A Prescription for Savings

1

• A Prescription for Savings
• Marcia Hams- Community Catalyst
• Bill Vaughn Consumer Union
• Peter Wyckoff Community Catalyst
• January 27, 2007

Version 2
2

• A Prescription for Savings
• Marcia Hams- Community Catalyst, Director of
  Director of Prescription Policy Initiatives -
  directs state and payer policy initiatives for
  the Prescription Project, a new national effort.
  www.communitycatalyst.org
• Bill Vaughn Consumers Union, Senior Policy
  Analyst in the health sector former staff to
  House Ways and Means Committee and Director of
  Government Relations for Families USA
  http//www.consumerreports.org/cro/aboutus/index.h
  tm
• Peter Wyckoff Community Catalyst field staff,
  founder of Minnesota Senior Federation from
  1973-2006 www.mnseniors.org email
  pete.wyckoff_at_yahoo.com

Version 2
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U.S. Drug Prices the Highest in the World and
only getting worse
2000 60 More
2003 81 More
Average Percentage more that Americans pay for
brand drugs then 7 Western Nations
Source Boston University School of Public Health
October 28, 2004 Based on formulary of 1,000
patent drugs
4
Amount U.S. Pays for patented drugs 2003 compared
to
58
Switzerland
63
Britain
73
Germany
75
Canada
87
Sweden
108
France
118
Italy
Source Health Reform Program Calculations from
Patented Prices Review Board reports (Trends in
Drug Prices and Expenditures tables) Based on
formulary of 1,000 patent drugs
5
Top Drugs Most Used by Elderly
Brand Price Inflation CPI All
1998 to 2004
Annual Change in Wholesale Cost
Brand Inflation
Drug Firm Discount Cards
National Elections
Medicare Discount Card Began
CPI All Items
Source Compiled by the PRIME Institute, Univ. of
Minnesota from data found in MediSpans PriceChek
PC and Penn. PACE program annual reports.
6
Medicare Part D (January 2006)Percentage of
Savings on Drug Costs
Compared to Avg. Canadian Rx Costs
52
Avg. Canadian prices
PDP Negotiated Rate - 2006
12
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The Problem

• Out of control industry marketing
• Industry influence in government
• Quality of care compromised
• Pharmaceutical costs out of control
• Consumers cant afford their drugs

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Rx Marketing to Doctors

• Industry spends 12B/year on drug marketing to
  MDs (13,000/MD)
  
• 90,000 sales reps (1 for every 5 MDs)
• Gifts, lunches, trips, educational grants,
  entertainment, free samples

10
Rx Marketing to Consumers

• Over 4.5 Billion spent by industry in 2006
• Focus on new, expensive treatments
• Ads promote drugs for new diseases
• 50 most heavily marketing drugs accounted for 50
  of increased sales

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Impact of marketing on prescribing

• Even small gifts create obligation and influence
  prescribing decisions
  
• Free samples create loyalty to brand
• Doctors sometimes paid to promote expensive new
  drugs and off-label uses

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Impact on costs

• Marketing is 30 of cost of drugs
• Only 10-15 spent on RD
• Expensive me-too drugs marketed
• 17 of cost increases due to switches to more
  expensive drugs
  
• Generics cost 30-80 less

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• A Prescription for Savings

The Solution

• State and National Perspective
• Public Policy Changes
• Administrative Change
• Institutional Change
• Litigation

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• Prescription for Savings
• from a National Perspective
• Bill Vaughn

16

• Prescription for Savings
• from a National Perspective
• Bill Vaughn

• Mr. Vaughns presentation did not include Power
  Point Slides but provided information on
  
• House HR 4 removes limitation on Government
  negotiating drugs for Medicare Part D, but
  prohibits a national formulary.
  
• Discussed Veterans Administration drug formulary
  and myths associated with it.
  
