Pharmacoeconomics 101:How to Beat the High Cost of Prescription

Medications – Resources for you and Your Patients

Mark Cucuzzella MD FAAFP (West Virginia University)Heather Congdon, PharmD (University of Maryland)

The Old Timey Mountains

Potomac RShenandoah R

Maryland

W. Virginia

Virginia

FM

“The education of a man (or woman if Lee

were around in 2006) is never completed until he dies” Robert E. Lee

Objectives

• Background pharmacoeconomics• How to learn drug prices / comparison shop• Generic medications• Slicing medications…..yes it can be done more

than you think• Selecting other medications in the same class• Use the Government to Your Advantage- non

partisan stuff that saves your patients cash• Pharmaceutical assistance programs

Your Mother• 66yo with HTN, DM2, hyperlipidemia, COPD and

was recently dc’d from the expensive care unit after an angina episode

• Her dc meds were clopidogrel 75mg, atorvastatin 80mg, rosiglitazone 8mg, losartan 100mg, Metoprolol Ext Release 100mg, metformin 1000mg bid, fluticasone/salmeterol diskus, and a baby aspirin

• Depressed by how much this all costs, her PCP prescribes escitalopram

• She has heartburn from all the meds so he prescribes rabeprazole 20mg.

• She has Medicare. What is her daily med cost?

$37.42 a day or $1122.60 a month

• Clopidogrel 75mg $4.53• Atorvastatin 80mg $4.06• Rosiglitazone 8mg $6.93• Losartan 100mg $3.03• Metoprolol Ext Release 100mg $1.50• Metformin 1000mg bid (Wallmart) $0.13• Fluticasone/salmeterol diskus $7.03• Aspirin $0.01• Duloxetine 30mg $4.30• Rabeprazole $5.90

Prices from Walgreens.com Oct 2007

• More than 80 million Americans have been without prescription coverage sometime in past two years

• More than 4 million Americans with Medicare lack prescription coverage

• Spending on prescription drugs has increased >10%/yr from 1994 to 2004, 8% in 2005

• Spending on prescription drugs outpaces every other category of public health expenditure

• 200 Billion spent in 2005 (5x increase over 1990)

Source Kaiser Family Foundation

Background - The Ongoing Crisis

Background – Knowledge is Power

• Those caught in the gap between public healthcare coverage and private health insurance suffer the most

• Those unable to pay for their prescription often return to the clinic or emergency room in even worse condition

• Knowing how to save money on your drugs can literally be a lifesaver

• Public information will eventually reverse the trend in prescription drugs costs

Doctors Don’t Talk About CostAmerican J Managed Care Nov 2006

• 185 audiotaped visits at 2 clinic sites UCLA

• MDs talk cost only 1/3 time when prescribing….this also includes discussion of generics, insurance, refills

• Patients asked about cost or insurance 2% of time

What costs more?

45 mg of pioglitazone

Big Mac, large fries, large coke

Pioglitazone $7.36 Big Mac Meal $4.39

Which Industry Had the Highest Profit as Percent of Sales or Assets 1995-2005?

1. Oil

2. NBA

3. Big Pharmacy

4. Fashion

5. Fast Food

2006 Fortune 500Most Profitable Industries:

Return on Revenues

• Big Pharma hurting a little….now # 2

• Fortune 500 2006 rankings

• Mining/Crude oil now #1

Background - Big Pharma Basics

• Median profit margin 17% for top 10 Big Pharma (3.1% average other 490 Fortune 500)

• 10 Pharm companies had more profit than other 490 combined (Public Citizen)

• 5 companies US, 5 Euro….but US main profit center

Source Marcia Angell MD (former NEJM editor) author Truth About the Drug Companies

Big Pharma Basics - “Me-Too” Drugs

• Minor variations of highly profitable drugs• 1997-2003 487 Drugs approved by FDA

– 379 “appearing to have similar qualities to one or more drugs already on market”

– 333 not even new compounds- reformulations– Only 67 new compounds felt to be

improvements over old ones

• Innovation is actually rare Source Marcia Angell MD (former NEJM editor) author Truth About the

Drug Companies

Big Pharma Basics - Marketing

• For 1990s top 10 pharmaceutical companies– 35 % Marketing– 11-15% R & D– Profits 19-25% of sales

• 2002 US $67 B of $217 B in sales• Where does this go???

