March 07, 2012
Drug Company Coupons Are Illegal Bribes Used to Dupe Consumers, Lawsuit Alleges
Three health plans in Community Catalyst's Prescription Access Litigation coalition today filed class action lawsuits in four federal courts against eight major drug companies
BOSTON, MA - Three health plans in Community Catalyst's Prescription Access Litigation coalition today filed class action lawsuits in four federal courts against major drug manufacturers for illegally subsidizing co-payments for expensive brand-name prescription drugs such as Lipitor and Nexium through the promotion of co-pay coupons.
The lawsuit alleges that the payments by eight drug makers -- Abbott, Amgen, AstraZeneca, Bristol-Meyers-Squibb, GlaxoSmithKline, Merck, Novartis, and Pfizer -- are illegal under a federal statute that prohibits commercial bribery because the undisclosed payments to patients and pharmacies are made through a ‘shadow claims system' designed to keep information about the presence or amount of these payments from health plans.
Community Catalyst, a national consumer advocacy organization, warns that while prescription drug coupons appear to save consumers money by reducing or eliminating co-payments, in reality they dramatically increase the cost of health care by driving up health insurance premiums and potentially causing consumers to hit benefit caps or lose coverage altogether.
"Pharmaceutical corporations are duping consumers with misleading coupons that are more about increasing corporate profits than actually reducing the cost of drugs for consumers" said Wells Wilkinson, director of the Prescription Access Litigation project at Community Catalyst. "If not stopped, the use of these deceptive coupons will increase costs for consumers' health plans by billions of dollars, contributing to higher premiums and the increasing loss of coverage and benefits for Americans."
A recent report by the Pharmacy Benefit Manager trade association (PCMA) estimates drug coupons will increase drug costs by $32 billion nationwide by 2021. Federal government health plans like Medicare consider these coupons kickbacks and have banned them; they are also banned in Massachusetts under an anti-kickback law.
The lawsuits were filed in New York, Chicago, Philadelphia and Newark by the AFSCME District Council 37 Health & Security Plan Trust, Sergeants Benevolent Association, the New England Carpenters, and the Plumbers and Pipefitters Local 572 Health and Welfare Fund. These health plans provide drug benefits for civilian and uniformed municipals workers, retirees and their dependents throughout the City of New York, plumbers from Florida to Ohio, and carpenters throughout New England. All of these health plans are struggling to keep up with continually rising drug costs.
"Our members are harmed by these unlawful practices by drug companies because coupons offering discounts off of brand drugs don't save consumers money in the long run." says Lillian Roberts, Executive Director of AFSCME, District Council 37, a plaintiff in the lawsuit.
"By combining direct-to-consumer marketing and supermarket ‘coupon clipping,' pharmaceutical companies are steering consumers to higher priced drugs in the pursuit of greater profits" said Edward Mullins, President of the Sergeants Benevolent Association, also a plaintiff in the lawsuit.
Under most health plans, consumers pay a larger co-payment for expensive brand-name drugs. By subsidizing all or the majority of a consumer's co-payment, drug companies promote the sale of these expensive products over less expensive, equally effective medications. This drives up the cost of care for health plans, employers and, ultimately, consumers. In addition, consumers who stay on expensive brand-name drugs run the risk of reaching their coverage caps sooner, forcing them to either pay out of pocket or forgo important care when they need it.
"Drug company coupons are not coupons. They are high-interest loans. We save money now, but we pay the loan sharks later," said Dr. William Jordan, a practicing physician in New York City serving low-income patients.
In 2009, half of the 109 best-selling U.S. brand-name drugs were promoted by coupons, and the number of coupon subsidy programs has skyrocketed since then, from 86 in July 2009 to 362 in November 2011. Coupons are aggressively marketed to consumers by TV, radio, Internet ads, and through physicians and pharmacists. And consumers are using them up, unaware of the negative impact on their premiums. In 2010 alone, co-pay coupons were used in one-eighth of all brand-name drug purchases, or 100 million prescriptions, according to the PCMA report.
Coupons also threaten anticipated savings from so called "patent cliff drugs," the dozens of brand-name drugs going off-patent between 2010 and 2013 and competing for the first time against generic counterparts.