• S 250 (Wyden and Snowe) lets government
  negotiate on drug prices with heavy Federal
  research dollars or unique price problems
  
• Prescription Importation Legislation discussed
  by Pete Wyckoff with following slides

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Medicare Prescription Drug Medicare Reform Act

• Must control prescription drug costs if
  legislation is to
  
• Provide adequate coverage
• Not bankrupt our economy
• 400 billion appropriated cost

724 billion

• 1.9 trillion liability

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Real Options to control prescription drug costs

• Negotiations and price controls
• Opening up U.S. prescription drug pricing to
  world competition and free trade
  
• 2007 Prescription Drug Importation Debate

• Not about safety.
• Not about importation, rather is about
• About the cost of drugs for all Americans.

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Comparison of Prescription Drug Prices Twin
Cities with Canadian and European
Survey Taken 5-14-06 All prices are US dollars
(Walgreens.com) - International prices include a
ll professional fees, but not postage
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Pharmaceutical Market Access and Drug Safety Act
of 2007
House H.R.- 380 Senate S-242
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2007 Pharmaceutical Market Access Act

• House Sponsored by Reps. Rahm Emanuel (D-IL), and
  Jo Ann Emerson (R-KS)
  
• Helps all Americans, not just seniors
• Allows individuals, wholesalers pharmacists to
  import from FDA approved facilities in 30
  countries
  
• Raises drug safety with Platinum standard against
  counterfeiting

23
2007 Pharmaceutical Market Access and Safety Act
- S- 242 Senate Vote Soon

• Senate Sponsored by Byron Dorgan (D-ND) Olympia
  Snowe (R-Maine) 30 co-sponsors
  
• Allows individuals, wholesalers pharmacists to
  import from FDA approved facilities in 30
  countries
  
• Raises drug safety with Platinum standard against
  counterfeiting with additional provisions from
  House Passed bill
  
• Has anti-gaming provisions to stop drug companies
  from cutting off supply to countries

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• Prescription for Savings
• from a State Perspective
• Marcia Hams

25
Reducing Drug Industry Influence Improving
CareGovernment and payer solutionsMedical
profession solutions Legal strategies

• Community Catalyst www.communitycatalyst.org
• January, 2006

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Solutions

• Federal regulation and payer policies
• State regulation and payer policies
• Private insurer policies
• Medical profession self-regulation
• Litigation

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State Regulation and Policy Solutions

• Increase the use of evidence-based, independent
  information by doctors, hospitals and public
  payers
  
• Regulate and reduce conflicts of interest

28
Evidence-Based prescribing strategies

• Evidence-based review and prescribing policies
• Expand use of generic drugs
• Physician education

29
Evidence- Based Review and Prescribing
Policies

• Drug Effectiveness Review Project used by 15
  states
  
• Statutory requirements to use EBM as basis for
  public purchasing (WA)
  
• State Preferred Drug Lists

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Expand Use of Generic Drugs

• Average now 56 of all drug sales
• 70 at Kaiser Permanente
• Generic substitution laws not sufficient
• Need MD education and/or prior approval

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Physician Education Academic/Counter Detailing

• Evidence based information to physicians in
  offices
  
• Pennsylvania project in Medicaid, senior
  programs, state employees
  
• Health plans such as Kaiser, Health Partners can
  do in-house
  

32
State Level Solutions Reducing Conflicts of
Interest

• Gift bans and disclosure
• Data mining
• Clinical trials registries

33
Disclosures of or bans on industry marketing

• Vermont statute (2002) individual MD reports to
  AG which publishes report
  
• Minnesota statute (1993) 50 limit for gifts
  but education and many other exemptions
  
• West Virginia (2004) Broad disclosure but
  individual MD names excluded from public
  

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Bans on sale of prescriber data to drug industry

• Industry purchases prescribing data from
  pharmacies and lists from AMA
  
• Used to micro-market to MDs
• New Hampshire statute (2006) bans
• PhRMA challenging NH law

35
Clinical Trials Registries

• Register all studies
• Combats publication bias, deceptive reporting of
  results
  
• Maine (2005) passed comprehensive statute. Also
  statute in VA with bills pending in NV, and IL.
  

