Corporate Greed Puts Profits over Safety: Pfizer Inc. is Moving into Retail
In an effort to hold onto sales of cholesterol fighter Lipitor after the drug loses patent protection at the end of this month, Pfizer is planning to sell the pills at generic prices directly to patients, breaking a longstanding triad between the patient, prescriber, and pharmacist, which provides a system of checks and balances for delivering medication therapy, The Wall Street Journal recently reported.
Lipitor, the top-selling drug of all time, has made Pfizer more than $81 billion in sales since launching in 1997, according to IMS Health. At its peak, more than 11 million Americans took it, says Wolters Kluwer Pharma Solutions, another health-care data firm.
Because most patients see multiple prescribers, when a patient uses a single pharmacy the risk of drug errors is reduced substantially. By interjecting a Pfizer Pharmacy for a single drug, at least one leg of the triad is undermined creating the risk of duplicative therapy since neither the plan's nor the pharmacy's records would be complete for the patient.
In letters to pharmacists last week, PBMs instructed pharmacies to continue dispensing brand Lipitor for the next 6 months. This reversal of business as usual reflects new tactics by Pfizer to keep sales afloat as generic competition threatens its blockbuster drug. Pfizer has agreed to large discounts for benefit managers that block the use of generic versions of Lipitor, according to a letter from Catalyst Rx, a benefit manager for 18 million people in the United States. The letters have not previously been made public.
Earlier this year, Pfizer, Inc attempted to circumvent Medicare Part D formulary regulations by offering generous rebates to PBMs to block the addition of generic Lipitor, atorvastatin, and place the brand name on a preferred tier. Part D Plans are prohibited from making formulary decisions based on financial incentives to the Plan or its delegated entity, the PBM.
Dave Marley, RPh, founding member of the group and author of a Pharmacy Times blog about bringing accountability to the PBM industry, told NYT that employers and taxpayers will bear the brunt of excess costs under the new arrangement—even as PBMs pocket Pfizer's rebate dollars.
To offset the expense of dispensing Lipitor instead of its generic equivalent, which would cost payers roughly $35 less, Pfizer is offering benefit managers a point-of-sale discount that undercuts the generic price. As a result, most patients taking Lipitor will see their co-pays drop to about $10 per prescription, the New York Times reported. The block on generic Lipitor is scheduled to lift on May 31, 2012, when several other generic drug makers are expected to launch their versions of the drug.
Forbes Gets it Wrong on Medicare Advantage
Forbes recently published a blog post ("Seniors: No, You Cannot Keep Your Plan Even if You Like It") that was wildly off the mark on the future of Medicare Advantage. I commented directly there (my handle on the Forbes blog is MedicareNinja), but had to call it out here.
I agree, the President overpromised to seniors when he famously said during the health reform debate "If you like your health care plan, you can keep your health care plan." You can't cut $135 Billion from plan payments and expect to have no impact on beneficiaries. But Forbes got it wrong: we are NOT about to see another exodus from the program as we did in the late 1990s.
As we've said here before, the exhortations of the death of MA are premature. We got confirmation from CMS last month: MA premiums will fall another 4% in 2012, and enrollment will grow by a brisk 10%. This after a robust 2011 where we think AEP will close with MA enrollment up over 8% vs. 2010.
The plans aren't going anywhere for several reasons -- none of which you see if all you're reading is wonky CBO and MedPAC reports.
First, government programs (Medicare and Medicaid in particular) are the only segments of the insured that are growing. As noted earlier, MA enrollment will grow over 8% this year, topping 12.5 million beneficiaries. Part D is approaching 20 million enrollees. Just this week Cigna announced it's spending over $3 Billion to acquire HealthSpring, a pure-play MA plan. Why? Because they see tremendous continued growth in the program, not because of its imminent demise.
Second, publicly-traded companies like MA leaders Humana and United are now dependent on Medicare, deriving twice their earnings from the program than they did a decade ago (average publicly-traded health plan earnings from Medicare in 1999: 13%; today, 26%, with some like HealthSpring and Universal American over 70%.) Bottom line: the big boys ain't going anywhere.
