Generic Drugmakers Are in Big Trouble

Generic Drugmakers Are in Big Trouble

June 21, 2019 – A major lawsuit accuses generic drug makers of a price-fixing conspiracy and “billions of dollars of damage” to the US economy.

A new lawsuit, joined by 43 states, was filed May 10 in the U.S. District Court in Connecticut. According to Connecticut’s Attorney General William Tong, appearing on CBS’ 60 Minutes, dramatic price increases for some of the industry’s most common drugs between 2013 and 2014 were the result of a massive price-fixing scheme involving some 20 drug makers, including the world’s largest generic drug maker, Teva Pharmaceuticals.

The price increases hit patients with high-deductible corporate insurance plans particularly hard, according to consumer advocates.

As Scripta has often noted between 2010 and 2015, more than 300 generic drugs had at least one price increase of 100% or more. This lawsuit serves as proof once again that generics now require as much (if not more) vigilance from payers as do brand-name drugs. Indeed, payers and patients have long been at the mercy of drug makers, drug wholesalers and, yes, quite possibly your PBM.

Generic substitution is just one step towards a comprehensive pharmacy benefit savings plan. Contact one of Scripta’s savings experts to learn how to protect your company and your employees from price manipulation.

GENERIC DRUG MAKERS: “TOO BIG TO CARE.”
As one might imagine, the market for generic drugs is massive. According to recent research, patients around the world spent over $200 billion on generic drugs in 2015, a market that is expected to reach $380 billion by 2021. In the US alone that market is $100 billion, and the market for generics have grown from less than 20% of total prescriptions to upwards of 90% of prescriptions filled.

Attorney General Tong, during his turn on 60 Minutes, laid out a strong case for collusion in carving up that market. With access to phone records and text messages, his office uncovered a “massive systematic conspiracy to bilk customers out of billions of dollars.” As a result, more than 1200 of the most-prescribed drugs jumped on average 400% in a single year.

According to antitrust investigators, if proven the drug makers’ collusion may constitute one of “the most egregious examples of corporate greed” ever seen. The industry and defendants including Pfizer, whose wholly-owned subsidiary Greenstone, LLC is named in the suit, “vehemently” deny the accusations and will “vigorously” contest the lawsuit.

WHAT DOES COLLUSION LOOK LIKE?
So how did drug makers manufacture the price increases?

Congress established the current generic industry in 1984 to push prices down and foster competition. But according to the lawsuit, sales directors, marketers, and CEO’s alike (and as far back as 1986) participated in a complex price-fixing scheme by “playing nice in the sandbox together.”

Writing in the Hartford Courant, Josh Kovner offers an example: Pravastin, a cholesterol-lowering medication, made $1.3 million under the brand name Pravachol for Bristol Myers Squibb in the year before it came off patent protection and entered the generic market in 2006.

Kovner explains what happened next: “Five companies produced the generic version — Teva, Glenmark, Zydus, Lupin and Apotex… Up until the spring of 2013, a bottle of 10 mg Pravastatin tablets was selling for about $27…. by the end of August 2013, all five companies had raised their prices and had agreed not to undercut one another, even to the point of refusing to offer lower prices when wholesalers came seeking relief… Once the fifth company locked in at the high price, Pravastatin was selling for about $196 per bottle, according to the lawsuit.

“The lawsuit says that the net profits for Teva from the manipulation surpassed $653 million — per quarter.”

PRICE-FIXING AFFECTS ALL OF US
Generic drug prices spiked between 2013 and 2015, and even though they have remained stable ever since, that inflationary moment has affected health insurance premiums and impacted Medicare and Medicaid, driving up the cost of American healthcare.

Mr. Tong noted two additional examples among the 1215 drugs that saw price increases during this period: Doxacyclene, a common antibiotic, the price of which rose 8281% fro $20 to more than $1800 between 2013 and 2014. Nystatin cost just $68 a bottle for years until April 2013, when it doubled in price, with Heritage Pharmaceuticals leading the way for Sun and Teva.

As Ted Doolittle, the state health advocate and a former federal prosecutor, put it, speaking again with the Hartford Courant, “Moving people toward generics had been somewhat effective” in combating the rising cost of health care. “The victims of this fraud,” he says, “are our families, our loved ones, our neighbors.”

Generic substitution is just one step towards a comprehensive pharmacy benefit savings plan. Contact one of Scripta’s savings experts to learn how to protect your company and your employees from price manipulation.

Sourcing:

Give Plan Members the Tools They Need

Give Plan Members the Tools They Need

High-deductible plans haven’t encouraged employees to shop more effectively for health care because they haven’t been given the tools they need in order to do so.

