Pharmaceuticals

You are currently browsing the archive for the Pharmaceuticals category.

Why are there so few vaccine suppliers?

February 7, 2012 in Contagious Disease, Pharmaceuticals, Regulation, Supply of Medical Services, Vaccinations | No comments

In many cases, only a handful of suppliers produce vaccines for a given disease.  In fact, for several vaccine types the U.S. has fewer suppliers than countries with a smaller market and a higher level of government purchase.

One reason for this finding could be strict government regulation.  All vaccines must be approved by the FDA.  Further, the CDC provides guidelines to physicians regarding who should get which vaccines.  The CDC also is a large purchaser of vaccines.  Thus, at first glance, it seems that government regulation may be causing industry consolidation in the vaccine market.

A paper by Danzon and Pereira, however, finds this not to be the case.  They find that the likelihood a supplier exits from a particular vaccine market is not effected by whether the CDC is a purchaser of the vaccine, the amount of vaccine the CDC purchases, or the CDC price at the time the firm exits.

The authors propose that the large economies of scale in vaccine production are the cause of the lack of competition in the vaccine market.

“The vaccine industry is characterized by large fixed costs of initial vaccine development as well as substantial ‘semifixed’ costs of producing an individual batch (a process that may take 6 to 18 months) but low marginal costs of producing an additional dose, up to the batch limit, and low storability. If there are multiple competing suppliers with large sunk costs and low marginal costs, competition may drive the price low enough that it is relatively unattractive for multiple firms to remain in the market and for new firms to enter.”

Further, the demand for vaccines is price sensitive.  Insurers (public and private) typically pay physicians and hospitals a fixed payment per vaccine administered.  Increases in vaccine costs come directly from the provider’s bottom line.

Some observers may point to the 2004-2005 influenza vaccine shortage and claim that government regulation had to cause this shortage.  The authors note that although several suppliers did exit the market before the shortage years, “…this cannot be blamed on government purchase and price controls, as less than 20 percent of the flu vaccine is publicly purchased.”

Tags: , , , , ,

How to get cheap Lipitor tomorrow

November 30, 2011 in Pharmaceuticals | 1 comment

Is this a spam post?  Is the Healthcare Economist working for Pfizer?  The answer to these questions are no and no.

However, there are two easy ways to get the cholesterol lowering drug Lipitor for a lower price tomorrow:

  • Buy the generic form of Lipitor
  • Buy Lipitor

According to Marketplace, on Friday Lipitor will go off patent. On Thursday, the Indian drug company Ranbaxy will launch its generic at a low price. Pfizer will also lower the price of Lipitor to the generic levels.  Using its monopoly pricing power, Pfizer has made $81 billion from this blockbuster drug.

Although the arrival of generic Lipitor is good news, consumers could have saved more money earlier if it weren’t for a phenomenon known as pay-for-delay. Pay for delay occurs when a brand drug pays a generic company to delay certain lawsuits to bring a drug off patent. In essence, the generic forces the brand to split the rents from their monopoly power. In many cases the profits from splitting these rents will exceed the profits the generic drug could make by entering the market. By allowing pay-for-delay, however, consumer access to affordable drugs is also delayed. Drugmakers win; American patients and taxpayers lose.

Tags: , ,

Does Prescription Drug Coverage Save Money?

August 30, 2011 in Medicare Part D, Pharmaceuticals | 5 comments

Many experts have claimed that increasing Medicare beneficiary’s access to prescription drugs through Medicare Part D is cost saving.  Even if it does increase cost, by increasing patient adherence to various prescription drugs, Medicare could prevent certain expensive hospitalizations and emergency room visits.

The only problem is that it doesn’t.

According to Liu et al. (2011) :

“After adjustment, Part D was associated with a U.S.$179.86 (p=.034) reduction in out-of-pocket costs and an increase of 2.05 prescriptions (p=.081) per patient year. The associations between Part D and emergency department use, hospitalizations, and preference-based health utility did not suggest cost offsets and were not statistically significant.”

In fact, increased drug coverage could increase the number of prescriptions the elderly take and lead to a higher number of harmful drug interactions, leading to increased hospitalizations.

Another paper, however, disagrees.  Afendilus et al. (2011) use HCUP data and and find that for selected ambulatory care sensitive conditions:

“…our point estimates suggest that Part D reduced the overall rate of hospitalization by 20.5 per 10,000 (4.1 percent), representing approximately 42,000 admissions, about half of the reduction in admissions over our study period…The increase in drug coverage associated with Medicare Part D had positive effects on the health of elderly Americans, which reduced use of nondrug health care resources.”

The debate rages on.

Tags: , , , , , ,

What does drug ‘price’ mean anyway?

