Delisting albuterol CFCs: Economic Considerations

1
Delisting albuterol CFCsEconomic Considerations

• Randall Lutter, Ph.D.
• Chief Economist
• Office of Policy Planning
• OPPl/OPl

2
Overview

• Delisting albuterol CFCs will deter use of a
  number of prescribed MDIs that is large in
  absolute terms but small relative to the market
• Ignores GSK giveaway of 2 m MDIs per year
• Effects on public health are too uncertain to
  quantify

3
Institutional Background

• E.O. 12866, Circular A-4
• Decision IV/25 essential turns on whether
  there are available technically and economically
  feasible alternatives or substitutes that are
  acceptable from the standpoint of environment and
  health
• 2.125 adequately served

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Economic Fundamentals

• Delisting removes albuterol MDIs with CFCs,
• only generic albuterol MDIs available are CFC
• Benefits of earlier delisting include
• Controlled transition
• Reduced ODS emissions unquantified reductions in
  skin cancers, cataracts UV-B related ecologic
  benefits
• International cooperation
• Encouraging Innovation
• Costs of earlier phase-out dates
• Not increased spending per se
• Increased prices may deter appropriate usage

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To Assess Effects of Delisting

• Baseline continued availability of generic CFC
  albuterol
• Estimated Quantity Response
• Price increase () times
• Consumer response (elasticity)
• MDIs sold in baseline to price sensitive
  consumers

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Price Increase

• Prices, of course, are variable
• Take current price differences as measure of
  price increases from delisting
• Simple
• Transparent
• Consistent with GSK wholesale price freeze
  through December 2007

7
Internet Prices

• Pharmacychecker.com
• Generics
• Drugstore.com, 3/24/04 14
• HFA
• Drugstore.com
• PROVENTIL HFA, 6/3/04, 39.61
• VENTOLIN HFA, 6/3/04, 38.99
• Unchanged since 3/24

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Internet Prices

• Increase 180 (39-14)/14
• But web-based prices are unrepresentative because
  they neglect
• Brick and mortar outlets
• Shipping costs
• Avg. retail market prices for cash-paying
  customers would be best.

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MEPS AHRQ Prices

• Among non-institutionalized people 0-64 in the
  non-Medicare population, the estimated average
  retail prices among all payer types for CFC
  albuterol inhaler prescriptions in 2000-2001 are
• Generic 24.77, SE 0.64
• Brand 39.41, SE 1.85
• Increase 56 (39-25)/25, but
• Data on HFA prices are too rare to report.

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MEPS AHRQ Prices

• Among people with income less than 400 of
  federal poverty level, who pay cash because they
  have no insurance or only private non-group
  insurance, estimated average retail prices were
  
• 22.02 for generic inhalers, SE 0.74
• Data on branded inhaler prices were too rare to
  be reportable

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IMS Health Price Data

• National Prescription Audit PlusTM 1st Quarter
  2004 (extracted April 2004)
• Prices are measured using the average pharmacies
  revenues from uninsured customers, insured
  customers, and Medicaid beneficiaries alike
• Includes chain, independent and food store
  pharmacies, excluding internet, mail-order and
  long-term care pharmacies

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IMS Health Price Data National Prescription
Audit PlusTM 1st Quarter 04

• Median price for generic albuterol MDIs 19.70
• Price for albuterol HFA MDIS 43
• Difference of 23
• suggests increase of 120 (43-19.7)/19.7
• should be seen as approximate because of recent
  trends
• HFA albuterol prices rose by 8 over earlier
  year
• reflects full price for insured and uninsured
  alike

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Response to Price Increase

• Extensive economics literature finds small
  effects but rarely distinguishes among drugs.
• Goldman et al. (JAMA, 2004)
• 530,000 people in 52 health plans over 4 years
• As the average co-payment for antiasthmatics
  doubles, the average number of days of treatment
  supplied fell by more than 0.30
• Albuterol (including albuterol sulfate) was most
  common antiasthmatic

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Response to Price Increase

• Goldman et al. (JAMA, 2004)
• For drugs with no OTC substitutesa set that
  presumably includes albuterol MDIs--the effect is
  0.15
• For diabetes, asthma and gastric acid disorder,
  ER visits grew by 17 hospital days by 10 when
  co-pays doubled.
• But results not definitive.

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Response to Price Increase Summary
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DiscussionEmpirical Caveats

• Ignores responses of insured patients to any
  increases in co-pays.
• Co-pays for branded products are much higher than
  co-pays for generics.
• Price sensitive population, price increase, and
  consumer response (elasticity) are all quite
  uncertain.

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Policy Caveats

• GSK letter of 5/3/04
• GSK will make 2 million complimentary samples of
  Ventolin available each year to physicians, who
  may choose to reserve these inhalers for their
  lower-income patients
• freeze wholesale acquisition cost
• This giveaway may significantly offset lost
  canisters, provided it is well targeted to the
  most price sensitive patients