“Grandma and Grandpa aren’t going to figure this one out.” Prescription drug savings disappear in Medicare overhaul


For Medicare patients who are struggling to afford Biogen BIIB,
-0.27%
multiple sclerosis drug Tecfidera, the arrival of much cheaper generic competitors last year should have been great news. Instead, it has become a warning about the complexities of Medicare prescription drug benefit that prove to be costly for patients and taxpayers, according to drug pricing researchers.

Looking at Medicare prescription drug plans offering coverage of Tecfidera or its generic equivalent in the third quarter of this year, research on nonprofit drug prices 46brooklyn Research found that more than half of enrollees did not ‘had access only to the brand name drug, despite the fact that several lower cost generic options have been available for about a year. Even when the plans covered the generic, the cost was typically much higher than the list price of the cheapest generic, the researchers found.

“It’s a series of broken incentives that lead to this type of result,” says Antonio Ciaccia, CEO of 46brooklyn, including issues with the “rebates” or rebates that drug makers often pay to plan sponsors. Part D and other intermediates after drug delivery.

“Just having generics on the market doesn’t mean people can get them or they’re affordable,” says Bari Talente, executive vice president of advocacy and access to health care for the community. National Multiple Sclerosis Society. The group heard from patients and healthcare providers about challenges with Tecfidera and generic access that echo 46brooklyn’s findings, Talente said.

The research adds to a growing body of studies illustrating how generic competition for expensive specialty drugs, when filtered through the complicated Medicare Part D prescription drug system, may fail to deliver cost savings for patients.

The findings come as Congress assesses prescription drug prices and Medicare Part D reforms under the Build Back Better social spending bill. President Joe Biden highlighted the problem in a speech this week, noting that the bill would cap prescription drug costs for Medicare beneficiaries at $ 2,000 per year, among other changes.

For many Medicare patients, it was as if the price war never happened

Generally speaking, most Part D plans are designed to favor the use of generics over brand name drugs, according to a 2020 study published in Health Affairs. Looking at the coverage of brand name plans versus generic equivalents, the researchers found that the plans had generic coverage only over 80% of the time. But “there are obviously major exceptions to this rule,” says Stacie Dusetzina, associate professor at Vanderbilt University Medical Center and co-author of the study, including some cases involving expensive specialty drugs. The exceptions “are very important because the effect on consumers is so negative,” she said. “The idea that you can’t access these cheap drugs and pay less is incredibly frustrating. “

After the launch of the first generic version of Tecfidera in August of last year, the competition was fast and fierce. Within months, 11 manufacturers were making the drug, bringing the median monthly wholesale purchase cost of generic generics for the 240 milligram capsules to around $ 900, a roughly 90% discount from the Tecfidera list price of 8. $ 276, according to 46brooklyn.

Tecfidera sales have plummeted. The branded product was Biogen’s best-selling drug in 2019, with sales of approximately $ 4.4 billion. The company sold around $ 1.5 billion worth of the drug in the first nine months of this year. Late last month, a federal appeals court dismissed Biogen’s efforts to revive a key patent on Tecfidera.

“The idea that you can’t access these cheap drugs and pay less is incredibly frustrating.”


– Stacie Dusetzina, Associate Professor at Vanderbilt University Medical Center

For many Medicare patients, it was as if the price war never happened. Despite their bargaining power, the larger Part D plans generally offered registrants a worse deal on the drug than their smaller counterparts, according to the 46brooklyn study. According to the study, larger plans tended to offer brand-only coverage, while smaller plans were more likely to cover both brand and generic or just generic. And by examining the lowest negotiated price of Part D plans for any version of the drug (brand or generic), the researchers found that the prices of the large plans were often even higher than the list price of Tecfidera. , while the smaller plans had some of the lowest negotiated prices.

“Bigger plans have more resources, sophistication, and leverage” to give consumers the cheapest options, says 46brooklyn’s Ciaccia, but “we’ve found it to be the exact opposite of that.”

Four big companies — Humana HUM,
+ 0.57%,
CVS CVS,
+ 0.90%,
Centene CNC,
+ 4.98%
and Anthem ANTM,
+ 0.71%
– offer health insurance plans with only branded Tecfidera coverage, collectively covering more than 23 million people, according to 46brooklyn. Humana, CVS and Centene did not respond to requests for comment. Anthem referred questions to the Pharmaceutical Care Management Association, a professional group for pharmacy benefit managers, which manages prescription drug benefits on behalf of Part D plans and other payers. This group said in a statement: “On behalf of patients, PBMs support obtaining the lowest net price for prescription drugs, whether through the use of a generic, a generic licensed or a brand name drug. ”

In some cases, a single parent company has a large health care plan, a specialty pharmacy, and a pharmacy benefits manager, which creates potential conflicts of interest that can prevent consumers from getting the best price, depending on the market. researchers. More transparency is needed “to understand how dollars flow,” says Dusetzina. Where the plans, PBMs and pharmacies are all part of the same parent company, she says, “we created a system that could continue to reward itself by not trading as much as they can and trying. not getting the best price for Medicare. program.”

Some provisions of the Build Back Better bill may help alleviate the vagaries of Part D

Kristine Grow, spokesperson for the AHIP Healthcare Professional Group, said the number of generic drugs prescribed to seniors has risen sharply since the introduction of Medicare Part D, “resulting in significant savings for registrants and taxpayers. “. The problem, she said, is the drug prices set by the pharmaceutical industry. The 46brooklyn report, she said, “is based on a false premise.” PBMs pass the rebates over to health insurance plans, “which use these savings to reduce premiums and offset other health care costs for the elderly,” she said.

But Michael Bagel, director of public policy for the Alliance of Community Health Plans, a trade group for nonprofit plans, says his group supports transparency demands that would further highlight pricing issues. Most of the issues raised by the 46brooklyn report are “because of the lack of sunshine in the pricing process and about the discounts and rebates that are passed on,” he says.

Some provisions of the Build Back Better bill may help alleviate Part-D quirks that can favor brands over generics, the researchers say. The bill would eliminate the “coverage gap,” a phase of Part D delivery in which manufacturers offer a 70% discount on brand name drugs, but not generics. These branded discounts count toward direct patient spending, which can help them reach the most generous phase of catastrophic coverage faster than they would with a generic. This can lead to counterintuitive outcomes for patients. In the first three years of generic competition for the cancer drug Gleevec, for example, Medicare patients saw their out-of-pocket expenses increase if they switched from brand-name drugs to generics, according to a 2020 study by Dusetzina and she. co-authors.

The bill would also increase the liability of Part D plans for the costs of the disaster coverage phase to 60%, from 15% today.

But much remains to be done, the researchers say, to make the system more accessible to consumers who simply want to find the most affordable way to fill their prescriptions. “This is a four-month research project that we did,” Ciaccia says of the Tecfidera study, “and we’re drug price freaks. Grandma and Grandpa are not going to figure this one out. It shouldn’t be that complex.


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