Drug prices were in the news this week because of a shocking 5000% increase in the cost of a single drug: Daraprim.
But during the first 9 months of 2015, the average wholesale price (AWP) of almost 50 drugs more than tripled! Given this striking fact, unless your plan – or Coalition – positions itself to learn about – and respond to – these steep price increases, your plan will not be able to control its costs.
A First Example: Glumetza
Take the diabetes drug Glumetza ER as an example. From December 31, 2014 to September 1, 2015, the AWPs of the two dosage forms of Glumetza increased by 800%. As a result, the net costs of this drug at each of two dosage levels – factoring in a PBM’s approximate discounts – shot up during this period to about $3,300 or $6,600 for a 30 day supply.
But your plan need not accept such inflated costs for a diabetes drug. After all, multiple alternatives are available at far lower costs. In fact, depending on the total dose needed, the 30 day prescription costs of generic metformin ER are typically about $9 or $17. Moreover, if a plan participant finds metformin ineffective, the participant can add – or substitute – several other diabetes drugs that cost only a few hundred dollars per 30 day prescription.
Thus, your plan can entirely stop covering Glumetza and still be confident that every participant will be able to identify a lower cost means to control his diabetes. Or, at the very least, your plan can insist that your PBM implement a strong Glumetza step therapy or prior authorization program, which will steer your plan participants to use lower-cost drugs before they try Glumetza.
Additional Examples: Pennsaid, Vimovo and Duexis
Given recent exponential price increases, every plan should be taking action in connection with many other drugs as well. For example, the AWP of Pennsaid – approved for osteoarthritis knee pain – increased by 514%, bringing Pennsaid’s total monthly cost – with a PBM’s typical discounts factored in – to about $1400. But over-the-counter pain relievers can address knee pain for a few dollars a month, or if need be, prescription Voltaren gel can be used at a net monthly cost under $100.
Similarly, the AWPs of two “combo” drugs – Vimovo (that combines over- the-counter Aleve and Nexium) and Duexis (that combines over-the-counter Motrin and Pepcid) increased by more than 40% during the past 9 months. As a result, the cost of each of these drugs, respectively, is now about $1400 and $900 for a 30 day supply.
Do you really think your plan should pay that amount of money simply to provide your plan participants with the convenience of “2 pills in 1”, especially when both pills are very inexpensive over-the-counter drugs?
Wouldn’t it make far more sense for your plan to stop covering both drugs and take the position that plan participants should pay for over-the-counter products on their own, particularly because Aleve and Nexium together would only cost about $40 per month, while Motrin and Pepcid would together only cost about $15 per month?
Even if your plan were to decide to end coverage of Vimovo and Duexis entirely – and provide coverage for the over-the-counter alternatives – your plan would end up saving large sums of money.
Don’t Forget Novacort Gel
As a final example of more than a dozen other drugs that your plan should be addressing – and the methods that manufacturers employ to distract consumers from paying attention to drug prices – let’s look at Novacort gel, a topical cream for red, itchy or swollen skin (caused by rashes, scrapes, insect bites, eczema, or other similar problems):
Novacort’s cost increased by 1,954% during the first 9 months of this year, bringing the total cost per tube to about $2,500! Moreover, Novacort’s manufacturer (Primus) is offering a coupon limiting copays to a “maximum of $35,” which may incentivize your plan participants to use this gel rather than several low-cost alternatives. Primus is also providing dermatologists and other doctors with Novacort samples, undoubtedly hoping that once plan participants start using Novacort, they’ll never stop!
Accordingly, don’t you think your plan would be justified in ending coverage for Novacort? And don’t you think your plan participants would understand why your plan is taking this step, if you tell them that Novacort’s price increased by 1,954%, bringing its total cost per tube to about $2,500 even though there are far-lower cost alternatives available that will provide the same therapeutic outcomes? All of which leads to our final point.
Educate Yourself & Enlist Your Beneficiaries’ Support
Consumers can understand outrageous situations and will do their part in responding to them, if they are given appropriate information. Remember when everyone threw trash from car windows, people dropped cigarette butts onto sidewalks, kids rode bikes without helmets, and seat belts were rarely buckled? Today, such conduct has largely changed, because we all obtained new information and altered our thinking and actions as a result.
Therefore, there’s every reason to assume when your plan starts providing information about drug price changes to your plan participants – and you urge them to start taking price into consideration in making drug choices – your plan participants will respond wisely. Moreover, given how marketplaces work, there’s every reason to believe that when plans – and plan participants – start paying attention to outrageous price increases, manufacturers will stop raising their prices exponentially (at least for drugs with lower-cost alternatives).
On the other hand, if you as a plan administrator aren’t even aware of 800% – or 1,954% – AWP increases that are causing your plan’s costs to skyrocket, why would you expect your plan participants or their doctors to pay attention to drugs’ costs? And on what basis could you believe that manufacturers will ever end their outrageous conduct?
In short, as a plan administrator, you need to position yourself to obtain information about – and respond to – exponential drug price increases, and you need to provide information to your plan participants about why you are doing so.
Moreover, if your plan is a member of a Coalition, you should insist your Coalition begins to track AWP increases and provide timely information about them to your plan and your plan participants. After all, these are tasks that every Coalition can routinely perform. And if all Coalitions do so, the marketplace is likely to change.