August 25, 2011 in Pharmaceuticals | 2 comments

How much do drugs cost?  The answer to this question depends who you are and how you want to measure cost.  For instance, MediSpan‘s Master Drug Data Base (MDDB) defines drugs prices as follows:

  • Wholesaler Acquisition Cost (WAC) – the cost reported to Medi-Span by a manufacturer at which wholesalers purchase drug products from that manufacturer. The WAC does not necessarily represent the actual sales price in any single transaction, as any manufacturer may agree to sell its products to one or more wholesalers at a lower price with that wholesaler through the inclusion of any number of methods, such as discounts or rebates.
  • Average Wholesale Price (AWP) – the most common wholesaler price charged to its customers
  • Direct Price (DP) - represents the price reported to Medi-Span by a manufacturer at which non-wholesalers, who may re-sell directly or indirectly to retailers, purchase drugs from that manufacturer.
  • Manufacturer’s Suggested Wholesale Price (SWP) – The SWP represents the manufacturer’s suggested price for drug products sold by wholesalers to their customers.
  • CSM Federal Upper Limit (CMS FUL) – CMS has developed a list of multiple-source drug products with upper price limits for each specific strength and dosage form in its Medicaid Manual. The manual establishes ceiling prices for each set of therapeutically equivalent drug products according to the formula in the Medicaid final regulation published July 31, 1987 by CMS’s parent organization, the Department of Health and Human Services (HHS). The rule’s aggregate reimbursement ceiling is set at 150% of the lowest published price for therapeutically equivalent multiple-source drug products. CMS periodically updates the list of covered drug products.
  • Average AWP (AAWP) – average of all AWPs for each multi-source drug product in a given Generic Product Packaging Code (GPPC), not including the originator drug products.
  • Generic Equivalent Average Price (GEAP) -  The GEAP is a generic price applicable for all drug products sharing the same GPPC.

The correct price to use depends on your particular research question.

Tags: , ,

What most reduces adherence: increasing copayments or decreasing prescription lengths?

July 20, 2011 in Pharmaceuticals | No comments

According to this article, the answer is:

“Both policies decreased medication adherence. The days’ supply policy [decreasing the days supply of each prescription from 100 to 34 days] had a much larger effect on adherence than did the copayment increase. Total Medicaid spending declined from the days’ supply policy, but the copayment policy resulted in a net increase in Medicaid expenditures.”

If someone is very sick, the time/inconvenience cost to refill a prescription seems to be a more important factor than the out-of-pocket cost.  This is true even for the Medicaid population, which is of course made up of exclusively low income individuals.  Many economists measure the elasticity of demand with respect to price, but health economists may need to start constructing a demand elasticity measure with respect to inconvenience.

 

Tags: , , , , ,

Dose Chek

July 14, 2011 in Pharmaceuticals, Quality | No comments

How do you know if a patient is receiving the correct dose?  Better yet, how can you check if your entire patient panel is on the right dosage?

Although identifying the ‘right’ dosage is difficult, it is much easier to see if your patients are on the wrong dosage.  Medi-Span’s Dose-Chek data provides information on the following:

  • Screening for inappropriate daily dose
  • Screening for individual doses that exceed maximum recommended values
  • Screening for inappropriate duration of therapy

The Dose-Chek data describing minimum, usual, and maximum daily dosages, as well as maximum individual dosages for a drug product. Because appropriate dosage varies by patient type, Dose-Check has this information for normal adult, geriatric, pediatric, and infant patients in their database.

Tags: , , ,

Setting FDA Standards

July 5, 2011 in CER, Pharmaceuticals, Regulation | 1 comment

To what standard should the FDA hold new drugs?  The FDA has a number of choices.  Drugs companies could be required to prove that the drugs they make:

  • Do no harm.
  • Are more effective than placebos
  • Are more effective than existing drugs
  • Are more cost-effective than existing drugs, or
  • Are both more effective and more cost effective than existing drugs.

For my money, I believe the standard should be the first and second ones.  The drug company should simply have to show that the drug does no harm and is more effective than placebos.

Due to asymmetric information, however, the FDA could require the drug companies to compare their drug’s effectiveness against existing treatments or gauge the cost-effectiveness of the treatment.  Although these effectiveness and cost-effectiveness tests need not affect drug approval, insurance plans could use this information to determine if they should cover the drugs.

GoozNews has some interesting commentary regarding calls for the FDA to perform Stage III CER testing.

“I do not support the position of advocates like former New England Journal of Medicine editor Marcia Angell who think new drugs should have to be proven better than what exists before they are approved. If companies want to bring comparable therapies to market, that’s their business. It may even be the case that some me-too drugs work in some sub-populations, but not in others. So if one drug fails to achieve lower cholesterol, or offer arthritis pain relief, for instance, the doctor can switch her patient to the newer drug. But if the new drug is not proven to be better than what exists in a large Phase III trial, then physicians, patients and payers will have the information they need to insist that people start on the cheapest, comparably effective medicine that is available. For most drug classes, that will mean a generic.“

Tags: , , ,

Medical Societies and Industry Sponsorships

May 12, 2011 in Pharmaceuticals | No comments

Maybe money can’t buy you love…but can it buy you influence over physician treatment choices? That’s what many pharmaceutical and medical device firms are betting on.

