a previous post, the FDA recently approved Zohydro ER, a pure hydrocodone drug designed to treat moderate to severe chronic pain. This decision was controversial given that hydrocodone is already widely prescribed and abused, and that it went against the recommendations of the FDA’s expert panel.

Ramin explores the reasoning behind the FDA’s decision in her post for The New Yorker.

“…refusing to approve Zohydro ER because it is a dangerous opioid would require revisiting the approvals of all other opioids on the market. That would be expensive and time-consuming for the F.D.A. and pharmaceutical companies. It would also likely be unproductive, because previous efforts to limit access to these drugs have met with resistance from groups—some funded by the pharmaceutical industry—that point out, reasonably, that adults with chronic pain deserve to have their suffering mitigated as much as possible.

And yet, isn’t there something problematic about a system in which a new drug can be pinpointed as prone to abuse—but can pass muster because other drugs, equally hazardous, were approved?”

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FDA Labeling Proposal to Increase Generic Drug Safety

Currently, only brand name drug manufacturers can change labels, while generic drugs must carry the same warning labels as their brand name counterparts. Earlier this year, and in 2011, the Supreme Court heard cases in which defendants were suing generic drug manufacturers for adverse side effects. The Court ruled that generic drug manufacturers could not be sued under state law because the superseding federal law already approved the generic drug and its label.  Essentially, unless the generic manufacturer has introduced new problems into the drug, it is not liable for inadequate safety labels. Critics of the decision argued that it disincentives generic drug manufacturers to monitor the safety of their products and warn consumers since only brand name manufacturers can be held accountable. This presents an especially frightening situation given that generic companies sell over 80% of the prescription drugs in the nation.

Last month, the FDA proposed allowing generic drug manufacturers to change drug labels through the same process followed by brand name manufacturers. The proposal will undergo a 60-day commenting period, and if finalized, could be an important step towards increasing the responsibility and legal liability of the generic drugs industry.


Supreme Court Decision

12/18/2013: The FDA extended the commenting period for this proposal by an additional 60 days- read more.

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The New Math of Health Care Series

Here are some interesting articles about how Americans are navigating the changing health care marketplace. 

The New Math of Health Care

Collection Description:

The price tag for medical care, already big and getting bigger,  looms over Americans.  Retirees see their savings vanish.  Families face tough and often bewildering choices, and uncertainties over Obamacare only add to the confusion. This special section,  produced in collaboration with American Public Media’s Marketplace, examines the soaring out-of-pocket costs of staying healthy, end-of-life care, and  strategies for picking doctors and health plans.   We also explore what doctors facing death can teach us about dying well.