Protect Your Health Plan Against Astronomical Drug Price Increases
Drug prices were in the news this week because of
a shocking 5000% increase in the cost of a single drug: Daraprim.
But during the first 9 months of 2015, the average wholesale price (AWP) of almost 50 drugs more than tripled! Given this striking fact, unless your plan – or Coalition – positions itself to learn about – and respond to – these steep price increases, your plan will not be able to control its costs.
A First Example: Glumetza
Take the diabetes drug Glumetza ER as an example. From December 31, 2014 to September 1, 2015, the AWPs of the two dosage forms of Glumetza increased by 800%. As a result, the net costs of this drug at each of two dosage levels – factoring in a PBM’s approximate discounts – shot up during this period to about $3,300 or $6,600 for a 30 day supply.
But your plan need not accept such inflated costs for a diabetes drug. After all, multiple alternatives are available at far lower costs. In fact, depending on the total dose needed, the 30 day prescription costs of generic metformin ER are typically about $9 or $17. Moreover, if a plan participant finds metformin ineffective, the participant can add – or substitute – several other diabetes drugs that cost only a few hundred dollars per 30 day prescription.
Thus, your plan can entirely stop covering Glumetza and still be confident that every participant will be able to identify a lower cost means to control his diabetes. Or, at the very least, your plan can insist that your PBM implement a strong Glumetza step therapy or prior authorization program, which will steer your plan participants to use lower-cost drugs before they try Glumetza.
Additional Examples: Pennsaid, Vimovo and Duexis
Given recent exponential price increases, every plan should be taking action in connection with many other drugs as well. For example, the AWP of Pennsaid – approved for osteoarthritis knee pain – increased by 514%, bringing Pennsaid’s total monthly cost – with a PBM’s typical discounts factored in – to about $1400. But over-the-counter pain relievers can address knee pain for a few dollars a month, or if need be, prescription Voltaren gel can be used at a net monthly cost under $100.
Similarly, the AWPs of two “combo” drugs – Vimovo (that combines over- the-counter Aleve and Nexium) and Duexis (that combines over-the-counter Motrin and Pepcid) increased by more than 40% during the past 9 months. As a result, the cost of each of these drugs, respectively, is now about $1400 and $900 for a 30 day supply.
Do you really think your plan should pay that amount of money simply to provide your plan participants with the convenience of “2 pills in 1”, especially when both pills are very inexpensive over-the-counter drugs?
Wouldn’t it make far more sense for your plan to stop covering both drugs and take the position that plan participants should pay for over-the-counter products on their own, particularly because Aleve and Nexium together would only cost about $40 per month, while Motrin and Pepcid would together only cost about $15 per month?
Even if your plan were to decide to end coverage of Vimovo and Duexis entirely – and provide coverage for the over-the-counter alternatives – your plan would end up saving large sums of money.
Don’t Forget Novacort Gel
As a final example of more than a dozen other drugs that your plan should be addressing – and the methods that manufacturers employ to distract consumers from paying attention to drug prices – let’s look at Novacort gel, a topical cream for red, itchy or swollen skin (caused by rashes, scrapes, insect bites, eczema, or other similar problems):
Novacort’s cost increased by 1,954% during the first 9 months of this year, bringing the total cost per tube to about $2,500! Moreover, Novacort’s manufacturer (Primus) is offering a coupon limiting copays to a “maximum of $35,” which may incentivize your plan participants to use this gel rather than several low-cost alternatives. Primus is also providing dermatologists and other doctors with Novacort samples, undoubtedly hoping that once plan participants start using Novacort, they’ll never stop!
Accordingly, don’t you think your plan would be justified in ending coverage for Novacort? And don’t you think your plan participants would understand why your plan is taking this step, if you tell them that Novacort’s price increased by 1,954%, bringing its total cost per tube to about $2,500 even though there are far-lower cost alternatives available that will provide the same therapeutic outcomes? All of which leads to our final point.
Educate Yourself & Enlist Your Beneficiaries’ Support
Consumers can understand outrageous situations and will do their part in responding to them, if they are given appropriate information. Remember when everyone threw trash from car windows, people dropped cigarette butts onto sidewalks, kids rode bikes without helmets, and seat belts were rarely buckled? Today, such conduct has largely changed, because we all obtained new information and altered our thinking and actions as a result.
Therefore, there’s every reason to assume when your plan starts providing information about drug price changes to your plan participants – and you urge them to start taking price into consideration in making drug choices – your plan participants will respond wisely. Moreover, given how marketplaces work, there’s every reason to believe that when plans – and plan participants – start paying attention to outrageous price increases, manufacturers will stop raising their prices exponentially (at least for drugs with lower-cost alternatives).
On the other hand, if you as a plan administrator aren’t even aware of 800% – or 1,954% – AWP increases that are causing your plan’s costs to skyrocket, why would you expect your plan participants or their doctors to pay attention to drugs’ costs? And on what basis could you believe that manufacturers will ever end their outrageous conduct?
In short, as a plan administrator, you need to position yourself to obtain information about – and respond to – exponential drug price increases, and you need to provide information to your plan participants about why you are doing so.
Moreover, if your plan is a member of a Coalition, you should insist your Coalition begins to track AWP increases and provide timely information about them to your plan and your plan participants. After all, these are tasks that every Coalition can routinely perform. And if all Coalitions do so, the marketplace is likely to change.
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