Generic vs. Brand Name drugs.

[Guest guest]

Hello All,

$39 million is no chump change, but, it takes an average of $500 million to bring a new drug to the market.

Which figure is more important?

God Bless,

Jim Stark

http://www.jsonline.com/ Return to regular view Original URL: http://www.jsonline.com/news/state/jul01/script08070701a.asp

GOP budget has drug firm bonus

Brand-name emphasis could cost $39 million

By JOHN FAUBERof the Journal Sentinel staff

Last Updated: July 7, 2001Madison - A widow living on $16,000 a year would get no help under a prescription drug program favored by Republican legislators, but the plan could produce a $39 million annual windfall for drug companies.

New RX Plan

Current policy under state Medical Assistance program:Pharmacists who fill prescriptions for low-income patients substitute generics or lower-cost therapeutic-equivalent drugs, under certain circumstances, for brand-name drugs. Patients generally must try lower-cost alternative for 30 days. Pharmacists must seek prior authorization before higher-cost, brand-name drugs can be prescribed.Policy proposed by Assembly:New drugs would be exempted from prior authorization.Exempted would be new drugs of companies in the Medical Assistance program from July 1, 2002, to July 1, 2004.

Activity Increasing

Graphic/ Arbanas

Graphic: State Ethics Board Records

That windfall is likely to be one of the hottest issues for a conference committee charged with working out the vast differences between the Republican Assembly version and the Democratic Senate version of prescription drug relief for seniors.

It's a provision that senior groups don't want and the state Department of Health and Family Services did not request. It also is likely to draw attention to explosive growth in lobbying done in Madison on behalf of the prescription drug industry.

Prescription drug relief for seniors has been kicking around Washington for years. Now, Wisconsin seems poised to join more than 25 other states in taking some action to provide prescription drug relief for seniors while federal officials continue to debate the issue.

There are more than 702,000 Wisconsin residents 65 and older. About one-third of them have no drug coverage. And it is not uncommon for many of them to spend more than $1,000 a year on medications.

There are also a lot of lobbyists, 21 who were registered with the state as of Jan. 1. Lobbyists from 12 drug companies and from their trade association spent 3,800 hours lobbying in Wisconsin on prescription drug coverage and other matters during 1999 and 2000, according to State Ethics Board records.

The Republican plan passed by the Assembly would provide drug benefits to those 65 and older whose annual income is at or below 185% of the federal poverty level, or $15,892 for an individual and $21,479 for a two-person family.

The Democratic plan passed by the Senate would provide coverage for individuals making less than $25,770 and couples earning less than $34,830.

Republicans and drug company lobbyists argue that the Assembly plan would help preserve the doctor-patient relationship as well as offer incentives for drug companies to give rebates to the state, claims that are disputed by senior groups and Democrats.

Whatever compromise ultimately passes, millions of dollars in state revenue for prescription drugs would be provided. It is the Republican plan, however, that is favored by the pharmaceutical companies.

In 1998, the industry's lobbying costs in Wisconsin were $302,303, according to an analysis by Wisconsin Democracy Campaign. The costs increased to $379,909 in 1999 and $460,303 in 2000.

Although records for the first half of 2001 are not yet available, a total of 21 lobbyists from eight drug companies as well as the trade group Pharmaceutical Research and Manufacturers of America had signed up as of Jan. 1 to work the halls of the Capitol.

"That's an awful lot of lobbying activity," said Mike McCabe, executive director of the non-partisan watchdog group, which tracks money in state politics. "They weren't a major player. And then all of sudden you see this tremendous spike in their activity."

McCabe said the reason is the same one that keeps drug company lobbyists so busy in Washington: the prospect of prescription drug cost controls.

"The (drug) industry has fought tooth and nail any proposal at the state level if it has any provision that would seek to control costs," he said.

Such has been the case with the current state Medical Assistance prescription drug program for low-income residents, which would be changed under the Assembly bill.

Generic drugs at issueUnder the program, pharmacists who fill prescriptions for low-income patients automatically substitute generics for brand-name drugs when generics are available, said Ted , a pharmacy consultant to the state Department of Health and Family Services and researcher at the University of Wisconsin-Madison. Generic drugs are chemically identical to brand-name drugs but less expensive.

If generics are not available but a lower-cost therapeutic equivalent is, pharmacists substitute the lower-cost drug, said.

In general, patients must try the lower-cost alternative for 30 days. In order to provide the brand-name drugs, pharmacists must electronically seek prior authorization from the state department.

There are several exceptions. If the patient already tried an alternative and had an adverse reaction or found it ineffective, pharmacists can provide the more expensive drug.

However, a provision in the budget bill passed by the Assembly late last month created an exemption to prior authorization for new brand-name drugs that come on the market. The exemption would affect new drugs of all pharmaceutical companies participating in the Medical Assistance program beginning July 1, 2002, and extending to July 1, 2004.

Because newer, heavily promoted brand-name drugs can cost up to four times as much as generics and some lower-cost brand-name drugs, that exemption could mean a windfall for drug companies.

Based on department estimates, the non-partisan Legislative Fiscal Bureau in a recent report said the exemption could mean an additional $39 million in annual costs to the program - $16 million in state funds and $23 million in federal funds, most of it going to drug companies.

Senior groups, including the Coalition of Wisconsin Aging Groups and AARP, are opposed to the exemption.

"My view is, who needs it the most, the drug companies or older people?" said Tom Frazier, executive director of the coalition. "It rewards all the marketing and advertising the drug companies are doing. It is ridiculous public policy."

Pris Boroniec, deputy administrator in the department's Division of Health Care Financing, said the department did not request the exemption.

"We've used prior authorization as an effective tool to manage costs," she said. "It certainly is an integral part of our program."

Sen. Judy Robson (D-Beloit), sponsor of the state Senate's prescription drug plan, said prior authorization requirements are intended to help control costs. Robson, a geriatric nurse, said taxpayers should not have to subsidize heavily advertised drugs when lower-cost alternatives are available.

"A moratorium on prior authorization will give drug manufacturers carte blanche to pour big money into advertising new drugs and to pressure doctors into prescribing them," Robson said.

Republicans and drug company lobbyists defend the plan, arguing that prior authorization interferes with the doctor-patient relationship.

"All prior authorization is an effort by the state to keep medications away from people," said Madison lobbyist Broydrick, who represents two large pharmaceutical firms, Abbot Laboratories and Glaxo Kline. "They can sugarcoat it any way they want. We feel very strongly that people should have the drugs that physicians want them to have."

In addition, drug companies that participate in the Medical Assistance program give rebates to the state. The exemption provision would give the companies an incentive to extend rebates to the senior plan as well, said Rep. Steve Wieckert (R-Appleton), sponsor of the Assembly drug bill.

Wieckert took issue with the claim that the special exemption would cost the state $16 million in additional funds.

More precisely, he said, "It would reduce future cost savings."

Beyond that, the exemption would take power away from state bureaucrats and put it in the hands of doctors and patients.

He added, "The neat thing is the drug companies are in agreement with our plan."

Appeared in the Milwaukee Journal Sentinel on July 8, 2001.