Aside from cost concerns, consumer advocates and policymakers are also concerned about coupons for safety reasons. For instance, the FDA is currently studying whether drug coupons can mislead consumers concerning the safety and risks of drug products.
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About Community Catalyst
Community Catalyst is a national non-profit consumer advocacy organization dedicated to quality affordable health care for all. Community Catalyst works in partnership with national, state and local consumer organizations, policymakers, and foundations, providing leadership and support to change the health care system so it serves everyone - especially vulnerable members of society. For more information, visit www.communitycatalyst.org. Read or comment on our blog at http://blog.communitycatalyst.org/. Follow us on Twitter @healthpolicyhub.The 130-member Prescription Access Litigation coalition, a project of Community Catalyst, has played a major role in bringing lawsuits challenging illegal pharmaceutical industry pricing or promotional tactics. One lawsuit resulted in over $360 million in settlements with 29 of the country's largest drug makers.
The government in India has granted the rights to an indigenous pharmaceutical group to manufacture a generic version of the cancer treatment drug Nexavar.
For the first time, an Indian drugs firm has been approved to produce a medication under licence when the original's still patent-covered.
As a result of the agreement, the firm - Natco Pharma - is obliged to forward six per cent in royalties back to Bayer, which presently markets Nexavar alongside Onyx Pharmaceuticals.
Bayer, meanwhile - according to reports - isn't best pleased with the Indian government's move. "We are disappointed about this decision", company representative Sabrina Cusimano stated in comments made to the Associated Press. "We will see if we can further defend our intellectual property rights in India".
Nexavar Cancer Drug
Nexavar is the market name for sorafenib, an orally-taken medication now approved to treat two types of cancer - advanced hepatocellular carcinoma (liver cancer) and advanced renal cell carcinoma (kidney cancer).
The kidney cancer approval came first, in 2005, when the US FDA declared its satisfaction with the product. It did the same for the drug as a liver cancer treatment two years later and, with clinical trials now in progress, thyroid cancer could be the next condition added to this approved treatment list.
Controversially, the drug's not available as a
UK liver cancer treatment, after being rejected - on grounds of cost - by the National Institute for Health and Clinical Excellence in November 2009.
Natco Generic Nexavar Approval
The Natco generic Nexavar approval decision will see the production of drug copies priced at the equivalent of £112 for a box of 120: less than £1.00 each. This is dramatically cheaper than the original drug, with the same quantity presently priced at over 30 times that cost.
The Indian pharmaceutical firm believes that the drug's availability is key to the treatment of close to 9,000 cancer patients in India.
"This is a victory for Indian patients and for India's generic manufacturers, which are under attack", Natco Pharma's General Manager, Madineedi Adinarayana, stated according to the BBC, adding: "many more such cases will follow."
India effectively ended Bayer's monopoly on a patented cancer drug Monday, licensing a much cheaper generic under a unique law aimed at keeping costs affordable.
Starting in August, the Obama administration's new rules on contraceptive coverage take effect. Photo Illustration by Kevork Djansezian/Getty Images.
Two years after its passage, the sweeping health care overhaul remains deeply controversial, with both political parties trying to use it to their advantage in the upcoming elections. As GOP lawmakers constantly deride "Obamacare" and threaten to repeal it, it's easy to forget that implementation marches on, and a number of notable changes will take effect for consumers this year.
They will, that is, unless the Supreme Court strikes down some or all of the law, including the requirement that nearly everyone have health insurance beginning in 2014. If that happens, all bets are off. Provisions that have already taken effect -- such as allowing adult children to remain on their parents' health plans until age 26 and the 50 percent discount on brand-name drugs for seniors who reach the so-called donut hole in their prescription drug plans -- could be rolled back, and provisions for 2012 cancelled. The court will hear arguments in the case later this month and a decision is expected this summer.
If the law stands, here are the major new provisions that will affect consumers this year:
Free Contraception Coverage
Starting in August, the Obama administration's new rules on contraceptive coverage that have generated such controversy take effect. That means that women in a new health plan or in an existing one that has changed its benefits enough to not be considered grandfathered under the law will be able to receive contraceptives without an out-of-pocket charge. In addition, these plans will have to provide a variety of basic women's health services, including well-woman visits (breast exams, pap smears, etc); screening for gestational diabetes; HPV testing; counseling for sexually transmitted infections; counseling and screening for HIV; and screening and counseling for interpersonal and domestic violence.