Concerns about the influence of industry money have prompted universities [10] [10] such as Stanford and the University of Colorado-Denver to ban drug sales representatives from the halls of their hospitals and bar doctors from paid promotional speaking.  Yet, one area of medicine still welcomes the largesse: societies that represent specialists.

…Nearly half the $16 million the heart society collected in 2010 came from makers of drugs, catheters and defibrillators used to control abnormal heart rhythms, the group’s website disclosed.  Officials of the Heart Rhythm Society say industry money does not buy influence and is essential to developing new treatments.

Are these sponsorships a mechanisms for disseminating information to providers on new treatment options or a method of convincing physicians to change their treatment patterns. The distinction between physician education and marketing is often blurred.

Tags: , , , ,

Trends in Medicare Part D

April 25, 2011 in Medicare, Medicare Part D, Pharmaceuticals | 1 comment

Recent research from Avalere Health, LLC using Medicare Part D reveals some interesting trends.  Overall, premiums for fee-for-service prescription drug plans (PDPs) increased by 3%.  For beneficiaries who enrolled in a Top 10 plan, however, premiums actually decreased by 6%.  This result was driven by a 12% decrease in premiums for the largest PDP, AARP MedicareRxPreferred and the recent arrival of the low cost Humana-Walmart-Preferred Rx Plan.

Although the total number of Special Needs Plans (SNP) has held fairly steady over time, the number of enrollees in a dual-eligible SNP has risen by 11% between 2010 and 2011.  Additional information on SNPs is below.

Within the Medicare Advantage program, enrollment in HMO and PPO plans continues to grow as PFFS enrollment declines.

Additional Part D trends are highlighted below.  This spreadsheet provides even more detail.

Plan Consolidation in 2011

  • The top 3 PDP plans made up 45.4% of all PDP enrollees.  The top 10 plans made up 73.2% of all PDP enrollees.
  • CIGNA Medicare Rx Plan One joined the top 10 PDPs as did the Humana Walmart-Preferred Rx Plan.
  • UnitedHealth, Humana, and Kaiser provide MA benefits to 44% of all MA enrollees

Part D Sponsor Acquisition and Plan Consolidation

  • CVS Caremark will acquire Universal American’s PDP plans and members after Q1 of 2011
  • AARP MedicareRxSaver consolidated into AARP MedicareRxPreferred
  • PrescriberRxBronze consolidated into Community CCRxBasic

Prices

  • Overall, PDP premiums increased by 3%.  For beneficiaries who enrolled in a Top 10 plan, however, premiums actually decreased by 6%.  This result was driven by a 12% decrease in premiums for the largest PDP, AARP MedicareRxPreferred and the advent of the low cost Humana-Walmart-Preferred Rx Plan.

Special Needs Plans

According to the CMS website, Special Needs Plans (SNPs) were created by Congress in the Medicare Modernization Act (MMA) of 2003 as a new type of Medicare managed care plan focused on certain vulnerable groups of Medicare beneficiaries: the institutionalized, dual-eligibles and beneficiaries with severe or disabling chronic conditions. These beneficiaries are typically older, with multiple comorbid conditions, and thus are more challenging and costly to treat.  Dual-eligible SNPs also offer the opportunity of enhanced benefits by combining those available through Medicare and Medicaid…Specific legislative and regulatory provisions allow SNPs to focus on specific subsets of the Medicare population with the intent to improve care and control costs for these beneficiaries. Consistent, comparable measures that reflect the service delivery and outcomes important to these populations and that promote quality improvement and maturation of SNP products are necessary.

The fifteen SNP-specific chronic conditions approved for 2010 are: 1) Chronic alcohol and other drug dependence; 2) certain auto-immune disorders; 3) cancer (excluding pre-cancer conditions; 4) certain cardiovascular disorders; 5) chronic heart failure; 6) dementia; 7) diabetes mellitus; 8 ) end-stage liver disease; 9) end-stage renal disease requiring dialysis; 10) certain hematologic disorders; 11) HIV/AIDS; 12) certain chronic lung disorders; 13) certain mental health disorders; 14) certain neurologic disorders; and 15) stroke.

 

Tags: , ,

Do the elderly need help managing their prescriptions?

January 10, 2011 in Pharmaceuticals | No comments

According to this study, I would certainly say yes!

“The study reviewed pharmacy claims from the CVS Caremark pharmacy benefit management (PBM) book of business for 1.83 million patients taking statins, and 1.48 million patients taking angiotensen converting enzyme inhibitors (ACE inhibitors) or rennin angiotensen receptor blockers (ARBs) between June 1, 2006 and May 30, 2007…

During a three-month period, patients filled prescriptions for an average of 11 medications representing an average of six different drug classes, the researchers said.  ’More striking, during this 90-day time frame, 10 percent of these patients filled prescriptions for 23 or more medications . . . and 11 or more different drug classes, had prescriptions written by four or more prescribers, filled these prescriptions at two pharmacies and made 11 or more visits to those pharmacies,’ they said.”

Tags: ,

« Older entries