– Promoting drugs– Promoting “disease” (example RLS)

Source Marcia Angell MD (former NEJM editor) author Truth About the Drug Companies

Big Pharma Basics – Influence on Medical Profession

• Drug companies support most CME, conferences….STFM we pay to present…this is good

• Lunches, perks, dinners• JAMA Jan 2006 “Health Industry Practices

that Create Conflicts of Interest”…..a call for AMCs to separate from industry

• Family Medicine Jul-Aug 2006 “Of Doctoring Conventions and Drug Companies”…..a look at our AAFP conference

Big Pharma Basics –Influence on Government

• Laws allowing suits to extend patents• Publicly funded research with profits to drug

companies• Prohibitions from drugs crossing borders• FDA not requiring to test drugs against old ones

in same class• Allowing Part D to pass which prohibits Medicare

to bargain for lower prices similar to VA, DOD, or other large insurers.

• 2003 – 675 lobbyists employed

Perfect Storm Approaching Big Pharma ?

• Many blockbusters coming off patent• Not many new innovative drugs in the pipeline• Negative press on unethical business practices• Public awareness of many physician conflicts of

interest (Read On The Take)• Consumers becoming more empowered with

knowledge (why we are here)• Lawsuits hurting finances and public trust

True or False• Generic drugs are lower quality than brand?

• It is inappropriate to change a medication if the patient has been on it for a while?

• There are many assistance programs to help limited income patients with medications?

• Free samples usually decrease the cost of medications?

• The sales rep giving you lunch is there with the sole purpose of helping educate you?

True or False

• Generic drugs are lower quality than brand? F

• It is inappropriate to change a medication if a patient has been on it for a while? F

• There are many assistance programs to help limited income patients with medications? T

• Free samples usually decrease the cost of medications? F

• The sales rep giving you lunch is there with the sole purpose of helping educate you? F

What does the drug manufacturer make from these patients?

Rank from highest margin to lowest• VA patient

• Uninsured patient

• HMO patient

• Medicare patient (incl new Part D)

• Private insurance

• Medicaid

What does the drug manufacturer make from these patients?

Rank from highest margin to lowest

1. Uninsured patient

2. Medicare patient (incl new Part D)

3. Private insurance

4. Large HMO patient

5. Medicaid

6. VA patient

The cost of Medicare Part D over 10 years

• 1 Billion• 50 Billion• 100 Billion• 350 Billion• 675 Billion

Source Kaiser Family Foundation 2007

Journal Heath Affairs Feb 2006 Analysis from Centers for Medicare and

Medicaid Services• Health care spending now represents

about 16% of the economy. But in a decade, it will make up about 20% of the economy.

• Medicare spending will more than double, from $309 billion in 2004 to $792 billion, in 2015

• Medicaid spending will grow from $293 billion to $670 billion by 2015

• The nation's total health care bill by 2015 will rise to more than $4 trillion

How to Learn Drug Prices / Comparison Shopping

• Informed consumers pay the lowest prices• Different segments of the population pay

different prices for the same prescription drugs• Know the four types of prescription drug prices

– Cash Customers– Veterans – Medicaid Beneficiaries– Private Health Insurance Subscribers

How to Learn Drug Prices / Comparison Shopping

• There are several sites with this capability• Walgreens Drug Pricing Site• Bid RX listen to NPR story on Bid RX• Pillbot• Drugstore

• One pharmacy won’t always have the best price for a certain Rx drug

• Wholesalers and online pharmacies are great resources for discounted medication

• Always check an online pharmacy’s standing with the National Association of Boards of Pharmacy at www.nabp.net

The Future?

• Humana has a telephone robot named Eliza that calls members to tell them about cheaper drug alternatives.

• In 18 months it has saved members $11 million

USNWR Nov 6 2006 Best Health Care Plans issue

Generic Medication• Encourage patients to take generic alternatives

– Generics undergo the same rigorous FDA inspections as brand-name drugs

• Consumer Reports Best Buy Drugs Project provides “consumers and their doctors with information to help guide prescription drug choices–based on effectiveness, a drug's track record, safety and price”

Generic Medication

• U.S. brand pharma sales for 2005: $229.5 billion

• U.S. generic pharma sales: $22.3 billion.

• U.S. generic sales increased by 20% in 2006. (Source: IMS Health)

• 8,400 of the 11,167 drugs listed in the FDA’s Orange Book  have generic counterparts. (source: FDA)

Generic Medication

• National Association of Chain Drug Stores 2004– Average cost of a brand-name script is $96/mo– Average cost of a generic is $28/mo

• Generics were 56% of all scripts in 2005 (IMS Health data) but less than 13.1% of every dollar spent on prescription drugs.