36
Medical Profession Self Regulation

• Academic Medical Centers
• Medical Societies
• Hospitals
• Individual physicians

37
AMC standards Proposed in JAMA, 2006

• Gifting
• Drug samples
• Drug formularies in hospital
• Continuing Medical Education
• Funds for physician travel
• Speakers bureaus and ghostwriting
• Consulting and research grants

38
Medical Profession action

• AMCs Yale, Univ. Penn, Stanford, UC Davis
• Physician leaders expose problem, call for action
  in books/articles
  
• AMSA (medical students) PharmFree campaign
• No Free Lunch campaign

39
Litigation Strategies Prescription Access Litig
ation Project

• Use class action lawsuits and public education
  to
  
• Make prescription drugs more affordable
• End illegal drug company marketing and price
  tactics
  

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The PAL Coalitionbringing a range of consumer
constituencies together

• 125 organizations from 35 states and the
  District of Columbia
  
• State-based consumer groups (including PIRGs
  in 10 states)
  
• Senior groups
• Unions
• Health welfare funds
• Non-profit health plans
• Other national organizations

41
Challenge Company Schemes

• Keeping Generics off the Market
• Relafen, Buspar
• Deceptive Marketing
• Nexium, Vioxx, Zyprexa
• Gaming the pricing system
• Average Wholesale Price, First Databank

42
PAL Case Settlements

• Buspar 90 million
• Relafen 75 million
• Lupron 150 million
• Augmentin 29 million
• GlaxoSmithKline 70 million
• First Databank Rollback worth 4 billion

43
Strategies for Rx Reform Campaigns

• Analyze problem and needs
• Define policy solutions
• Voluntary
• Administrative
• Statutory change
• Litigation
• Recruit leadership

44
Rationales for Rx Reform

• Need for affordable coverage of Rx
• Protection of existing programs and plans
• Sustaining comprehensive expansions
• Establishing trust in medicine
• Combating industry influence

45
Institutional Change

• Leaders and allies
• Rationale for action
• Medical professionalism standards
• Pressure from media, legislation, litigation,
  community
  
• Quality, cost considerations
• Design and implement solutions
• Collaboration with other organizations

46
Advocacy Campaigns

• Recruit allies and develop coalition
• Develop solutions and strategy
• Identify legislative/policy maker champions
• Build public support/grassroots
• Media
• Funding

47
Minnesota physician and consumer education
campaign

• Minnesota Senior Federation---consumer leader of
  broad coalition
  
• CRBestBuy Drugs the educational tool
• Medical society, health plan active involvement
  and innovation
  
• Support of Governor
• Academic resources and evaluation

48
METHODS (1) Drug Effectiveness Review Project (
DERP)

• Pioneering work under leadership of former Oregon
  Governor John Kitzhaber

• Drug Effectiveness Review Project Oregon Health
  Science University Evidence-Based Practice
  Center

• Partnership (DERP) now includes 15 states and two
  non-profit organizations
  
• Systematic reviews by AHRQs Evidence-Based
  Practice Centers
  
• Process transparent, unbiased, rigorous, highly
  regarded

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• METHODS
• (2) Medical Input and Prices
• Input from medical consultant
• Data on average national retail price paid by
  cash-paying consumer
  
• CU team reviews effectiveness and cost
• Input from CUs medical advisor, health editorial
  team, statistician, 2-3 outside medical peer
  reviewers for each category

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• METHODS
• (3) Identifying CR Best Buy Drugs

• CU team reviews the effectiveness and cost data,
  and selects one or more drugs that
  
• Are in the top tier of effectiveness
• Have a safety record as good as others in the
  category
  
• Have an average price substantially lower than
  the most costly drug in the category

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• BEST BUY DRUGS CholesterolLowering
  Drugs/Statins
  
• For moderate cholesterol reduction
• Generic lovastatin 10 mg or 20 mg
• For substantial cholesterol reduction
• Atorvastatin (Lipitor)