With PBMs and high prescription drug prices back in the news, it’s worth asking once again: “Why did we design a health plan that has the ability to deliver a $1,000 surprise to employees?” It’s a good question. In a 2018 article that remains pertinent today, Bloomberg offers a portrait of an American healthcare system in collapse:

“39% of large employers offer only high-deductible plans, up from 7% in 2009, according to a survey by the National Business Group on Health. Half of all workers now have health insurance with a deductible of at least $1,000 for an individual, up from 22% in 2009, according to data from the Kaiser Family Foundation.” This despite the fact that, according to the Federal Reserve, a large and growing number of American families cannot afford a $400 emergency expense without borrowing or selling something.

Interestingly, these high-deductible plans were designed to encourage patients to make value-based decisions – to make us better shoppers so that we save money (for both the patient and the payer). Instead, many Americans arrive at the pharmacy counter to find that they simply can’t afford their medications.

Scripta has years of experience driving savings for self-funded companies and their employees. We contend that high-deductible plans haven’t encouraged employees to shop more effectively for health care because they haven’t been given the tools they need in order to do so.

Contact Scripta to learn more about how Scripta can help you and your employees save.

Percent of People with High Deductible Plan By Year

The most startling thing about the Bloomberg article? Even companies like pharmacy Giant CVS are taking notice. (We would argue that they are nevertheless part of the problem, but we digress…) CVS noticed that as they pushed more costs onto employees, some stopped taking their medications. As a result, the company has recently announced plans to cover more care before workers are exposed to the cost.

CVS isn’t alone in questioning a system they say costs patients too much. JPMorgan’s CEO Jamie Dimon told Bloomberg, “We all thought high deductibles are going to drive people to get involved—skin in the game,” but instead, “they didn’t get the surgery they needed, when they needed it, because they can’t afford the high deductible in one shot.”

JPMorgan has since effectively eliminated deductibles for workers making less than $60,000 a year. Most self-funded companies don’t have that luxury, and that’s where Scripta can help.

Scripta works with self-funded employers and their trusted benefits advisers to eliminate surprises at the pharmacy counter. We arm employees with reports that help them understand ALL of their therapeutic options, and these same reports help guide discussions with caregivers, so that together patients and their doctors can take advantage of savings opportunities – saving money without sacrificing quality of care.

Scripta provides employees with personalized medication savings reports so they can afford to follow doctor’s orders AND save money. Contact one of our pharmacy benefit savings experts to find out how.

Sourcing:

Supply Chain Complexity and Rx Pricing Games

Supply Chain Complexity and Rx Pricing Games

February 7, 2019 – For any given prescription drug, there are often five companies involved in getting it to the consumer, and that’s the way they like it.

Scripta was founded by doctors, and we’ve spent years studying prescription pricing games. We have hundreds of examples of systemic pricing anomalies that affect healthcare at the most basic level: If patients can’t afford their drugs, they don’t follow doctor’s orders.

High deductible plans were supposed to make employees “smarter consumers,” but without the right tools, how is an employee (or her doctor) supposed to make better choices?

While it’s fashionable to blame the drug companies for rising drug prices, they aren’t the only ones with their hand in the cookie jar. For years, drug makers, drug wholesalers, pharmacies, and pharmacy benefit managers (also known as PBMs) have thrived in a complex system that conceals profiteering.

Just have a look at this superb infographic by Skype Gould for Business Insider:

Who pays for your prescription?

SYSTEMATIC INEFFICIENCIES ARE DRIVING RX INFLATION

The complexity is the point. It gives cover to profit-taking by any number of companies in the supply chain. And, as Justin Leader of Benefit Design Specialists noted in a tweet, it helps to explain why we can’t point to one villain when it comes to prescription drug price increases.

In the same way that “Employees see a $10 or $20 copay and never think about what you are being charged as a self-funded employer on the back end,” as Justin puts it, payers in turn are forced to rely on and trust in the beneficence of their own PBM (as if that PBM were not also answerable to shareholders).

The Business Insider article does a good job of outlining the state of play noting that, “Lately… some people have come to wonder if PBMs serve much of a purpose at all, other than skimming off profits for themselves. That’s because the PBM have an enviable position in the middle of all this…”

After reading the article, you may feel a sense of unease regarding your pharmacy spend. Give the pharmacy benefit experts at Scripta a call. We know how to win at the games the pharmaceutical giants (and PBMs) play.

Read More:

Welcome to Million-Dollar Healthcare

Welcome to Million-Dollar Healthcare

The advent of million-dollar drugs is bad news for employers and, by extension, for the 61% of covered workers who participate in a self-funded plan.

Changes in U.S. health policy have made it more lucrative for drug makers to develop and sell high-cost drugs. Efforts to develop lower-cost versions of these drugs have been stymied. And this rampant profit-taking is taking a toll on patients as well as the U.S. health system.

