Tagged Drug Costs

KHN’s ‘What The Health?’: We Answer Your Questions


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This week, KHN’s “What the Health?” panelists answered questions submitted by listeners.

Among the topics covered were drug prices, how other countries provide and pay for health insurance and whether Congress might repeal the “Cadillac tax” on generous health plans.

This week’s panelists are Julie Rovner of Kaiser Health News, Anna Edney of Bloomberg News, Alice Miranda Ollstein of Politico and Caitlin Owens of Axios.

Among questions the panel addressed:

  • Why [does] the health care debate in the U.S. seem to be focused on “Medicare for All” or strengthening the ACA, but no one is suggesting a universal multipayer system with price controls, as in France or Germany?
  • Can you please explain the policies that prevent the majority of Medicare patients from using third-party and manufacturers’ coupons for medications?
  • I know that you all talked about the update on the Cadillac tax, but I was wondering, what are the reasons why there is bipartisan support to repeal it?

Plus, for extra credit, the panelists recommend their favorite health policy stories of the week they think you should read too:

Julie Rovner: The Washington Post’s “Illness Is One of Many New Factors to Count Against Immigrants Seeking U.S. Residency,” by Paige Winfield Cunningham

Anna Edney: Bloomberg News’ “Trump’s Canada Drug Import Plan Can’t Happen Without Big Pharma,” by Natalie Obiko Pearson and Simran Jagdev

Alice Miranda Ollstein: The Appeal’s “Ohio Governor Wants to Detain Fewer Mentally Ill People Before Trial,” by Kira Lerner

Caitlin Owens: JAMA Internal Medicine’s “Assessment of Out-of-Network Billing for Privately Insured Patients Receiving Care in In-Network Hospitals,” by Eric Sun, Michelle Mello and Jasmin Moshfegh

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KHN’s ‘What The Health?’: Gun Violence And The Politics Of Public Health


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Three mass shootings in eight days have refocused the nation’s attention on the problem of gun violence — and restarted the long-running debate over guns as a public health issue.

Although Congress is on its summer break, before lawmakers left Washington they passed a two-year budget deal to make it easier to fund health programs — but it also cements funding restrictions like the Hyde Amendment, which bans most federal abortion funding.

This week’s panelists are Julie Rovner of Kaiser Health News, Alice Miranda Ollstein of Politico, Margot Sanger-Katz of The New York Times and Mary Agnes Carey of Kaiser Health News.

Among the takeaways from this week’s podcast:

  • Mass shootings — like the weekend recent violence in El Paso, Texas, and Dayton, Ohio, and the earlier attack at the Gilroy, Calif., garlic festival — prompt calls from officials for more screening and treatment options for mental illness. However, experts — who generally support more mental health services — say it’s not clear extra services would reduce these episodes.
  • Among measures invoked by Republicans in response to the shootings is implementing red-flag laws, which would allow officials and family members to get authorities to temporarily take guns away from people having a mental health crisis. Seventeen states have such laws, and initial research suggests they help reduce suicides.
  • Before leaving town last week for its August recess, the Senate passed a two-year budget deal. It would solidify policy riders such as the Hyde Amendment, which bans the use of government funds for abortions except in limited circumstances, such as to save a mother’s life. The new budget would also remove spending caps that could have caused significant cuts in health programs like the National Institutes of Health and the Centers for Disease Control and Prevention.
  • Canadian officials have raised concerns about the Trump administration’s announcement that it might approve a pilot program allowing states to import drugs from Canada, where they are much cheaper than in the U.S. Canadians say they are worried about the U.S. draining their drug supply.
  • The administration’s change in rules about abortion counseling, as outlined in the federal reproductive health program, Title X, has left some health centers that are bowing out with a problem: Contraceptive supplies they bought under Title X can’t be used. They are looking to the federal government for guidance on what they should do with those supplies.

Plus, for extra credit, the panelists recommend their favorite health policy stories of the week they think you should read too:

Julie Rovner: The Washington Post’s “2020 Democrats Are Fighting Over Universal Health Care Details. Voters May Not Want That,” by Paige Winfield Cunningham

Mary Agnes Carey: The Washington Post’s “Proponents of Stricter Gun Control Face a Reality Check in the Senate,” by Paul Kane

Alice Miranda Ollstein: Governing’s “America Has a Health-Care Crisis — in Prisons,” by Alan Greenblatt

Margot Sanger-Katz: Balloon Juice blog’s “The Upcoming Strange Politics of the ACA,” by David Anderson

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And subscribe to What the Health? on iTunesStitcherGoogle PlaySpotify, or Pocket Casts.

Drugmakers Now ‘Masters’ At Rolling Out Their Own Generics To Stifle Competition

When PDL BioPharma’s $40 million blood-pressure medicine faced the threat of a generic rival this year, the company pulled out a little-known strategy that critics say helps keep drugs expensive and competition weak.

It launched its own generic version of Tekturna, a pill taken daily by thousands. PDL’s “authorized” copycat hit the market in March, stealing momentum from the new rival and protecting sales even though Tekturna’s patent ran out last year.

PDL’s version sold for $187 a month versus $166 for the competing generic, made by Anchen Pharmaceuticals, according to Connecture, an information technology firm. PDL’s brand-name Tekturna runs about $208 a month.

The plan is “to maximize profit at this point,” Dominique Monnet, PDL’s CEO, told stock analysts in March. With the boost of PDL’s house generic, “the economics would still be very favorable to us” even against the generic rival and even if prescriptions plunged for the brand, he said.

Lawmakers who created the modern generic-drug industry in the 1980s never imagined anything like this — brand-pharma companies maximizing profits by appearing to compete with themselves.

But it goes on all the time. In fact, there are now nearly 1,200 authorized generics approved in the U.S., according to the Food and Drug Administration. While these might look like products that would push prices down, authorized generics can be as profitable as, if not more profitable than, brand-name drugs.

“Authorized generics are not generic drugs,” Dr. Sumit Dutta, chief medical officer for drug-benefit manager OptumRx, told Congress in April. “The marketing and production of authorized generics is exclusively controlled and directed by brand-drug manufacturers. They do nothing to promote competition.”

Last year, authorized generics appeared at the rate of about once a week. High-profile examples in recent years included Mylan’s generic version of the EpiPen anti-allergy injector, introduced to soothe public outrage after the company raised the brand price 400%. In March, Eli Lilly said it would launch a less expensive generic of its Humalog insulin, whose branded list price has also soared.

Of all the ways drug companies try to protect sales as patents expire — changing doses, adding ingredients, seeking approval to treat new diseases — authorized generics are by far the most profitable, returning $50 for every dollar invested, research firm Cutting Edge Information calculated in 2015.

Brand-drug companies say authorized generics increase competition even if they’re not an independent product.

This “reduces prices and results in significant cost savings,” said Holly Campbell, spokeswoman for the Pharmaceutical Research and Manufacturers of America, or PhRMA, the brand-drug lobby. “Congress should reject attempts to delay, restrict or prohibit authorized generics.”

But critics say authorized generics hurt long-term competition and often perversely increase costs, even in the short term.

Authorized generics don’t just steal sales from existing generic rivals. Critics say they erode incentives to make generic drugs, partly by thwarting the intent of Congress to let one company temporarily have generic business to itself after a brand patent expires.

Tactics like this can “stave off generic competition and make sure that generics can’t get much of a foothold when they do get to market,” said Robin Feldman, a professor at the University of California Hastings College of the Law, who studies pharma policy. “That’s the game. And drug companies have become masters at this.”

Authorized copycats may help explain why relatively few true generics are reaching the market despite a surge in approvals, analysts say.

The 1984 Hatch-Waxman Act founded the modern generic business by establishing rules for safety and competition, including granting six months of market exclusivity to the first generic rival to each brand. The idea was to give the first mover a profitable head start to attack the established pill.

Few realized the law left room for brand companies to launch their own generics at the same time as or even earlier than rivals, often slightly lower in cost and nearly indistinguishable to patients and doctors from the brand as well as any independent generics.

PDL acquired Tekturna from Novartis via an affiliate in 2016 and soon learned that Anchen was planning a generic. It moved quickly to fight back.

