A report from the General Accountability Office found that among all Medicare Part D beneficiaries who used at least one specialty tier–eligible drug in 2007, 55 percent reached the catastrophic coverage threshold, after which Medicare pays at least 80 percent of all drug costs. In contrast, only 8 percent of all Medicare Part D beneficiaries who did not use a specialty tier–eligible drug reached this threshold in 2007.
Specialty tier–eligible drugs accounted for 10 percent, or $5.6 billion, of the $54.4 billion in total prescription drug spending under Medicare Part D plans in 2007. And Medicare beneficiaries who received a low-income subsidy accounted for most of the spending on specialty tier–eligible drugs—$4.0 billion, or 70 percent of the total, according to the GAO. High-cost drugs eligible for a specialty tier commonly include immunosuppressant drugs, those used to treat cancer, and antiviral drugs.
For those unfamiliar, the Centers for Medicare & Medicaid Services allows Part D plans to use different tiers with different levels of cost sharing to manage drug use and spending. The specialty tier is designed for high-cost drugs with prices that exceed a certain CMS threshold and beneficiaries who use these drugs - such as biologics - typically face higher out-of-pocket costs than beneficiaries who use only lower-cost drugs (here is the report).
"The report documents that competition is needed so that health insurers can negotiate for lower-cost alternatives to high-priced specialty-tiered brand drugs," Kathleen Jaeger of the Generic Pharmaceutical Association, which has been agitating for Congress to allow the FDA to create a so-called pathway for approving biogenerics, says in a statement. "The GAO findings also underscore the fact that the current system leaves older Americans particularly exposed to the high cost of brand specialty –tiered medicines."
5 Comments
I think it's absolutely ridiculous that we spend so much on prescription drugs. If a company in India or Canada can make a drug for $2 while a company here in the U.S. charges $50, something's wrong.
The drug costs almost the same to manufacture. It is the sales price where people in the US are paying that extra amount. Prices are marked up in the US than in say Singapore based on how much the general population can support.
A substantial fraction of small molecule pharmaceuticals are manufactured outside the US, with Ireland being a manufacturing powerhouse. Also, to be fair, cost of manufacturing is only one component to be considered.
Although I frequently take the industry to task on my blog, I do agree that R&D costs need to be considered. Of course that's only part of the story. When your sales and marketing expenses are double your R&D costs, that needs to be taken into account too.
The real issue that needs to be addressed is a path for approval of generic biologic drugs. As a small molecule specialist, I can see how the market is currently biased in favor of biologics research, presumably because short sighted companies are ramping up for discovery of biologic drugs. Although such drugs have potential benefits, we shouldn't abandon small molecule therapies, since they form the vast majority of current therapies.
Establishing bioequivalence of biologic drugs is not as straightforward as for small molecules. However, to say that the FDA couldn't come up with criteria to approve biogenerics is disingenuous at best. What GMP criteria are currently used to establish lot-to-lot efficacy for branded biologics? Surely generic biologics could be evaluated for bioequivalence through a combination of functional assays, primary sequence characterization, and characterization of post translational modifications such as phosphorylation, sulfation, and glycation. If not, then I have no confidence in branded biologics.
The whole system is a wreck. I had to talk with 15-20 people to findout my wife (35 years old) brain cancer drug was covered under B. It's good due to the donut hole but took me about 60-80 hours of talking with all of the people who should know this.
While I haven't read the report yet, one has to wonder if it discusses price controls as part of the needed strategy?
The principle that "competition is needed so that health insurers can negotiate for lower-cost alternatives to high-priced specialty-tiered brand drugs," is vital and indeed advocates continue to work to ensure that a rational pathway for the FDA to approve generic biologics is established as soon as possible. The biopharma industry-backed measures to require a minimum of 12-years marketing exclusivity for such new drugs had been incorporated into the "old" version of the health care reform bills, which was contrary to the Obama Administration's position that 7 years was plenty, and Waxman's and Schumer's bills that would have given 5 years. Genuine patient-centered advocacy campaigns have struggled to be heard above the massive biopharma lobbying efforts.
You can read more at www.affordablemedsnow.org and at http://healthwatched.org/2010/02/20/affordable-medicines-now/.
In the meantime,not only are many biologic drugs priced so high as to be out of reach for almost everyone, there are no alternatives for many of these drugs.