PBS NewsHour explores two business strategies that drug companies have used to prevent generic competition- “pay for delay” and “evergreening.”
Governors from Massachusetts, Rhode Island, New Hampshire, Vermont, and Connecticut met earlier this week to discuss collaborative measures aimed at improving opioid prescription monitoring and expanding access to addiction treatment. While prescription monitoring programs are emerging at the state-level, sharing this data across the New England region could catch prescriber and pharmacy “shopping” across state borders. The governors also planned to work across Medicaid programs so that beneficiaries who cannot access addiction treatment in their home state can be covered in other New England states. A framework for these measures is expected by late September.
The Kaiser Family Foundation created an interactive tool that displays the income, savings, and home equity of Medicare beneficiaries in 2013 alongside projections for 2030. Users can view and compare this information across different demographics such as age, race, and education level.
Medicare recently reversed its decision to deny coverage of expensive hepatitis C drugs and adopted a new policy that requires beneficiaries who demonstrate medical necessity to have access to new treatments. Sovaldi, made by Gilead Sciences, costs $1,000 a pill and an estimated $84,000 for a standard 12- week regimen. Furthermore, other drugs are often needed in conjunction with Sovaldi and some patients will need to take the drug for 24 weeks. Sovaldi is expected to cure over 90 percent of patients, which is a major advancement in hepatitis C treatment. Prior options took 24 to 48 weeks, had a 75 percent cure rate, and involved more pills as well as injections. These high treatment costs create a financial burden for Medicare, Medicaid, and private insurance companies. First-quarter sales of Sovaldi exceeded $2 billion, of which 90 percent was paid for by Medicare and private health insurers, and 7 percent by Medicaid. UnitedHealth, the nation’s largest health insurer, reported that it spent more than $100 million covering Sovaldi within three months. Additionally, Part D beneficiaries can pay as much as $7,000 in cost sharing for a 12-week regimen. The hepatitis C virus affects approximately 3 million Americans and is most prevalent among baby boomers. A Health Affairs blog piece (link below) estimates that 350,000 Part D beneficiaries have the hepatitis C virus. At current prices, providing 25,000 beneficiaries with a 12-week regimen would increase Part D spending by approximately $2 billion. Premium bids from the 2015 contract year will likely reflect the anticipated costs of covering Sovaldi and other expensive specialty drugs. Article Blog
Beneficiaries who automatically qualify or successfully apply for the low-income subsidy and do not select a Part D plan are randomly assigned to a plan with a below average to average premium for the region. Researchers from the University of Pittsburgh compared an “intelligent reassignment” algorithm against Part D’s random placement and determined that intelligently assigning low-income beneficiaries using past drug claims would have saved Part D over $5 billion in 2009. Given that overall Part D spending totaled $52.5 billion in 2009, these findings present the potential for significant cost reduction. Furthermore, matching beneficiaries to the plan that best covered their drug needs reduced the number of prescriptions subject to utilization review and quantity limits. By law, however, Part D randomly assigns low-income beneficiaries who do not select a plan to prevent a single plan from receiving a disproportionate number of very sick beneficiaries. Thus, any efforts to intelligently assign beneficiaries in the future would require legal changes.
Medicare Part D provides a subsidy to beneficiaries with incomes below 150 percent of the federal poverty level. Enrollees with the low-income subsidy accounted for 75 percent of the $60 billion in total federal Part D spending in 2013. The government randomly assigns any new beneficiary who automatically qualifies for the subsidy, or who successfully applies for it without indicating a preferred plan, to a stand-alone Part D plan whose premium is equal to or below the average premium for the basic Part D benefit in the region. We used an intelligent reassignment algorithm and 2008–09 Part D drug use and spending data to match enrollees to available plans according to their medication needs. We found that such a reassignment approach could have saved the federal government over $5 billion in 2009, for mean government savings of $710 (median: $368) per enrollee with a low-income subsidy. Implementing that simple change to reassign beneficiaries would have also lowered the proportion of prescriptions that required utilization review from 29 percent to 20 percent, and the proportion of prescriptions with quantity limits from 27 percent to 19 percent.