PDL’s authorized generic version of Tekturna “was timed to secure us the benefit of being first to market,” before Anchen’s version was even on the shelves, PDL’s CEO, Monnet, told analysts. “We believe this provides [PDL] with a distinctive competitive advantage.”

PDL was so confident the authorized generic, called aliskiren, would produce substantial revenue without much effort that it got rid of its Tekturna salesforce of 60 people.

“There’s a lot of parts of the system that just automatically switch” to generics, whatever the source, said Maxim Jacobs, who follows PDL’s stock for Edison Investment Research. So even if the authorized generic isn’t much cheaper than the brand, “it’s almost like a no-brainer” to roll one out, he said.

Monnet was unavailable for an interview, a spokesperson said. Anchen did not respond to requests for comment.

Oddly enough, authorized generics can be more profitable than the brand-name drug even if their list prices are much lower, OptumRX’s Dutta told Congress. That’s because they usually aren’t subject to rebates that flow from the drugmaker to middlemen such as OptumRX and effectively lower a brand’s revenue.

“These authorized generics often result in net prices higher than the brand drugs they replace,” he told Congress. “Authorized generics are just another tactic for drug manufacturers to improve profitability.”

The list price for the authorized generic of Humalog insulin is half the brand’s — $137 versus $275. That apparent discount offered limited relief to uninsured patients paying cash and generated spirited headlines saying Lilly had lowered the price significantly.

But the move won’t cost Lilly any money, said another senior pharmacy benefits executive who asked for anonymity to speak candidly about a vendor. After rebates, $137 is about what the drug giant nets for Humalog now, the executive said. And it’s still far higher than what insulin costs in other countries.

“It’s a parlor trick,” the executive said. “They’re bending to political pressure, but are they taking any money out of the system? They’re not.”

Lilly’s Humalog generic, called insulin lispro, and Mylan’s EpiPen copycat departed from the traditional playbook by launching well before patents for those brands expired. The companies were trying to calm outrage over rising prices rather than fend off generic rivals, analysts said.

Generic Humalog “was made available to help people paying full retail price for their insulin” because of coverage gaps or lack of insurance, said Lilly spokesman Greg Kueterman.

The mere threat of an authorized generic can also smother competition.

A 2013 Supreme Court ruling challenged deals in which brands blatantly paid rivals to keep generics off the market. So pharma firms came up with an alternative: They could would hold fire on an authorized clone if generic firms agreed to delay launching their products or gave some other concession, according to the Federal Trade Commission.

Both sides win. The brand stretches its monopoly beyond the life of the patent, while the generic firm avoids facing an authorized rival later on.

Authorized generics can generate outsize profits in yet another way: as a method to game Medicaid contracts that costs taxpayers hundreds of millions of dollars a year, according to investigators for the Health and Human Services Department.

Brand-pharma companies routinely “sell” authorized generics to a corporate affiliate at a sharp discount, establishing an artificial wholesale price, said Edwin Park, a research professor who studies Medicaid at the Georgetown University Center for Children and Families.

Because of complex discounting formulas, this strategy minimizes rebates the drugmakers owe to Medicaid, found HHS’s Office of Inspector General.

Congress is eyeing bipartisan legislation to close that loophole, which the Congressional Budget Office estimates would save the federal government $3.15 billion over 10 years.

The next frontier in authorized generics involves harder-to-make biologic drugs, such as generic Humalog, which are made from components of living organisms, analysts say.

Such products tend to be expensive and highly profitable, producing especially strong incentives for brand companies to preserve their franchises.

Makers of valuable biologics such as arthritis drug Humira have avoided the kind of competition from generic-like “biosimilars” that exists in Europe, partly due to patent extensions and litigation settlements.

But once patents do expire, authorized biosimilars are likely to be an integral part of their profit-preservation tactics, analysts say. In February, Lilly asked regulators to clarify their stance on “branded biosimilars” — a clear indication of its interest.

The query is “part of a number of questions Lilly and others have posed” about shifting FDA treatment of biologics, said Lilly spokesman Kueterman.