GAO: Federal upper limits 1.4% lower than National Average Drug Acquisition Cost
WASHINGTON — In a report publicly released Thursday by the U.S. Government Accountability Office, the GAO found that the total draft federal upper limits amount based on the new formula under the Patient Protection and Affordable Care Act was about 1.4% lower than the total National Average Drug Acquisition Cost amount in aggregate for 1,035 outpatient drugs subject to the FUL in first quarter 2013. GAO found large differences between the total PPACA-based FUL amount and the total NADAC amount for generic and for branded generic versions — brand-name drugs with other versions that can be substituted for one another — of the drugs subject to the FUL in first quarter 2013.
GAO found that the total PPACA-based FUL amount for the generic versions was 19% higher than the total NADAC amount, but for the branded generic versions was 26% lower. GAO’s work indicates that CMS is close to having a formula under which FULs would better reflect pharmacy acquisition costs, but continues to apply FULs that were calculated more than 4 years ago. Additionally, the relationship between PPACA-based FULs and NADACs may be affected by several factors, including rebates and discounts that are not reflected on pharmacy invoices. To determine whether GAO’s early results of the relationship between the PPACA-based FULs and the NADACs holds over time will require continued monitoring by CMS, GAO reported.
To develop a national benchmark for retail pharmacy acquisition costs of Medicaid covered outpatient prescription drugs — known as the National Average Drug Acquisition Cost — the Centers for Medicare & Medicaid Services within the Department of Health and Human Services surveys each month randomly selected retail community pharmacies for invoice data on their actual drug acquisition costs. CMS then calculates an average acquisition cost for each drug based on invoice data received from about 500 to 600 pharmacies. CMS officials expressed confidence in their current process, but noted that some limitations may exist, GAO noted. For example, CMS officials stated the extent to which NADACs reflect rebates and discounts is limited because most occur off-invoice or are not tied to a specific drug purchase. CMS has developed and published more than 5,000 NADACs, which CMS has estimated apply to more than 90% of the drug claims reimbursed by Medicaid.
GPhA: FDA’s proposed rule on prescription drug labeling adds $4 billion to healthcare costs
WASHINGTON — The Food and Drug Administration’s proposed rule on prescription drug labeling would add $4 billion annually to the nation’s healthcare costs, undercutting the cost savings that generic medicines have brought to America’s patients and healthcare system, according to an analysis released Wednesday by economic consulting firm Matrix Global Advisors.
“Flooding the marketplace with multiple versions of labels for the same medicines would not only seriously jeopardize patient safety, but also would burden consumers, taxpayers, large and small businesses, and state and federal governments with billions of dollars in increased costs for generic medicines,” said Ralph Neas, president and CEO of the Generic Pharmaceutical Association. “The study demonstrates that in proposing this rule, the FDA overlooked its very real financial impact on the affordability and availability of generic medications for patients and all stakeholders in the drug supply chain.”
Of the projected increase in healthcare costs, MGA estimates that Medicare and other government programs will incur $1.5 billion in annual new spending, while private insurers and patients will pay $2.5 billion per year.
The proposed rule would expose generic drug manufacturers to substantial new tort liability costs, which in turn would require them to adjust prices to stay in business, withdraw products or decline to launch new affordable versions of brand medicines, the report cautioned. Increased liability also would accrue to pharmacists, physicians and the other principal participants in the healthcare system, beyond the substantial confusion for all stakeholders, impeding healthcare decisions and delivery.
“New labeling regulations should protect patients, facilitate care and reduce costs,” Neas said. “Unfortunately, the Proposed Rule does none of these things — the unintended consequences of this rule would be nothing short of catastrophic. The FDA and others need to take a hard look at the potential harmful impact on patient access and national healthcare costs of a Proposed Rule that changes 30 years of law requiring generic and brand medicines to have the same labels, and permits for the first time labeling changes for generic drugs without FDA approval."
Coalition of healthcare industry stakeholders address best practices regarding controlled substances
MOUNT PROSPECT, Ill. — The National Association of Boards of Pharmacy, along with a coalition of healthcare industry stakeholders, on Wednesday issued a consensus statement regarding the collaborative steps that will be taken to help ensure the delivery of responsible and effective patient care as it relates to the prescribing and dispensing of controlled substances.
The agreement indicates the need to work collaboratively to address the prescription drug abuse epidemic and to help practitioners comply with their legal responsibilities for prescribing, dispensing and distributing controlled substances. With the intention of restoring and improving coordination among stakeholders, the 13 participating organizations — which represent physicians, pharmacists, pharmacies, regulatory boards, wholesalers, manufacturers and government agencies — will develop two subsequent consensus documents. The first document will identify the “red flags” that warrant the need to review the legitimacy of controlled substance prescriptions. The second document will outline the actions stakeholder organizations will take to improve dialogue so that such red flags are addressed in compliance with federal and state law, and so that practitioners are supported in delivering the most appropriate patient care.
While some policies recently implemented by stakeholders were intended to protect patients and prevent prescription drug abuse, participants agreed that coordination and collaboration must be improved to ensure that this public health problem is addressed and that patients receive responsible and effective patient care. Additionally, participants recognized that such policies were implemented to help practitioners comply with regulations and were not intended to “intrude into the scopes of practice or authority of other stakeholders.” The forthcoming consensus documents are intended to restore and improve collaboration among all health care practitioners, and to eliminate confusion caused by “the diversity of current proprietary policies.”
“The dialogue and consensus among organizations representing the spectrum of the healthcare team will be instrumental in ensuring that patients with legitimate medical needs receive the most appropriate and safest medication therapy,” said Karen Ryle, president NABP. “By coordinating on actions that help reduce rates of prescription drug abuse, the forthcoming stakeholder discussions and ongoing collaboration will benefit patient care and the public health.”
The consensus document was the result of stakeholder meetings convened by NABP in October 2013 and December 2013. The document was finalized at the December meeting and was developed by NABP and the following organizations: American Academy of Family Physicians, American Medical Association, American Osteopathic Association, Cardinal Health, CVS Caremark, Federation of State Medical Boards, National Association of Chain Drug Stores, National Community Pharmacists Association, Pharmaceutical Care Management Association, Pharmaceutical Research and Manufacturers of America, Rite Aid and Walgreens.