The number of patients whose medical care cost at least a million dollars over the course of a year rose by nearly 90% between 2014 and 2017, according to a new report conducted by Sun Life. Dan Fishbein, president of Sun Life Financial U.S told MarketWatch, “We’re seeing drug claims that can be in the millions of dollars.

“Most people don’t imagine getting an $80,000 prescription, but that’s relatively common now.”

It’s not necessarily just patients feeling the squeeze. Many firms, particularly larger firms, choose to pay for some or all of the health services of their workers directly from their own funds rather than by purchasing health insurance for them. Today, 61% of covered workers are depend on a plan that is completely or partially self-funded.

If you are a self-funded employer, you are particularly vulnerable to the shift toward high-cost drugs. Contact one of Scripta’s pharmacy benefit experts for a review of your specialty drug management policy.

Percentage of Workers Self Funded Plans 2018

Sourcing:

Diabetics Are Feeling the Squeeze

Diabetics Are Feeling the Squeeze

More than a third of U.S. adults have diabetes or prediabetes, and the price of insulin has more than doubled in the past 5 years.

Per-person spending on insulin doubled in a recent five-year period, according to a report released Tuesday by the Health Care Cost Institute.

Individuals with type 1 diabetes spent an average of $5,705 on insulin in 2016, compared with $2,864 in 2012, according to the study. Yes, insulin prices DOUBLED in 5 years, due almost entirely to price increases at the point of sale. Inflation, for the record, is about 2% annually.

This is of special import for payers, as one third of U.S. adults are now living with diabetes or prediabetes, according to a separate report from the Centers for Disease Control and Prevention (CDC). Their report finds that as of 2015, 30.3 million Americans – 9.4 percent of the U.S. population – have diabetes.

Dramatic price increases like this have the biggest impact on the uninsured and those with the high-deductible health plans currently in fashion with self-funded employers seeking shelter from skyrocketing healthcare costs. And we have seen that as out-of-pocket costs increase, especially for patients with chronic conditions, diseases often go untreated and other health issues are almost certain to follow.

Your employees should be able to follow doctor’s orders AND save money. Contact one of our pharmacy benefit savings experts to find out how.

Rx spending diabetics

According to the Health Care Cost Institute study, for a type I diabetic using an average amount of insulin, the price increased from $7.80 a day in 2012 to $15 a day in 2016. This after the cost of insulin tripled between 2002 and 2013.

Here, it is worth noting that Frederick Banting, who discovered insulin in 1923, surrendered the patent for nothing – for free – because he thought it should be available to and affordable for everyone.

Policymakers are taking notice. In May 2018 the American Diabetes Association testified before Congress on the issue. The state of Minnesota is taking action by suing three of the world’s largest insulin manufacturers. And now, Colorado Gov. Jared Polis has signed a bill into law that places a $100 per month cap on insulin co-pays, regardless of how much insulin a patient uses.

Payers like you (or your clients) will be expected to foot any costs over and above.

Scripta provides employees with personalized medication savings reports so they can afford to follow doctor’s orders AND save money. Contact one of our pharmacy benefit savings experts to find out how.

Read More:

Healthcare Waste is Costing Payers Billions

Healthcare Waste is Costing Payers Billions

Healthcare waste costs $750 billion per year, and most employers aren’t doing anything about it. Are you one of them?

According to a survey commissioned by the National Alliance of Healthcare Purchaser Coalitions, some 60% of employers don’t take steps to manage their healthcare plan’s wasteful spending.

Click here to view the summary report.

The NAHPC is a non-profit, membership association representing more than 12,000 healthcare purchasers and 45 million Americans. President and CEO, Michael Thompson notes that, “While waste has long been identified as a key concern and cost contributor, employers are operating blind and need to look at a more disciplined approach to address top drivers that influence waste.”

Not doing anything to address healthcare waste? Contact Scripta and let us run the numbers to find out how much you could be saving.

Healthcare Waste Costs Billions

Among the categories most directly associated with waste: out-of-control prescription drug pricing and specialty drugs.

At Scripta, we know that the savings opportunities are right there in your PBM data, but we also know that it takes a great deal of expertise to mine that data put it to work. Perhaps that is why only 7% of the employers surveyed could say, “Yes, our organization internally collects and analyzes data to track waste.”

Worse, as Employee Benefit News put it: “Most employers don’t monitor unnecessary healthcare spending. The 34% of employers who do rely entirely on their healthcare vendors to do it for them, trusting that it’s being taken care of.”

That’s where Scripta can help.

Scripta’s team has been analyzing pharmacy benefits data for nearly a decade now. Armed with insights derived from our best-in-class technology, we know where to look to find savings. As importantly, we know how to prevent unpleasant surprises because we understand the games PBMs play when you’re not looking over their shoulders.

Scripta works with benefit advisers and insurance brokers to identify wasteful spending and stop it, without compromising quality of care.

Sourcing: