Transcript Pharmaceuticals - University of Florida

Pharmaceuticals
Medicare Part D
Amy Hager
John Hance
Ife Nelson
Haichang Xin
Pharmaceuticals
What this Presentation Includes:
► Overview
of Pharmaceuticals
► Existing Legislation
► Republican Views
► Democratic (OUR) Views
► Proposed Legislation
Pharmacology 101
The science of how substances interact with
living organisms to produce a change in
function
Pharmaceutical Industry
Current Structure
► US
Census: 723 pharmaceutical firms
 > 100 employees: 263
 PhRMA members: 34
 Fortune 500: 11
► Research-orientated
chemical firms
► Biotechnology or biopharmaceutical firms
► Generic firms
Pharmaceutical Industry
Current Structure
► Research-orientated
chemical firms
► Biotechnology or biopharmaceutical firms
► Generic firms
► Acquisitions
and Mergers
Pharmaceutical Industry
Environmental Forces in the Past
► Scientific
discovery/technological change
 Targeted drug design
 Biotechnology
► Economic
trends
 Health care inflation
► Socio-political
developments
 Restructuring of health care delivery
Demands on Pharmaceutical Industry
► Multiple
constituencies
►Patient-customers
►Health
care provider-customers
►Payer-customers
►Investors
►Researchers
►Regulators
► Conflicting
aims
Pharmaceutical Industry Enduring
Characteristics
► Intellectual
Property Protection
► Research & Development (R&D)
► Profitability
Pharmaceutical Industry Enduring
Characteristics
► Intellectual
Property Protection (IPP)
 Role of patents
 Market exclusivity
 Legislative initiatives in response to
market failures
Law
Description
Duration
1983
Orphan Drug Act
Exclusivity granted to drugs for indications with less than
200,000 U.S. patients. Protection from generic and other
branded versions of the same drug for the same
indication.
7 years from date of
approval
1984
Hatch-Waxman Act
Exclusivity granted to new chemical entities to
compensate for delays in regulatory approval process.
Up to 5 years from
date of approval
Exclusivity granted to modified versions of existing drugs
with new clinical data, e.g., new dosage form or new
clinical indication.
3 years from date of
approval
Automatic stay of approval of generic granted when
holder sues for patent infringement
Up to 30 months, or
litigation concluded
Exclusivity granted to first generic applicant prior to
expiration patents for brand drug. Protection from
approval of other generic versions during term of
exclusivity.
Up to 180 days or
until court declares
patent invalid or not
infringed
1992
Prescription Drug User Fee
Act
Faster FDA review processes funded by establishment
fees, new drug application fees and product fees paid by
manufacturers
FDA review reduced
2.1 yrs
1994
Uruguay Round Agreements
Act
Set patent life to international standard for patents
covering composition of matter, method of use,
formulation, product by process
20 years from date of
filing
1997 FDA Modernization Act
Codified accelerated approval regulations and policies &
procedures for fast-track approval
FDA review reduced
2.1 yrs
Granted in exchange for pediatric clinical trials requested
by the FDA.
6 months added to life
of patent or exclusivity
Pharmaceutical Industry Enduring
Characteristics
► Research
& Development (R&D)
 Product life cycles
 Blockbuster products
 Marketing in place of innovation
Pharmaceutical Industry Enduring
Characteristics
► Profitability
 Net profit as a percentage of revenue
 Mean return on investment
 “Virtuous rent seeking models”
Pharmaceutical Industry Enduring
Characteristics
► Profitability
 Net profit as a percentage of revenue
 Mean return on investment
 “Virtuous rent seeking models”
► Price
sensitivity
 Health care is a right
 Prices not based on cost of production
 Pricing: art vs. science
The Role of the FDA
► Due
to stringent regulations imposed by the FDA:
Drug approval on average takes 12 to 15 years
► Implications:
Safer Drugs, but Inefficient and Lengthy
Process
Healthy Competition
By: Michael Tanner and Michael Cannon
Tipping Points?