• Generics cost 30% to 80% less than brand counterparts

• 2006 the top 10 generics: Hydrocodone/APAP, Amoxicillin, Lisinopril, Hydrochlorothiazide, Atenolol, Furosemide Oral, Alprazolam, Albuterol Aerosol, Azithromycin, Metformin. (source: Drug Topics, 2007)

Generics- The Future Looks Sunny

• The generic industry sales grew by roughly 20% in 2006. (Source: IMS Health)

• Blockbuster products coming off patent are valued at $27 billion in 2007, and $29 billion in 2008. (Source: Bain & Company)

How many generic drugs are awaiting FDA approval?

• 50

• 100

• 200

• 400

• 800

Generic Drugs Hit Backlog At FDANo Plans to Expand Review

Capabilities

• Washington Post Saturday, February 4, 2006; Page A01

• At a time when the use of low-cost generic drugs is being embraced as one of the few ways to rein in skyrocketing health care costs, the Food and Drug Administration has a backlog of more than 800 applications to bring new generic products to the market -- an all-time high……

Which of the Following are Available Generic?

• Fluoxetine

• Lovastatin

• Metoprolol

• Clopidogril

• Ciprofloxacin

• Metformin

Drugs Coming Off Patent 2007-2009

• Lotrel Jan. 2007    • Norvasc Jan. 2007• Imitrex June 2007• Coreg 2007• Tequin Dec2007 • Zyrtec Dec.2007• Fosamax Feb. 2008• Effexor/XR June 2008• Risperdal June 2008 • Advair Aug. 2008• Serevent Aug. 2008

• See Drug Topics for full listing

• Here are just a few

What are these seniors doing?Hint….they are from Minnesota

Data from AARP

Data from AARP

Slicing Medications

• Many drugs have this Dose-Response Curve

Slicing Medications

Lipitor Dose

Price per 100 Tablets

Price per 10 mg Dose

10 mg $232.07 $2.32

20 mg $322.27 $1.61

40 mg $323.47 $0.81

80 mg $327.47 $0.41

Slicing Medications – Which of the following cannot be split?

1. Atorvastatin (Lipitor)

2. Metoprolol Ext Release (Toprol XL)

3. Sildenafil (Viagra)

4. Esomeprazol (Nexium)

5. Paroxetine (Paxil)

6. Pioglitazone (Actos)

The Slicing Bible

Same Class Medications

• Most literature supports a class effect over a specific brand

• SSRI’s equivalent (JAMA Dec 2001)• PPI’s all equivalent (Infopoems 2005)

We really are comparing…

Same Class Medications -Nonsedating Antihistamines

Brand Name

Generic Name

Monthly Cost

Allegra Fexofenadine $67.29

Clarinex Desloratadine $65.67

Claritin Loratadine $20.33

Zyrtec Cetirizine $60.19

Getting the Government to Help Your Patients

Cartoon may be true when it comes to IT…..but the Gov’t can get cheap drugs

Veterans Programs• Veterans who qualify for government

healthcare receive some of the best prescription drug coverage. VA Home page

– VA Form 10-10EZ; “Application for Benefits”

– VA Health Benefits Service; 877-222-VETS

Medicare and Medicaid• 2006 -OMB estimates that $578 billion will be spent on

Medicare and Medicaid.

Part D Basics

• Info for FPs and patients– Medicare's Web site – Medicare Rights Center Part D Web page

• AAFP's Medicare Prescription Drug Coverage Web page – physician-focused information– a standardized Exceptions Request Form – Pharmacist-to-Physician Fax Form– links to the Medicare Prescription Drug Plan Finder.

• Medicare Part D 2007 Formulary Changes

Medicaid• Know the ins and out through

Kaiser Family Foundation Medicaid Information Page. • In most state budgets, Medicaid spending has surpassed

that assigned to education.

The BIG Picture- Medicare and Medicaid

Pharmacy Assistance Sources

• Pharmaceutical companies

• Drug discount programs

• $4 generic drug program

• Medicare Part D

A 52 y.o. male presents to a family medicine clinic for a physical after not seeing his physician for 10 years. In the past, his

employer did not provide health benefits, however, they recently started doing so. As part of his physical, he was given a lab slip for blood work and was found to have diabetes (FBG 350) and

hyperlipidemia (LDL 145; trigs 700), and also was found to have a blood pressure of 156/96.