Religious employers such as churches are exempt from the new requirement. Colleges, hospitals and other employers that are affiliated with religious institutions are not exempt, but employees at those institutions will receive free contraceptive services from their employer's insurer.
Religiously-affiliated employers have a one-year grace period to implement this change, so some employees may not receive the free benefit until August 2013.
Rebates For Consumers
Under the health-care overhaul, insurers have to spend at least 80 to 85 percent of premium revenues on medical claims and quality improvement or else rebate the difference to policyholders. In most group plans, that would mean the employer.
How much consumers can expect to receive remains an open question. An analysis by the National Association of Insurance Commissioners, based on 2010 data, estimated that insurers would have returned $2 billion to consumers had the provision been in force then. The analysis said rebates would have gone to 53 percent of people in individual plans, 23 percent in small-group plans and 15 percent of large-group plan members.
In December, the Obama administration estimated that 9 million Americans might receive rebates totaling up to $1.4 billion, also based on 2010 data. The administration says some reports show insurers have been moderating their premium increases to avoid having to pay rebates. But other policy experts aren't so sure.
"My guess is that rebates will be higher [than the NAIC estimate] in 2011," says Timothy Jost, a law professor at Washington and Lee University who helped prepare the NAIC report. "Insurers seem to have raised their premiums based on projected increases in utilization that never occurred."
Clearer Descriptions
Beginning in September, at the start of the open enrollment season, all health plans will have to provide concise, consistent plan information aimed at allowing consumers to easily understand their benefits and compare plans.
Every plan will be required to give people a short summary of coverage and a uniform glossary of terms. It will also have to provide examples of how much the plan would cover if someone had a baby or was managing Type 2 diabetes -- two common situations that should make it easier for people to compare plans.
"This is a big deal," says Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation. "Some of the materials people get explaining their health plan benefits are extraordinarily confusing, and this should make it clearer."
Shrinking Doughnut Hole
The health care overhaul is slowly eliminating the 'doughnut hole.' This is the break in Medicare prescription drug benefits that, in a standard plan, begins after total drug spending by the beneficiary and the health plan exceeds $2,930 and continues until the beneficiary has hit the $4,700 out-of-pocket limit.
Last year, Medicare beneficiaries with high drug costs got a 50 percent discount on brand-name drugs once they reached the doughnut hole. This year, they'll see a 14 percent discount on generic drugs as well.
Drug costs will continue to diminish in coming years, until in 2020 the doughnut hole no longer exists and Medicare beneficiaries with drug plans will simply be responsible for 25 percent of their drug costs.
Accountable Care
Last December, the administration announced that 32 health-care organizations would participate in a three-year Pioneer Accountable Care Organization program aimed at providing better, coordinated care for 860,000 Medicare beneficiaries. Providers -- including hospitals, clinics and physician groups -- that work together to improve beneficiaries' health and to bring costs down will share in the savings that they achieve.
Although Medicare beneficiaries may not realize that their health-care provider is participating in the program, they may start to notice changes in their care this year, says Debra Ness, president of the National Partnership for Women and Families. She leads the Campaign for Better Care, a coalition of organizations focusing on improving health-care delivery.
"For some of these folks, it may start to feel like they have a team working with them, or like their primary-care provider is developing an individualized care plan," she says. "Compared to what happens now, it could feel like a pretty big change."
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.
MUMBAI: In a landmark decision that could set a precedent on how life-saving drugs under patents can be made affordable, the government has allowed a domestic company, Natco Pharma, to manufacture a copycat version of Bayer's patented anti-cancer drug, Nexavar, bringing down its price by 97%.
In the first-ever case of compulsory licencing approval, the Indian Patent Office on Monday cleared the application of Hyderabad's
Natco Pharma to sell generic drug Nexavar, used for renal and liver cancer, at Rs 8,880 (around $175) for a 120-capsule pack for a month's therapy.
Bayer offers it for over Rs 2.8 lakh (roughly $5,500) per 120 capsule. The order provides hope for patients who cannot afford these drugs.