► Escalating
► Pressure
Criticism
points
 Economic: pricing and price differentials
 Science/technology: R&D investment
 Socio-political: market prospects
Pharmaceutical Industry:
Present Agenda
► Repair
social image
► Juggle
traditional and biotech medicines
► Evolve
as global organizations
Pharmaceuticals
► Due
to the rising costs of pharmaceuticals—
Congress enacted Part D in January 2006
► Therefore, this presentation will focus on
Part D
Medicare Part D
►A
federal program that subsidizes the cost
of prescription drugs for Medicare
beneficiaries
► Enacted as part of MMA (2003)
► Plan D started January 2006
HOW Part D Works
► Plan
D is administered by Private Insurance
companies that are reimbursed by CMS
(Centers of Medicare and Medicaid Services)
► Medicare beneficiaries have to affirmatively
choose and enroll in Part D
HOW Part D Works
► As
a beneficiary of Medicare Part D you have the
option to enroll or not enroll
► Once you enroll, you select a plan that meets your
needs and then pay a monthly premium
► The premium is paid to CMS- which in turn pays
the private insurance companies
► The premium can be deducted from your social
security allowance
► The premium varies by plan
Existing and Current
Legislation in Congress
Universal Health Act of
2007
HR1521: Repeal of the Late
Enrollment Penalty in Medicare
Part D
Bill Sponsors
► Mr.
Kagen (D-WI)
► Mr. Altmire (D-PA)
► Mr. Larson (D-CT)
► Mr. Braley (D-IA)
► Mr. Perlmutter (D-CO)
► Ms. Castor (D-FL)
► Mr. Gene Green (D-TX)
► Mr. Farr (D-CA)
► Mr.
Cleaver (D-MO)
► Mr. Higgins (D-NY)
► Mr. McNulty (D-NY)
► Ms. Hirono (D-HI)
► Mr. Cohen (D-TN)
► Mr. Patrick J. Murphy
(D-PA)
► Mr. Wexler (D-FL)
What does this bill intend to do?
► To
amend part D of title XVIII of the Social
Security Act to REMOVE the Medicare prescription
drug benefit late enrollment penalty.
► FULL PREMIUM SUBSIDY- An income-related
premium subsidy equal to up to 100% of the
amount described by Medicare Part D
► The amendments made by this Act shall be
effective immediately and shall apply to monthly
beneficiary premiums for months beginning after
such date
REMEDY Act of 2007
HR1310: Relief and Elimination of
the Medicare Enrollment Deadline
Penalty
Sponsors
► Mr.
ALTMIRE (D-PA)
What would the Remedy Act do?
► Amend
part D of title XVIII of the Social
Security Act to waive the late enrollment
penalty under such part for 2006 and 2007
and to fully subsidize any such penalties
subsequently imposed for part D subsidyeligible individuals
What about those individuals who
already paid penalties in 2006?
►
►
►
►
REBATES OF CERTAIN PENALTIES PREVIOUSLY COLLECTED:
The Secretary of Health and Human Services shall establish a
method for providing rebates of late enrollment penalties
paid
This would include payments received for months BEFORE
the date of the enactment of this Act for which a penalty
does not apply under the amendment made by subsection (a)
but for which a penalty was previously collected
(RETROACTIVE)
The amount of any rebate returned for past late enrollment
fees shall NOT be treated as income for purposes of
determining the eligibility for or the amount of assistance for
the Medicare Part D program
It also cannot determine the eligibility for, or the amount of
assistance under any other Federal or federally assisted
program that bases eligibility, or the amount of benefits, on
need.
Medicare Prescription
Drug Benefits Gap
Elimination Act of 2007
(Introduced in House)
H.R.1277
Sponsors
► G.K.
