PHARMACY

Surescripts unveils lower pricing policy

BY Jim Frederick

ALEXANDRIA, Va., and ST. PAUL, Minn., Electronic prescribing network provider Surescripts made its new, lower pricing policy official Tuesday, announcing that it has lowered the cost of e-prescribing services used millions of times a day by physicians, pharmacists and pharmacy benefit managers.

Surescripts president and CEO Harry Totonis first revealed plans to lower the company’s pricing policy in an interview published in the Jan. 12, 2010 issue of Drug Store News. At that time, Totonis predicted Surescripts would cut its prices to chain and indendent pharmacies by an average of 10% to 20%.

Tuesday’s announcement is the company’s formal unveiling of that policy, which went into effect for many subscribers in January.

In part, said Totonis, the company’s ability to cut the cost of paperless prescribing for doctors, pharmacists and PBMs sprang from the merger last year of rival RxHub with Surescripts. “Our decision to lower prices fulfills a public promise made when legacy SureScripts and RxHub were founded,” said Totonis. “Three things have enabled us to keep this promise: Surescripts’ ongoing commitment to its own operational efficiency; the economies of scale resulting from the merger; and Surescripts’ success in working with healthcare organizations across the country to create and meet the growing demand for e-prescribing.”

Totonis indicated that more price reductions may follow as health information technology and electronic communications efficiencies further transform the U.S. health care system. “We are not done yet,” he vowed. “With this price reduction, we are focused on the opportunity to connect even more physicians, pharmacies, payers and patients. As we add more participants to the network, this will continue to drive down the cost of e-prescribing, as our efficiency, scale and economics improve.

“As this occurs, we will again pass those savings along to the industry,” Totonis promised.

Surescripts was founded in 2001 by the National Association of Chain Drug Stores and the National Community Pharmacists Association to foster the adoption of e-prescribing, improve efficiencies and lower costs. It has grown to become the nation’s largest e-prescription network.

“For community pharmacies, this growth not only lowers the cost of e-prescribing, but begins to realize the gains in efficiency that we all envisioned from the beginning,” said NCPA EVP and CEO Bruce Roberts.

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FTC pushes to end patent settlements, vexing branded, generic drug industry

BY Alaric DeArment

NEW YORK On a lot of issues, the branded and generic drug industries agree about as readily as bacteria and antibiotics, but they have united on one issue: patent settlements.

Patent settlements between brand and generic drug companies, particularly those that involve brand companies paying generics companies, have come under fire lately from the Federal Trade Commission, which released a report last month similar to one released in June 2009 that asserted such deals prevent the timely entry of generic drugs onto the market and recommended that Congress move to ban them. Bills were introduced in both houses of Congress last year to ban what the FTC has called “pay-for-delay” deals, though neither succeeded.

“The problem with these sweetheart deals is clear,” FTC chairman Jon Leibowitz said in a Jan. 13 press conference to mark the report’s release. “Branded pharmaceutical companies are literally paying their generic competitors to stay off the market. Does it seem right that a company can make money by not selling its product? Of course not.”

Patent settlements are permitted under the Hatch-Waxman Act of 1984. A generic company that wishes to market its version of a branded drug before the patent expires will file for regulatory approval with the Food and Drug Administration with a paragraph-IV certification, which asserts that the drug’s patent is invalid, unenforceable or won’t be infringed. This usually prompts a patent litigation suit from the branded drug maker, which bars the generic company from marketing its drug for 30 months or until it wins the suit or reaches a settlement with the brand company.

For the FTC, settlements become a problem when they involve the brand company paying the generic company not to immediately launch its product, with payment including anything from monetary compensation to the promise not to market an authorized generic during the generic company’s customary six months’ market exclusivity after the patent expires. According to the commission’s report, generic launch occurs, on average, 17 months later when settlements involve payment than when they do not, costing consumers $3.5 billion a year.

But the Generic Pharmaceutical Association, the Pharmaceutical Research and Manufacturers of America, and some analysts have criticized the report. For starters, an agreement to delay generic launch after the expiration of a patent would be illegal, GPhA president and CEO Kathleen Jaeger told Drug Store News, and she disputed the validity of the phrase “pay-for-delay.” Not only that, Jaeger said, but settlements often bring generic drugs to market earlier than when no settlement occurs, before the expiration of the patent. According to an analysis by RBC Capital Markets, generic companies have prevailed in 48% of patent litigation cases that have gone to trial overall over the last decade, but that figure increases to 76% when settlements are included; more than half of all cases are settled or dropped.

“They’ve couched it in a cute little phrase here, but it’s really misleading, and it’s wrong,” Jaeger told Drug Store News. “The vast majority of settlements are bringing in products so many years earlier.”

Soon after the FTC released its report, investment-banking firm Jefferies hit back with a strongly worded analysis challenging the FTC’s conclusions and methodology. Among other problems Jefferies said it found, the report didn’t consider the savings generated by generic entry before patent expiration and “falsely” assumed that patent settlements would continue to happen if payments were banned. It also, Jeffries said, didn’t take into account such variables as payment magnitude or the time of patent expiration. According to the Jefferies report, a ban on payments in settlements would make settlements generally less likely to occur.

“The end result is that our companies are not going to invest in the patent settlements that they do today,” Jaeger said.

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At least until the Ides of March, Walgreens agrees to fill Washington Medicaid scripts

BY Rob Eder

DEERFIELD, Ill. Walgreens has announced that it will continue to fill Medicaid prescriptions at its Washington state pharmacies until March 15. The company previously announced that it would stop filling Medicaid prescriptions in 64 of its 121 pharmacies due to a continued reduction in reimbursement under the State of Washington Medicaid program. The company made the decision to delay the withdrawal of the program as talks continue between the company and state. Secretary of the Washington State Department of Social and Health Services, Susan Drayfus, has stated that the state is grateful for Walgreens’ delay.

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