Despite options, doughnut hole hurts seniors
While it has been a boon to elderly Americans, Medicare Part D includes a complicating factor that has proven to be a headache.
Despite its seemingly charming name, the doughnut hole has proven to be a headache for many seniors. Also known as the Medicare Part D coverage gap, the doughnut hole is when drug costs reach a point when the patient becomes responsible for the entire cost, and Medicare doesn’t pay for them again until they reach the catastrophic-coverage threshold. The hole and threshold change from year to year.
Starting this year, the Centers for Medicare and Medicaid Services introduced a program that offers a 50% discount of branded drugs. But according to a December survey of 1,243 beneficiaries commissioned by the Medicare Today coalition and conducted by KRC Research, only 1-in-5 seniors were aware of the discount.
In many cases, entering the doughnut hole can be avoided or at least postponed by switching from branded drugs to generic drugs, but according to a study conducted by researchers form CVS Caremark, Harvard University and Brigham and Women’s Hospital released last month, Medicare Part D beneficiaries who enter the doughnut hole are twice as likely to discontinue their medications as they are to switch to more affordable or generic medications.
The study, published in PLoS Medicine, examined prescription drug use among more than 660,000 Medicare beneficiaries enrolled in more than 200 Medicare Part D and retiree drug plans in 2006 and 2007.
“Proponents of the doughnut hole argue the coverage gap benefits the healthcare system by making participants more sensitive to medication costs. There is an expectation that people will seek less expensive drug options when they enter the doughnut hole and that action will result in cost savings both for them and for their health plans,” stated Jennifer Polinski of the division of pharmacoepidemiology and pharmacoeconomics at Brigham and Women’s Hospital and Harvard Medical School, and lead author of the study. “However, our findings show that when beneficiaries have to bear the full financial burden of the cost of their medications, they are twice as likely to stop taking their medications altogether and become nonadherent as they are to switch to more affordable or generic drugs. The resulting decrease in medication adherence could ultimately result in higher medical costs as a result of adverse health events.”
The research team said that approximately one-third of the 663,850 beneficiaries it tracked in 2006 and 2007 reached the doughnut hole seven months into the fiscal year. Other studies estimated between 11% and 14% of Part D enrollees who do not receive a low-income subsidy reach the doughnut hole each year.
“No doubt, this is a difficult area for policy-makers. Taking cost out of the healthcare system is something everyone is trying to achieve,” added Troyen Brennan, EVP and chief medical officer of CVS Caremark, who heads the research initiative that conducted the study. “The Affordable Care Act incrementally eliminates the doughnut hole by 2020, but until that time, program beneficiaries remain at risk of decreased drug utilization because of high out-of-pocket drug costs. A strategy that promotes the use of low cost medications and that keeps people adherent would result in better health outcomes and overall reduced healthcare costs.”
The Medicare Part D study is a product of a three-year research collaboration between CVS Caremark, Harvard, and Brigham and Women’s Hospital that is focused on understanding why many consumers do not take their prescriptions as directed and developing solutions to assist patients in using their medications effectively.
Industry faces new issues concerning generic drug regulations
NEW YORK — While settlements constitute the most prominent patent-related issue for generic drugs, two others have cropped up this year as well.
In June, the Supreme Court said it would hear the case of Caraco Pharmaceutical Labs, Ltd. v. Novo Nordisk A/S, concerning Novo Nordisk’s Type 2 diabetes drug Prandin (repaglinide). Novo Nordisk had patent protection for the drug when combined with metformin, but not as a stand-alone therapy. Caraco sought approval of generic repaglinide for use alone, without metformin, under a provision of the Hatch-Waxman Act that allows the Food and Drug Administration to approve a generic version of a drug for approved uses not covered by any patent, allowing Caraco to avoid patent litigation. But Novo Nordisk changed its use code, a description of the patent required for FDA filing, to encompass use of Prandin alone, thus requiring the FDA to turn down Caraco’s approval application. Caraco filed a counterclaim requesting that Novo Nordisk be required to change the use code back to the original because its patents only cover Prandin in combination with metformin.
Another issue is the America Invents Act, introduced in March. The Generic Pharmaceutical Association has expressed opposition to a provision of the bill that it said would allow patent holders who knowingly falsify or omit information in their original patent applications to retroactively correct their filings without any consequences. Generic drug companies frequently use falsifications and omissions in patent applications as a basis for challenging the validity of patents when they wish to market a generic version of a drug prior to patent expiration.
Biosimilar path to take form by patent cliff
It’s hard to disagree that generic drug companies have had a good run for the last several years. Branded drug companies developed a large number of drugs that proved highly effective at treating widespread medical conditions and became blockbusters, garnering billions of dollars in sales in the United States alone. As patents on these blockbuster drugs have expired, they’ve provided generic manufacturers with enormous revenues, helping some to join the ranks of the world’s biggest drug companies.
Over the next few years, however, the party will come to an end as the number of blockbusters losing patent protection dwindles, part of what experts have come to call the “patent cliff.” While this will force many generic drug companies to merge, larger companies are looking to biosimilars.
The Affordable Care Act included a provision to create a regulatory approval pathway for biosimilars, though it turned out to be something of a pyrrhic victory for generics manufacturers because it would grant 12 years of market exclusivity to biotech drugs instead of the five years given to pharmaceuticals. Nevertheless, it brings biosimilars one step closer to the market.
“In terms of biosimilar drug manufacturers, there are huge opportunities because their biosimilar products have the potential to erode significant sales away from the branded agent,” Decision Resources analyst Andrew Merron told Drug Store News. “Biosimilars will target the most commercially successful branded biologics, and even if the biosimilar only manages to capture a small percentage of erosion from the major biologic blockbusters, sales could still be significant.”
IMS Health expected the global market for biosimilars to be between $1.9 billion and $2.6 billion by 2015, but its actual value — let alone the U.S. market’s value — remains uncertain. “That is a question that we are debating quite vigorously right now,” IMS Health VP industry relations Doug Long told DSN.
One major issue that remains is the form the regulations will take. The trouble with biosimilars, compared with generic pharmaceuticals, is that differences in the cells used to produce a reference product and those used to produce a biosimilar make it difficult to produce an exact copy, meaning that clinical trials will be necessary to determine that the latter is as safe and effective as the former. “The law has been passed; everybody’s waiting for the guidelines,” Long said. “When they will come out is anybody’s guess.” Still, Long said IMS expected them to hit the market in late 2013 or 2014.
Companies that already make biosimilars for the European market — Teva Pharmaceutical Industries, Sandoz and Hospira — are likely to be the first to market in the United States as well, Long said. In addition, Mylan and Watson have expressed an interest, but whether or not talk about making biosimilars will translate into action is unclear. With the costs of developing biosimilars estimated in the hundreds of millions of dollars, according to most analyses, the number of companies making them will probably remain small.
In terms of the first products, Long and Merron both said biosimilar versions of such drugs as Amgen’s Neupogen (filgrastim) and Neulasta (pegfilgrastim) — used to prevent infections in patients on chemotherapy — as well as epoetins would come before more complex treatments for cancers and autoimmune disorders, such as monoclonal antibodies. Teva applied last January for FDA approval of its versions of Neupogen and Neulasta, which it already markets in Europe. In the absence of an abbreviated approval pathway, it had to apply using a biologics license application — the same process used by branded biologics manufacturers — and Amgen has sought to block it. In July, Teva and Amgen reached a settlement that would allow Teva to launch its versions by November 2013.