Brand Cholesterol Drug Costs Soaring

It’s “Sticker Shock” time again — This time in connection with …


Control Human Growth Hormone Usage

An article in the Star Ledger reflects why it is critically important for payers to implement programs to control the usage of Human Growth Hormone.  According to the story, NJ firemen and policemen have received millions of dollars of Human Growth Hormone injections  to bulk up.  And given state and municipal governments’ generous prescription coverage policies, the individuals taking the drugs paid almost nothing for the drugs, meaning virtually all of the drugs’ costs were borne by the NJ taxpayer.

Human Growth Hormone drugs are enormously expensive — typically more than $2,000 a prescription.  Moreover, average monthly usage of any of the four largest HGH sellers is typically $4,200 per month.

However, the clinical purposes for which HGH has been approved means HGH drugs should be used very infrequently.  Indeed, the American Association of Clinical Endocrinologists (AACE) has estimated that only “about 75,000 out of 265 million Americans currently have true growth hormone deficiency indicating the need for replacement therapy” through drug supplementation.  See this press release.

Nonetheless, HGH drugs are widely used for non-clinical purposes, notwithstanding their enormous cost, and numerous health providers’ warnings against such use. Why?  If you scan the internet for only a few moments, you will see extensive advertising claiming that Human Growth Hormone drugs can be used to increase muscle development, invigorate male sexual drive and prevent aging.

Notably, those who make large sums of money from the drugs’ overuse — including PBMs that are pocketing and frequently not passing through any of the huge rebates they are receiving on such drugs — have no incentive to control the drugs’ use.  Accordingly, payers must take matters into their own hands and begin to do so.

The first step to take is to determine your plan beneficiaries’ usage in order to assess the extent of over-use. Assuming the extent of use reflects it is likely that your plan beneficiaries are using the drugs for non-clinical purposes, the next step you must take is to implement programs to prevent inappropriate use, including strict prior authorization programs.

In addition, at your earliest opportunity, you should renegotiate your PBM contract to require your PBM to pass through to your plan 100 percent of all rebates and other third party financial benefits. Doing so will not only increase your prescription coverage savings, but eliminate your PBM’s incentive to allow the over-prescribing of Human Growth Hormone (and other drugs as well).

Moreover, if you represent a relatively large health plan, when you renegotiate your contract you should ensure that your PBM contract allows you to negotiate directly with manufacturers. With such contract provisions in place, you can take additional steps to decrease the cost of your now-appropriate Human Growth Hormone usage by negotiating directly with the multiple manufacturers of Human Growth Hormone.

Those manufacturers who are willing to provide discounts and rebates to lower the costs of their drugs can have their drugs placed on a lower formulary tier, with lower copays or coinsurance used to motivate plan beneficiary usage.  Those manufacturers who are unwilling to provide reduced costs can have their drugs placed on a higher formulary tier, with higher copays and coinsurance used to incentivize your plan beneficiaries to use lower-cost drugs.

After all, as is the case with several specialty drug therapeutic categories, choice does exist in the Human Growth Hormone therapeutic category of drugs, and competition can therefore be created, if payers act to create that competition.

Included in this category of drug are the following:  Norditropen, Genotropin, Humatrope, Nutropin/AQ, Omnitrope, Serostim, Sorbtive, Tev-Tropin and Salzen.

Drug Recalls

Drug recalls represent an ongoing safety problem for patients and doctors, and an ongoing cost problem for those paying for drugs, meaning patients (who usually only pay for a small portion of drug costs in the form of copays or coinsurance) and their employers or the federal and state governments (which usually pay for the rest of drug costs).  When recalls occur, patients can sometimes be reimbursed for unused pills, if patients return unused units.  However, manufacturers rarely agree to reimburse the entities paying for most of the drugs’ costs, a situation that the marketplace needs to alter.

Drug recalls are not infrequent, as is evidenced by the treasure trove of information collected by the outstanding Pharmalot blog about 11 Johnson & Johnson recalls (including for products such as Tylenol, Mylanta, Motrin, Rolaids and Benadryl).  Drug recalls of prescription drugs are also continuously occurring, including most recently for costly commonly used drugs like Pfizer’s Lipitor and even extremely expensive biologics.

Accordingly, when payers draft and negotiate drug coverage contracts with PBMs, payers should include provisions that require the PBMs to provide whatever information may be necessary to enable the payers to obtain refunds from manufacturers for drug recalls.  When the next very-costly recall occurs, you should not find yourself without the ability to be reimbursed for large sums of money.

IMS Reports $70 Billion In Potential New Generic Savings

A new IMS Health report indicates the loss of patents by top-selling brand drugs during the period 2011 to 2014 may bring $70 billion in savings to the marketplace.  Among the brand drugs that will soon face generic competition are the following:

  • Pfizer’s cholesterol-reducing drug Lipitor
  • Bristol’s and Sanofi’s blood-clot preventer Plavix
  • Lilly’s schizophrenia drug Zyprexa
  • Merck’s asthma treatment Singulair

To learn more about IMS Health’s report, read this article.

And don’t forget — unless you change your PBM contract terms to ensure that you — not your PBM — will realize the financial benefits from newly available generic drugs, you may never obtain your rightful savings.  Read the articles under Topics 3 and 5 on our Videos and Articles page, and learn exactly what you need to do.

Alabama Medicaid Initiates Acquisition Cost Reimbursement

As of September 22, 2010, the state of Alabama began reimbursing for retail pharmacy dispensed drugs based on acquisition-cost pricing.  Like a small number of other payers, Alabama appears to have realized that a “pass-through” of the actual costs of drugs, plus a fixed rate dispensing fee, is a far less expensive method to pay for drugs than allowing vendors to make a “profit spread” on each drug dispensed, which is the payment method allowed by virtually all PBM/client contracts in today’s marketplace.

Our consulting firm can compare Alabama’s costs to those you are currently paying to determine the extent to which you are likely overpaying your PBM for retail dispensed drugs.  The comparison is likely to be quite telling.

For information about Alabama’s activities, visit the state’s website.  Note that other states may soon follow Alabama’s new practices, as reflected in the following news bulletin.

Human Resource Executive

“A Bitter Pill:  Specialty Drugs Represent the Next Frontier In Corporate America’s War On Rising Rx-Benefit Costs”  Read Article

OIG Finds Medicaid Is Dispensing Unapproved Drugs

The federal government’s Office of Inspector General (OIG) has issued a new report concluding that only 62% of drugs paid for by Medicaid were approved by the FDA, meaning 38% were not approved.  The approved drugs represented 75% of total Medicaid expenditures in 2008, meaning 25% of Medicaid’s drug expenditures were not approved.

A summary of the OIG’s report can be found on its website.  The OIG’s complete report can be found here.