Archives for September 20, 2016

An impossible course: navigating the generic drug label delay

In May 2016, the FDA put off until 2017 a decision about a Final rule that would allow generic drug companies to update their labels with new safety information similar to their reference product counterparts. This marks the third time since the FDA proposed the rule that it has been shelved in the face of opposition from the pharmaceutical industry and some lawmakers. The delay, with major ramifications for consumers and industry alike, was initially discovered in an update to a timetable for the rule and officially appeared in a Federal Register Notice in mid-June. The development dismayed consumer groups and representatives for trial lawyers, who had urged the agency to close a legal loophole that prevents patients harmed by generic drugs from suing manufacturers.

Unlike brand-name drug makers, generic drug makers are not permitted to make changes to a drug’s label without the FDA’s approval unless the brand name drug maker makes the label change first. Instead, generic drug makers must wait for the FDA to order them to change their label. Since the passage of the Drug Price Competition and Patent Term Restoration Act (P.L. 98-417) in 1984, known as the Hatch-Waxman Act, the FDA has approved over 8,000 generic drugs. The Hatch-Waxman Act provides an expedited approval process for generic drugs that have an identical reference listed drug (RLD). As a result, nearly nine in 10 prescriptions filled today in the U.S. are for generic drugs, yet only account for 28 percent of drug expenditures.

Two Supreme Court decisions have helped to establish the conflicting division faced by patients and drug makers regarding drug label. Under the federal Food, Drug, and Cosmetic Act (FDC Act) and the subsequent Hatch-Waxman Act amendments, a generic drug company “may not unilaterally change its labeling or change its design or formulation and cannot be required to exit the market or accept state tort liability.” Consequently, a state law is preempted in the event a generic drug manufacturer must take one of the aforementioned actions to comply with a state law duty. Thus, patients taking a generic prescription drug are unable to recover for alleged injuries from either the brand name or generic drug maker. The brand name drug maker is not liable because it did not sell the drug directly to the patient and the generic drug maker faces the “impossibility” of providing updates to the drug label without direction from the brand name drug maker.

This White Paper provides an overview of the laws and regulations establishing the foundation of drug labels. The White Paper will also discuss the impact of the Supreme Court decisions on consumers’ ability to sue a drug maker for its drug labels. Finally, this White Paper examines whether industry pressure or consumer sentiment will carry the day. As the public service announcement from the FDA attests, it may be difficult to get generic drug approval, but as follows in this White Paper, generic drug makers are also harder to sue.

Read further: “An impossible course: navigating the generic drug label delay.”

Report examines Medicare Part D trends since 2006

Seventy-one percent of Medicare beneficiaries are enrolled in Medicare Part D plans in 2016, in either stand-alone Part D plans (PDPs) (60 percent) or Medicare Advantage drug (MA-PD) plans (40 percent). A Kaiser Family Foundation (KFF) report examined trends among plans in 2016 and since 2006, analyzing areas including differences between PDP versus MA-PD plans, cost-sharing, and market share among insurers.

Enrollment and availability

In 2006, only 28 percent of beneficiaries were enrolled in MA-PD plans, increasing 12 percent by 2016. MA-PD plans sponsored by local firms play a larger role in that market segment than PDPs sponsored by local firms. At 886 in 2016, the number of available PDPs is lower than it has ever been. On average, 26 PDP plans are available to beneficiaries, compared to 55 in 2007. Sixteen MA-PD plans are available, on average.

Premiums, deductibles, and cost sharing

Premiums vary widely across plans, even among those offering an equivalent type of benefits. For example, basic benefit PDP premiums range from $11.40 to $139.70. They vary based on geography; the average basic benefit PDP monthly premium in New Mexico is $ 17.05, for example, compared to $37.13 in New Jersey. Average national monthly PDP premiums have increased by 6 percent since 2015 to $39.21, while MA-PD plan premiums have risen only modestly to $16.99.

While most PDP and MA-PD plans have five-tier formularies, tiered pharmacy networks, enhanced benefits, no additional gap coverage, and deductibles less than the standard $360 amount, more PDP enrollees are enrolled in plans with tiered pharmacy networks and more MA-PD plan enrollees are enrolled in plans with deductibles less than $360. In 2006, most enrollees were enrolled in plans with only three or four tiers, whereas in 2016, 98 percent of PDP enrollees and 96 percent of MA-PD plan enrollees participate in multi-tiered plans.

Coinsurance is becoming more common in PDPs, as 31 percent of enrollees pay coinsurance for preferred brand drugs and 96 percent pay coinsurance for non-preferred brand drugs. Still, almost all PDPs and MA-PD plans charge copayments for generic tiers. Most MA-PD plans use copayments for all tiers other than the specialty tier.

Market concentration

Market concentration has increased modestly since 2006, particularly among PDPs. UnitedHealth, Humana, and CVS Health enrolled 52 percent of all Part D participants in 2016. Should Aetna acquire Humana, the resulting company would account for 26 percent of all Part D enrollment in 2016, although it would account for 40 to 50 percent of enrollment in seven specific regions. If the both the Aetna-Humana and Anthem-Cigna mergers go through, 23 of 34 regions would be considered highly concentrated.

Legislation

Some senators would like to take action to stabilize the amount of money that rural pharmacies pay for Part D prescriptions. Senators Shelley Moore Capito (R-WVa) and Jon Tester (D-Mont) noted that some Medicare Part D sponsors and pharmacy benefit managers have begun retroactively imposing fees on pharmacists weeks and months after prescriptions were filled. The Improving Transparency and Accuracy in Medicare Part D Drug Spending Act (H.R. 5951) would prohibit such retroactive fees with respect to accurate claims.