Butterfield (D-NC)
► Albert Russell Wynn (D-MD)
► Anthony D. Weiner (D-NY)
► Gregory Meeks (D-NY)
► Walter B. Jones (R-NC)
► Robert Brady (D-PA)
► Donna M. Christensen (D-VI)
► Al Green (D-TX)
► Brad Miller (D-NC)
Bill supported actions
►
►
►
To direct the Secretary of Health and Human Services to
investigate how to eliminate the gap in benefits between
standard coverage and catastrophic coverage under the
Medicare prescription drug program
The Secretary shall conduct a study to investigate HOW to
eliminate the gap in benefits for covered part D drugs
under the Medicare prescription drug program after a part
D eligible individual's costs exceed the initial coverage limit,
and before the individual obtains protection against high
out-of-pocket expenditures
Not later than 6 months after the date of enactment of this
Act, the Secretary shall submit a report to Congress on the
findings from the study conducted and shall include
recommendations for legislation based on those findings.
To amend part D of title XVIII of the
Social Security Act to authorize the
Secretary of Health and Human Services
to negotiate prices for part D covered
drugs for Medicare beneficiaries.
H.R.118
Sponsors
► Jo
Ann Davis (R-VA)
What does the bill propose?
► The
Secretary would be authorized to
negotiate with drug manufacturers and
pharmacies prices charged to PDP sponsors
and MA organizations for covered part D
drugs provided under this title.
Is this bill truly Republican?
► It
is interesting that a republican representative
would propose legislation for government control
given Republican ideals of small government and
market competition…
► However, this bill seemingly maintains its
Republican nature by allowing government to
negotiate for PDPs and MAs, thus maintaining
the competitive entities
► The republicans have DISGUISED to the public
their true intentions by attempting to look like
us!?
Republican views on Part D
►
►
►
►
►
The theory behind Part D is that market forces and
competition among drug plans, overseen by government,
can achieve better results than a government-run program
The multitude of plans allows seniors to pick one that best
meets their needs, companies that do not meet the needs
of a significant portion of the population will be forced out
due to inefficiency, and those that do meet needs will
remain competitive and beneficial
The laws of supply and demand will dictate a fair and low
price for prescription drugs
Both the non-partisan Congressional Budget Office and
Medicare actuaries have said they doubt the government
could negotiate lower costs than the private sector
The public would be best served if the new Congress
conducts in-depth oversight to gather the facts, rather than
rushing through legislation to fix something that isn't
necessarily broken
Republican goals for Part D
► Maintain
market forces
► Create tax breaks and incentives for
enrollment in the program
► Maintain enrollment penalties to prevent
adverse selection
► Maintain the status quo, Part D is functional
and coherent
 If it’s not broke, don’t fix it!
Democratic goals for Part D
►
►
►
►
►
Expanded public programs aimed at covering more lowincome individuals, particularly children
Defeat of additional tax breaks for health savings accounts,
which we see as tax breaks for the wealthy.
Elimination of the "doughnut hole" in Medicare Part D
which leaves beneficiaries at risk of not being able to meet
financial needs and as a result potentially not being able to
buy needed drugs
Authorizing the government to negotiate lower drug prices
for Medicare beneficiaries.
"If you've got 43 million Medicare beneficiaries, they
should get some kind of reasonable discount"
Not explicitly stated, but important
Democratic Goals for Part D
► Remove
the PDP insurers from the equation and
negotiate directly with the pharmaceutical
industry to lower prices
► Improve Medicare funding sources to supply the
elderly with needed care
► Allow the global market to drive down American
prescription drugs prices (importation of
prescription drugs?)
► Kill Republican ideas before they kill America!
Proposed Legislation
Medicare Part E
Medicare Part D
► Medicare
Part D was drafted by a
Republican Congress— it takes a superior
party (i.e. Democrats) to fix this faulty piece
of legislation!
