Deal limitations, promotion of generic medications aim to stem rising drug costs, but threaten access

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Federal Trade Commission (FTC) officials say they are concerned about an increasing trend of pharmaceutical companies paying makers of generic medications to delay marketing competitive products. FTC commissioner Jon Leibowitz, JD, has criticized "reverse payment" settlements, which involve a branded manufacturer compensating a generic medications manufacturer for agreeing to delay marketing efforts for a generic product until the innovator's patent expires.

Federal Trade Commission (FTC) officials say they are concerned about an increasing trend of pharmaceutical companies paying makers of generic medications to delay marketing competitive products. FTC commissioner Jon Leibowitz, JD, has criticized "reverse payment" settlements, which involve a branded manufacturer compensating a generic medications manufacturer for agreeing to delay marketing efforts for a generic product until the innovator's patent expires.

In one high-profile case, retailers, labor unions, and insurers have filed a lawsuit to block a planned patent settlement that would delay competition to clopidogrel (Plavix, Bristol-Myers Squibb/Sanofi-Aventis). The lawsuit arises from an arrangement announced earlier this year by the manufacturers that generic medications maker Apotex would halt efforts to compete with clopidogrel until the patent expires in 2011.

FTC is monitoring the clopidogrel case and several "pay-for-delay" agreements negotiated since October 2005. The commission also is asking the Supreme Court to review a recent appeals court decision that may be encouraging these settlements but has not gained support from the Justice Department. FTC officials say they are concerned that these arrangements may block consumer access to lower-cost generic medications for months or even years.

MEASURING PHARMACY SERVICES

Another project aims to boost generic drug utilization by Medicare beneficiaries through interventions by pharmacists. Under development by the Pharmacy Quality Alliance (PQA), the initiative is creating quality measures, new payment models, and information systems that utilize pharmacists to promote appropriate drug treatment. These methods would provide more accurate measurements of pharmacy performance so retail and other pharmacists supporting these efforts would be more appropriately compensated.

The PQA, which was established by insurers, pharmacists, and Medicare officials, already has agreed on standardized electronic messages, or "reject codes," to simplify explanations by Medicare Part D plan sponsors about non-coverage to retail pharmacies and their customers. Causes for reject codes include quantity limitations, coverage under Part D, pharmacy network status, and a need for prior authorization. Also on PQA's agenda is the development of measures that will reward pharmacists for identifying opportunities for generic drug prescribing.

PATIENT-ASSISTANCE PROGRAMS BACK ON TRACK

Low-income elderly patients who need medications that have no generic equivalent may continue to benefit from manufacturers' giveaway programs. Major pharmaceutical companies have announced they will continue Pharmaceutical Assistance Programs (PAPs) for seniors that enroll in Part D drug plans but still have difficulty affording certain brand-name therapies.

These programs for Medicare beneficiaries appeared to be threatened by a November 2005 advisory from the Office of the Inspector General (OIG) indicating the program might violate federal anti-kickback laws. As a result, most manufacturers said they would discontinue PAPs for elderly patients signing up for Part D coverage. But the prospect that this opinion might discourage patients from enrolling prompted an OIG advisory in April to clarify how pharmaceutical companies can legally operate PAPs for Medicare without risking charges of fraud.

The later advisory directed that drug giveaway programs must operate outside the Part D benefit (patients cannot count the value of drugs received from PAPs towards the $3,600 out-of-pocket payment threshold for catastrophic coverage). PAP eligibility also has to be based on financial need and not smack of an inducement to use a certain product. PAPs also must notify Medicare drug plans about enrolled beneficiaries.

Since the OIG's announcement, Schering-Plough, GlaxoSmithKline, Lilly, and others said they will continue some PAPs for seniors. Low-income seniors who qualify for Medicare subsidies won't receive drugs from PAPs, but PAPs may be valuable to those who hit the "donut hole" between initial benefits and catastrophic coverage.

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