Third, over 40% of beneficiaries aging into Medicare have enrolled in MA plans the last two years, indicating the Boomers are a much more plan-friendly population than the World War II generation given managed care trends in the commercial market (HMOs, PPOs and POS plans represent more than 90% of all insured Americans).
Fourth, and most importantly, market-leading plans are adapting to the health reform cuts by focusing on Star Ratings quality bonuses and mastering the new state of the art in risk adjustment: the prospective home advanced evaluation. It's working, enabling plans to hold the line on benefits and premiums, and maintaining the attractiveness of these products vs. Medigap or traditional Medicare.
As long as the Congressional deficit Super-Committee doesn't fire another broadside at MA plan payment rates this fall, 2012 is shaping up to be a VERY good year, and I'd venture an estimate of over 15 million beneficiaries in these MA plans by the end of 2015.
The Forbes piece struck me as a wonky political hatchet job, trying to score cheap political points against Obama without any real basis in reality. They're usually above that sort of thing.
Creativity Shapes the Complexity of Part D Benefit Design
The question was recently posed on a social website as to "why some PDPs have no incentives for mail order and why some PDPs have bizarre generic tiers?" Although the question was specific to Oregon Medicare Prescription Drug Plans (PDP), it can be extrapolated nationwide. There are a variety of dynamics in play in the benefit design for PDPs, as well as MA-PDs, that have a significant impact on the complexity of the Part D Benefit offering. In considering the question, I have listed several possible reasons for the lack of mail-order incentives and the "bizarre generic tiers."
First, the national benchmark for the Part D benefit premium has decreased for the third consecutive year as the market has become more competitive, while the pharmaceutical inflation rate continues to raise approximately twice the national rate at 9.2% in 2011 and predicted to be 8.3% in 2012. Plans compensate for the increase by shifting to higher member cost-share using more tiering options, a broader range of copays, and more preferred tiers. CMS is allowing six tiers in 2012, allowing for both preferred brand and generic tiers. Utilization costs can be managed effectively by applying lower cost-sharing to more cost-effective therapies.
Next, Generic approvals are changing the landscape as many blockbuster drugs are moving off patent and becoming available in generic versions. Lipitor, Lexapro, and Zyprexa as well as other drugs representing over $1 Billion in sales either have or will become available over the next year. In many cases, however, the generic pricing is not much different than the brand name versions. As generics, they move to generic cost-sharing tiers, often actually increasing the cost to the plan. As a result the non-preferred generic tier is born with increased member cost sharing.
Next, the Specialty Drug Industry is a $40 billion industry involving more than 600 specialty pharmaceuticals currently under development in a market that is expected to top $160 billion by 2013. Management of this drug class is a challenge faced by every health plan. One of the tools applied to the management of specialty drugs is using cost-share tiers. Percentage based tiers are often applied to shield the risk.
Finally, Medicare Plan Rating incentives for MA-PDs achieving a five star rating are significant. Nine Five-Star Plans earned in excess of $4 billion in bonus payments for 2012 Plan Ratings. Starting in January, plans with three stars or better will get bonuses of 3 to 5 percent of their total Medicare payments. Five-star plans also can market to and enroll members year-round, while all other plans enrollment is limited to Medicare's annual open period. Member satisfaction plays a substantial role in those ratings. Part D Plan ratings look at factors such as access to prescriptions. Excessive step therapy and prior authorization requirements are member dissatifiers. By reducing restriction but increasing cost-sharing, members encounter less delay at point of purchase. Savings available by switching to a less costly therapy is also a satisfier.
Mail-Order service is on the decline as more and more plans are offering "mail-order at retail." When given the choice, the vast majority of Medicare Beneficiaries prefer to use their local retail pharmacies according to numerous studies. Although Medicare requires that an extended day's supply is available at retail, there was a cost saving advantage for using mail-order. As plans level the playing field, members seeking extended prescription supplies opt to use retail pharmacies. Again, increased member satisfaction results in better plan ratings and member retention.
Although there may be many other explanations, I believe these are some key reasons explaining the variation in plan design. Creativity and informatics continue to play a huge role in the delivery of high quality, cost-effective healthcare to Medicare Beneficiaries.