Patient was given Rx’s for Avandamet 2/500 bid, Altace 5mg qd and Lipitor 20mg qd.

Patient then goes to pick up his prescriptions at the local

Walgreens and the total amount is $293

Although patient has recently received health benefits, his employer does not provide prescription coverage.

How can we help this patient?

Pharmaceutical Company Programs

• http://www.needymeds.com

• http://www.rxassist.org (account required)

• http://www.pparx.org

Click here to begin

Select “L”, then Lipitor

Click here to link directly to application

Requires account

Drug Discount Programs

• http://www.rxoutreach.com (generics only)

• http://www.togetherrxaccess.com

Click HereClick here

Rx outreach income requirements

Income requirements

$4 generic drug program

• Wal-Mart (www.livebetterindex.com/4drug.pdf) and Sam’s Club

• Target• Giant Eagle / Giant• Costco (200 generics for $10/100 tablets)*******************************************************************• Drug savings regardless of insurance coverage• Currently available in select states only• $4 for 30 days supply (except Costco)• Approx. 320 generic medications available through the

program

$4 Generic Drug Program – Medication Classes Covered

• Allergy• Analgesics• Anti-inflammatory• Antibiotics• Antidepressants• Antifungal• Antipsychotic• Antiviral• Anxiety• Asthma• Cardiac

• Cholesterol• Cough/cold• Diabetes• Gastrointestinal• Glaucoma• Hormone• Oncology• Parkinson's• Seizure• Thyroid• Vitamins

Happy Days or a Big Mystery?

Who Can Get Part D Coverage?• All Medicare beneficiaries – people >65 years of

age, certain disabled persons, and those with ESRD – are eligible for Part D coverage

• Most beneficiaries must actively sign up for a Medicare prescription drug plan

• Beneficiaries with prescription drug coverage from an employer or union that is at least as good as the standard Medicare coverage can keep it

Phase 3: YOU PAY $2.15 FOR EACH GENERIC, OR $5.35 FOR EACH BRAND NAME, OR 5% OF  THE 

TOTAL OF EACH PRESCRIPTION, WHICHEVER IS THE HIGHER NUMBER. EXAMPLE: A $200 DRUG COSTS YOU $10.00. THIS 5% ARRANGEMENT CONTINUES ONLY UNTIL DECEMBER 31,

2007

Medicare Part D 2007

Drugs NOT Covered by Medicare

• Benzodiazepines• Barbiturates• Most OTC drugs• Prescription vitamins and mineral products, except

prenatal vitamins and fluoride preparations• Agents used for symptomatic relief of cough and

colds• Agents used for cosmetic purposes or hair growth• Agents used to promote fertility• Agents used for anorexia, weight loss, or weight gain• Drugs covered under Medicare Parts A or B

Help for People with Limited Income and Resources

Apply for extra help through social security office:

www.socialsecurity.gov

1-800-772-1213

Low-Income Assistance

• Medicare beneficiaries who also are eligible for Medicaid benefits:– Pay no prescription drug plan premiums– $0 deductible– $1/$3 per prescription cost-sharing ($0 in LTC)– No “coverage gap”

Back to the Sample Patient…

• Patient’s annual household (2 people) income is $32,500

• This makes him ineligible for most “free” pharmaceutical programs

• What about the discount programs• Suggestions for drug regimen improvement

– Rx Outreach• $60 for ALL THREE medications for NINETY DAYS• $20 for one month supply vs. $293 with brands

– Together Rx• Patient is eligible (<$40K income) and would receive a 25-

40% discount on the medications prescribed by his doctor

Conclusions

• You will make a big difference in someone’s life by helping make medications more affordable and accessible

• Informed consumers ask the right questions and puts downward pressure on the price of prescription drugs

• Share this information with your colleagues; knowledge is the first step to change!

Your Primary ToolboxPharmacy assistance programs

– http://www.needymeds.com– https://www.pparx.org– http://www.rxassist.org

Drug discount programs– http://www.rxoutreach.com– http://www.togetherrxaccess.com

Other– http://nofreelunch.org– http://www.crbestbuydrugs.org/– www.drmichael.com– http://www.gphaonline.org/ – http://www.fda.gov/cder/ob/default.htm (Orange book)

The End