Questions linger on generics, prompting AMP court delay
At issue is a plan by the HHS to shift Medicaid generic drug reimbursements to a new formula, based on the average manufacturer’s price of the drug. U.S. District Judge Royce Lamberth agreed in February to a joint request from the National Association of Chain Drug Stores, the National Community Pharmacists Association and HHS to delay a hearing on the federal health agency’s plan to impose the new payment formula.
Behind the delay is the same issue that has hampered previous government efforts to impose the new AMP formula: the dispute over the definition of a “multiple source drug” for purposes of payment to pharmacies. Judge Lamberth’s decision is expected to freeze any further action until at least mid-May, according to NACDS.
The request by NACDS, NCPA and HHS to delay the hearing came “in light of the change in administration at HHS,” noted the pharmacy groups. NACDS and NCPA also noted that the Centers for Medicare and Medicaid, a division of HHS, “must resolve any regulatory issues related to yet another revised definition of ‘multiple source drug,’ and is not prepared to proceed with the case at this time.”
This will be CMS’ fourth attempt to define “multiple source drug.” The agency’s last attempt was rendered invalid after NACDS and NCPA argued in court that CMS failed to take into consideration an NACDS-NCPA economic report that examined the impact of AMP-based Medicaid reimbursements when developing its definition of a multisource, or generic, medication.
“Unfortunately, the story of CMS’ Medicaid AMP rule can be summarized by the often-used phrase, ‘mistakes were made,’” said NACDS president and CEO Steve Anderson and NCPA CEO and EVP Bruce Roberts. “We are committed to getting the Medicaid pharmacy reimbursement rule right, for the good of pharmacy, patients and the nation’s entire healthcare delivery system.”
NACDS and NCPA have argued that CMS’ definition of multiple source drugs “is critical for pharmacies because CMS uses federal upper limits to cap Medicaid reimbursement to pharmacies that dispense them.”
That said, they told CMS in court filings, “the Social Security Act provides that a drug is not a multiple-source drug unless two or more equivalent drug products are ‘sold or marketed in the state;’ that is, whether particular drug products are generally available to the public through retail pharmacies in each state. CMS did not comply with this standard in revising the rule.”
In a letter last year, NACDS and NCPA pointed out that the federal agency has based its rulemaking on the assumption that every multisource drug is available in every state—when, in fact, some drugs may not be easily obtained by local pharmacies, raising their acquisition costs for the drug.
Walgreens set to expand distribution capacity
WOBORN, Mass. Walgreens is expanding the distribution capacity at its Mt. Vernon, Ill.-based distribution center by adding more portable robotic picking devices and upgrading many of its traditional conveyor-based systems into automated zones for sortation and movement of items to be shipped.
Walgreens uses the Kiva Mobile Fulfillment System from Kiva Systems in Mt. Vernon to store inventory and pick replenishment orders for its 6,700 stores and specialty pharmacies. Expanding the system in that distribution center puts nearly 1,000 mobile robots under a single roof, according to Kiva.
The upgrade marks the third expansion of the robotic picking system at the center since its initial deployment in 2007, Kiva noted. It also heralds a doubling of the throughput capacity at the center, the company reports.
“Productivity metrics from previous rollouts far exceeded Walgreens’ specifications for pick rate, accuracy, cycle time, tote utilization and installation time,” said Kiva CEO Mick Mountz. “By doubling capacity we expect Walgreens to quickly achieve an extraordinary new level of strategic competitive advantage and productivity.”
Congress takes up follow-on biologics bill
The long-awaited breakthrough for follow-on biologics may be close at hand.
Prompted by a far more supportive President and the growing crisis in healthcare funding, Congress has again taken up the call for a bill that would create a regulatory pathway for FDA approval of generic versions of biologically-engineered drugs. And with the strong affirmation of President Obama, who has campaigned for such an approval pathway, the newest iteration of the bill stands a far better chance of passage than previous attempts in the House and Senate.
The Promoting Innovation and Access to Life-Saving Medicine Act could mark the most significant change to the delicate balance of power between the branded and generic drug industries since passage of the landmark Hatch/Waxman compromise bill in 1984, which ushered in the modern era of me-too medicines. Tellingly, one of the new bill’s sponsors is an architect of that 1984 legislation, Democratic Rep. Henry Waxman of California.
The push for follow-on biologics augers well for both health plan payers and patients coping with the sometimes staggering costs of critically important but expensive pioneer biologics, and for the generic drug industry itself as it faces a critical shortage of new marketing opportunities as the number of blockbuster drugs facing patent expirations dries up. A new pipeline of me-too biologics could help fill the gap.
“With countless patients struggling to pay the high costs of brand biopharmaceuticals, an approval pathway for safe, effective and affordable biogeneric medicines that provides access sooner rather than later is desperately needed,” stated Kathleen Jaeger, president and CEO, Generic Pharmaceutical Association.
Cost-saving considerations aside, there’s no disputing the business potential follow-on biologics represent. Bio-engineered pharmaceuticals and specialized, highly targeted medications aimed at serious chronic or life-threatening diseases represent the only major bright spot right now in the global pharmaceutical market, with growth rates that far outpace the sluggish market for mainline meds. Indeed, most of the drugs that have reached blockbuster status in recent years have been biologically engineered specialty meds.