Criticisms of Part D
1)
2)
3)
Donut Hole
Enrollment Window
Federal government is NOT permitted to
negotiate for more favorable rates on
prescription drugs
*** Our Proposed Legislation addresses these
3 Criticisms***
Proposed Legislation
► Medicare
Part E
DOWN with D and Up with E
Part E Includes:
 More Donut: Less Hole
 Ability to enroll at any time
 YES Government can Negotiate for your
drugs
 NO reason to go to Canada for your drugs
Criticisms of Part D
► Donut
Hole
The donut hole refers to the coverage gap within
Part D
Beneficiaries pay 25% of their prescription drug
costs. However, once they meet a deductible of
$2,400— they are required to pay 100% of the
prescription until catastrophic coverage ($3,850)
has been reached
Eliminating the Donut Hole
► The
solution to the Donut Hole is to extend
the initial coverage limit from $2,400 to
$3,500
OR
► Those who need more than $2,400 in
prescription drugs can have an extended
coverage limit and as a result will pay higher
premiums
Enrollment Window
► Beneficiaries
of Part D have a 6 month window to
enroll. If you enroll after the 6 month period- you
are penalized with a 1% increase in the premium
price per month or you can wait and enroll in the
next Annual Enrollment Period.
► Additionally,
once you choose a plan, you are
locked in until the next enrollment period
Solving the Problem of the
Enrollment Window
► Make
Medicare Part D more flexible and
eliminate the 1% increase in premium costs
for late enrollment!
► As Simple as That— Yes!!!
Solving the Problem of Negotiation
► Private
Sector Negotiates with
Pharmaceuticals
► Government cannot negotiate even though
it is the buyer
► SOLUTION: Allow government to negotiate
with Pharmaceuticals!!!
Solving the Problem of Negotiation
► Allow
government to negotiate with
Pharmaceuticals!!!
► However, it is argued by the CBO
(Congressional Budget Office) that even
with government negotiations— this does
not mean that drug prices will become
substantially lower
► CBO says Public Negotiation is NO better
than Private Negotiation
Solving the Problem of Negotiation
► Public
Negotiation or Private Negotiation—
is one better than the other?
► Doesn’t hurt to try??? We have nothing to
lose- except more out-of-pocket
expenditures on pharmaceuticals
Rationale for Part E
► Since
drug costs continue to rise, the
Federal Government should shoulder the
responsibility by engaging in reforms that
decrease drugs cost for its enrollees
► Fixing the current glitches within Part D
► 50-60% of all beneficiaries enrolled in Part
D will reach the donut hole
Mechanisms for Part E
► Allowing
government to negotiate
Government Negotiations
CMS
Public
(Tax $’s)
Private
Insurance
Companies
Part D Enrollees
Pharmaceutical
Industry
Government Negotiations
CMS
Pharmaceutical
Industry
State
Govt
Public and
Part D Enrollees
Private
Insurance
Companies
Government Negotiations
► NOT
eliminating Private Insurance
Companies— they will no longer be the
intermediary between government and
pharmaceuticals
Target Group for Part E
►
All Medicare Part D Beneficiaries
AND
The Uninsured— especially:
1. Working families: in 2004, 80% of the uninsured came from working
families—almost 70% from families with one or more full-time
workers
and 13% from families with part-time workers
2. Low-income individuals: 2/3 of the uninsured are from low-income
families. Because of the high cost of health insurance, the poor and
near-poor have the greatest risk of being uninsured.
--- the Kaiser Family Foundation
Financing Part E
► How
do we afford an increase in the donut
hole threshold from $2,400 to $3,500?
► Increase Taxes
► Take away from National Defense and
allocate toward Health Care
Financing Part E
► CMS
may bypass insurance plans and
directly negotiate with pharmaceutical
industries for greater discount on
prescription drugs with their monopoly
market power
Financing Part E
CMS may bypass insurance plans and directly negotiate
with pharmaceutical industries
Advantages:
► Reduce intermediary procedure and cost for insurance
companies;
► Encourage competition among pharmaceutical companies
lowering drug costs
Disadvantages:
► Deal directly with large amount of beneficiaries,
administrative costs will increase, so the challenge may be
better performed by the state governments. CMS only
deals with administration of each state division.