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• POTENTIAL SAVINGS -- switching from high-priced
  statin to CR Best Buy Drug
  
• For those needing moderate cholesterol reduction
  108 monthly
  
• For those needing substantial cholesterol
  reduction 31 monthly
  
• Potential savings from pill splitting Up to
  58.50 per month

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www.crbestbuydrug.org home page as of 1-25-07
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Minnesota
An Outreach Program of the
In collaboration with..
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• A Few Facts

• Premier advocacy, educational organization of
  older Minnesotans 15,000 members, 300
  affiliated organizations

• Non- profit, non-partisan

• Largest independent source of health plan
  information

• Medicare Justice Coalition

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Minnesota
Outreach Efforts

• Minnesota CR-BBD Steering Committee
• Consumers
• Physicians
• Represent the Minnesota Medical Association
• Medical Directors of three MN Health Plans
• Federally Qualified Health Clinic Physician
• Retired Physician
• Pharmacists
• Minnesota Pharmacists Association
• University of Minnesota College of Pharmacy
• PRIME Institute

57
Minnesota
Short Term Outreach
Physician Outreach Efforts

• Minnesota Medical Association
• MMA E-Newsletter and website
• MMA Conferences
• Minnesota Medicine
• Printed CR-BBD Materials for Patients through
  clinics
  
• MN Specific CR-BBD posters/placards for clinics
  
  
• examining rooms

• General Physician Outreach
• Federally Qualified Community Clinics
• CR-BBD info on PDA systems such as Epocrates
  Tarascon
  
• CR-BBD videos for clinics

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Consumer Perspective on Safety, Effectiveness
Cost
A drug that one cannot afford is neither safe
nor effective. -- Stephen W. Schondelmeyer
PRIME Institute, 1996
60

• A Prescription for Savings
• Marcia Hams- Community Catalyst
• Bill Vaughn Consumer Union
• Peter Wyckoff Community Catalyst
• January 27, 2007

Version 1
61
Additional Background Slides Not used in Familie
s USA Presentation From Pete Wyckoff pete.wyck
off_at_yahoo.com
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U.S. Outpatient Total Rx Expenditures 1988 to
2012
Expenditure In Billions
Rx Expend All Settings
763
642
502
319
422
217
Rx Expend Outpatient Only
210
143
57
38
SOURCE Compiled by the PRIME Institute,
University of Minnesota from data and estimates
published by the US DHHS, Office of the Actuary
and other industry sources.
66
U.S. Outpatient Total Drug Expend.as a of
NHE 1988 to 2012
Drugs as of NHE
Rx Expend All Settings
Rx Expend Outpatient Only
SOURCE Compiled by the PRIME Institute,
University of Minnesota from data and estimates
published by the US DHHS, Office of the Actuary
and other industry sources.
67
Average Cost per Day of TherapyNew vs. Old
Drugs Pre-1995 to 1999
/ Day
Source National Institute for Health Care
Management. Estimates by the PRIME Institute,
University of Minnesota.
68
Average Rx Expenditures per Medicare Recipient,
2000-2010 (projection)
per year
Congressional Budget Office 2001
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Distribution of Retail Rx Dollar 2000
of Retail Rx
Manufacturer 73.3
Wholesaler 3.1
Pharmacy 23.6
PRIME Institute estimate based on data from
NCPA-Pharmacia Digest 2000 and previous editions.
70
February 2, 2004
71
Profit as of Sales for Selected Industries
(Fortune Magazine)
Profit as of Sales
Source Compiled by the PRIME Institute,
University of Minnesota from data found in
Fortune magazine.2000
72
Distribution of Revenue 1999 for US Drug
Companies by Expense Type
Marketing, Advertising, Admin. Costs
Taxes Other Costs
Net Profit
Research Development
Cost of Production
Source Compiled by the PRIME Institute,
University of Minnesota from data found in
Fortune 500, Med. Adv. News, Sept. 1999,
corporate annual reports.
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