The approval paves the way for the launch of Natco's drug in the market, a company official told TOI, adding that it will pay a 6% royalty on net sales every quarter to Bayer. The licence will be valid till such time the drug's patent is valid, i.e. 2020. As per the CL (compulsory licence) order, Natco is also committed to donating free supplies of the medicines to 600 patients each year.
Bayer said it was "disappointed" and would "evaluate options to defend intellectual property rights" in the country. In July 2011, Natco had applied for the CL in the Mumbai patent office to make Sorafenib Tosylate for which Bayer has a patent in the country since 2008.
LONDON (AP) - Drug maker AstraZeneca has filed a suit in the United States that seeks to extend its exclusive rights on some forms of its antidepressant drug Seroquel until December.
The Anglo-Swedish company said Tuesday that it had filed its suit in the U.S. District Court in Washington, D.C.
The suit seeks to overturn a ruling last week by the U.S. Food and Drug Administration that generic copies of the drug would not have to carry the same warnings about possible side effects - including suicidal thoughts and elevated blood sugar - that were required of AstraZeneca.
The patent on the active ingredient in Seroquel and Seroquel XR expired in September.
Seroquel was AstraZeneca's second best-selling product, and the fifth biggest seller in the United States.
This week I want to highlight David Brennan, CEO of pharmaceutical juggernaut AstraZeneca (
NYSE:
AZN
) .
The dunce cap
AstraZeneca is another company that I easily could have written about last month, but I simply had too many companies built up in the gaffe backlog – which is actually rather sad if you think about it.
In February, Brennan announced yet another round of
job cuts. This round will eliminate 7,300 jobs, of which 2,200 will be research and development, 1,350 operations, and a whopping 3,750 sales and administration. Since 2006, when Brennan took the helm, the company has shed approximately
21,000 jobs
. With this new round of cuts, that number is nearing 30,000!
In response to these layoffs, Brennan was quoted as saying, "We are acutely aware that these decisions will affect many employees, and we will strive to support our people as we implement these changes."
How "acutely aware" is Brennan of his employees' plight? Apparently not much, because it didn't stop him from increasing his compensation package every year since 2007, despite the company's proclamation that it needs to cut another $1.6 billion from its annual costs.
In 2007, he took home $4.3 million. In 2008 and 2009, that figure increased to $4.7 million and $4.9 million, despite the layoffs. In 2010, he received a 163% bonus on top of his salary. While we don't have data yet for 2011, I can tell you that his base salary rose by 2.5%.
To the corner, Mr. Brennan ...
But wait -- there's more!
In 2009, British corporate-governance watchdog group PIRC noted that AstraZeneca had donated $816,000 to U.S. political parties. Perhaps not the best use of shareholder money. And don't look now, but it's an election year yet again. One can only imagine how much money is being appropriated to political parties this year as AstraZeneca plans another round of layoffs.
The real problem underlying AstraZeneca is its lack of pipeline innovation. The company lost patent exclusivity to Arimidex in 2010, and Teva Pharmaceutical's (
Nasdaq:
TEVA
) generic Anastrozole helped contribute to a
50% decline in sales in 2011. AstraZeneca also lost the patent rights to schizophrenia medication Seroquel, which expires for pediatric use as well this month.
Other patent expirations are
waiting in the wings. Asthma treatment Symbicort is expected to lose patent protection this year, Iressa in 2013, and the company's top-selling heartburn drug, Nexium, in 2014. Together, these four drugs (not including Arimidex) combined for $14 billion of Astra's $33.5 billion in total sales for 2011.
Since purchasing MedImmune in 2007, the company has been
floundering, while its peers are doing what they can to avoid the patent-cliff maelstrom. Forest Laboratories (
NYSE:
FRX
) attempted to shore up its
pipeline by purchasing Clinical Data for $1.2 billion. Bristol-Myers Squibb (
NYSE:
BMY
) made an even
riskier move by purchasing Inhibitex for $2.5 billion, even though its hepatitis-C treatment had cleared only phase 1 clinical trials.
Astra has instead sat on its laurels, slowly bleeding employees and lining the pockets of its CEO. If Brennan was truly aware of and sympathetic to his employees' needs, he'd do something about his rising compensation package. But I guess they just don't make a pill to cure poor decision-making.
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