Seniors will be beneficiaries from the new $80 billion agreement of the drug industry to provide discounts for branded medicines to those in the Medicare doughnut hole, but there are a lot of unknowns about who will else will benefit from the deal. One question is how much will the government get from the deal to pay for covering the uninsured, the WSJ and the NY Times note this morning.

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Further, pharmaceutical companies actually benefit from the agreement if more seniors decide to switch to or stay on brand-name drugs because of the discount coming from the industry. Scott Gottlieb, a former FDA official and adviser at the Centers for Medicaid and Medicare, told the WSJ that the proposal won’t affect the bottom line of drug companies because it “will ultimately discourage patients in the donut hole from switching to generics” because of decreased out-of-pocket costs for branded drugs.

Most consumers are price sensitive when it comes to medicine. A fraction will always choose to remain on branded medicines regardless of cost, but the vast majority eventually switch to cheaper generics once they are available. But as the deal announced yesterday will reduce seniors’ out-of-pocket costs for branded medicines closer to those of generics, many may stick with branded medicines rather than switch to generics.

And the deal could induce seniors to keep taking those branded meds. “Because of the discounts, Medicare beneficiaries are likely to continue filling prescriptions in the doughnut hole, whereas in the past many stopped taking their medications because the drugs were unaffordable to them,” Barclays analyst C. Anthony Butler told the Times.

Source: The Wall Street Journal

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Procter & Gamble and sanofi-aventis entered into a deal with a US health insurer in which the drugmakers will reimburse the medical costs of non-spinal fractures in women taking the drugmakers’ osteoporosis drug Actonel (risedronate). Dan Hecht, general manager for Procter & Gamble Pharmaceuticals, indicated that the company’s participation in the pilot programme “shows that we stand behind our product.”

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The insurer, Health Alliance Medical Plans, announced the agreement Tuesday, and noted that the programme will apply to its clients in the states of Illinois and Iowa. Health Alliance explained that Procter & Gamble and sanofi-aventis will cover the average cost of treatment for the fractures by offering proportional rebates on the purchase price of the drug. Hecht said the deal with Health Alliance could lead to similar arrangements with other commercial insurers, and one day with Medicare.

In response to the announcement, Sidney Wolfe, director of Public Citizen’s health research group, said Procter & Gamble is marketing its product to insurers by employing “the kind of hucksterism you use to sell soap,” and he suggested that lower-priced, effective alternatives are available. Wolfe added that “this is obviously a cold calculation that Procter & Gamble will sell more Actonel via this money-back guarantee than they will pay out.” A spokeswoman for Health Alliance, Penny Ransom, noted that physicians’ treatment options are not affected by the insurer’s deal with the two drugmakers.

Source: FirstWord

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Specialty drugs, often sold by biotech companies, and used to treat complex conditions such as cancer — are some of the most expensive medicines on the market. As it turns out, their already high prices are rising much faster than inflation, and even faster than the prices of other prescription drugs.Last year, the wholesale price of specialty drugs rose 8.7%, three times the rate of inflation. The price of non-specialty, branded drugs rose 7.4%, while the price of generic drugs fell by 9.6%. Read the full story

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