►
Outcomes
► Pharmaceutical
companies compete for the
largest public payer, which results in the
lower drug costs for enrollees
► Reduction of intermediary insurance
companies, reducing CMS’s expenditures
► CMS supervises, coordinates and evaluates
the proposed legislation
VOTE For Part E
► Medicare
Part E
DOWN with D and Up with E
References
http://web.lexisnexis.com/congcomp/doclist?_m=7fc6fad002429d510b055aa2ea9e4874&_startdoc=
26&wchp=dGLbVzW-zSkSA&_md5=e24aa693d07bc9a70d12f6e8e36fc969
LEGISLATIVE HISTORY OF: P.L. 109-469, Office of National Drug Control Policy
Reauthorization Act of 2006 (TEMPORARY, INTERIM FILE), CIS-NO: 2006-PL109469, CIS-DATE: December, 2006, DOC-TYPE: Legislative History, DATE: Dec. 29,
2006, LENGTH: 48 p.
LEGISLATIVE HISTORY OF: P.L. 109-462, Dietary Supplement and Nonprescription
Drug Consumer Protection Act, CIS-NO: 2006-PL109-462, CIS-DATE: December,
2006, DOC-TYPE: Legislative History, DATE: Dec. 22, 2006, LENGTH: 8 p.
LEGISLATIVE HISTORY OF: P.L. 109-56, Drug Abuse Treatment Medications
Availability Expansion, CIS-NO: 2005-PL109-56, CIS-DATE: 2005 CIS-DATE:
December, 2005, DOC-TYPE: Legislative History, DATE: Aug. 2, 2005, LENGTH: 1 p
http://dorgan.senate.gov/issues/families/rx/
Reducing the Cost of Prescription Drugs
Reference
http://www.house.gov/apps/list/press/il05_emanuel/RX_JAN1107.html
Wednesday, January 10, 2007
SIGNIFICANT BIPARTISAN DRUG IMPORTATION LEGISLATION
INTRODUCED IN THE SENATE
http://www.pharmacists.ca/content/media/newsroom/news_rel
eases/release_detail.cfm?release_id=150
U.S. Congress threatens Canada's prescription drug supply
Louise Crandall, Canadian Pharmacists Association, (613) 5237877; Mary Ann Cedrone, Ontario Pharmacists' Association, (416)
441-0788; Paulette Eddy, Best Medicines Coalition, (416) 6223893
H.R. 4: A Confusing and Contradictory Prescription for Medicare
Drugs
by Greg D'Angelo and Robert E. Moffit, Ph.D.
Reference
H.R. 4: A Confusing and Contradictory Prescription for Medicare
Drugs
by Greg D'Angelo and Robert E. Moffit, Ph.D.
New Drug Legislation: A Response From The Pharmaceutical
Industry
by Paul E. Freiman
►Government Documents
oThe Pharmaceutical Market Access and Drug Safety Act - Full Text
of the Bill
oJanuary 10, 2007. Sen. Dorgan's press release. Reducing the Cost
of Prescription Drugs.
oJanuary 10, 2007. Rep. Emanuel's press release. Significant
Bipartisan Drug Importation Legislation Introduced in the Senate.
http://www.cptech.org/ip/fsd/health-pi-us.html
Parallel Imports of Pharmaceuticals Into the U.S. ("Reimportation")
Reference
CPTech Documents

April 23, 2004. Bipartisan drug import bill fixes exhaustion and
contract barriers, runs afoul of FTAs and Hague Convention.

April 14, 2004, Policy Issues Concerning Parallel Trade of
Pharmaceutical Drugs in the United States, FDA Prescription Drug
Importation Meeting.

March 31, 2004 Legal and Policy Issues Concerning Parallel Trade (aka
Re-Importation) Of Pharmaceutical Drugs in the United States

March 30, 2004, CPTech statement to Members of Study Group on
Enforcement of Judgments, Secretary of State Advisory Committee on Private
International Law, regarding First Sale Doctrine (parallel trade, exhaustion of
intellectual property rights).

March 3, 2004, Comments on Maryland State Senate Bill 167.
•Page on various legislation from previous Congresses on this topic.
Questions???