Rate of Growth in Prescription Drug Spending Projected to Drop by More than 50 Percent Since 1999

Washington, DC)—New data released today by researchers from the Centers for Medicare & Medicaid Services (CMS) finding that discounts in the new Medicare prescription-drug benefit are deeper-than-expected and helping to drive down overall prescription-drug spending projections is a validation of the tools and techniques relied upon by America’s pharmacy benefit managers (PBMs), the Pharmaceutical Care Management Association (PCMA) said today. PCMA is the national association representing PBMs. PBMs administer prescription drug plans for more than 200 million Americans with health coverage provided through small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare.

“During the past decade, PBMs have relied upon array of tools â?? formularies, mail-service pharmacies, and increased access to generics â?? to reduce costs and improve quality,” said PCMA President Mark Merritt. “With the rate of growth in prescription-drug spending dropping by more than 50 percent from its peak in 1999, these data vindicate PBMs’ efforts and provide a clear pathway to expanding access and reducing costs. Best of all, these tools are helping to drive deeper-than-expected discounts in the new Medicare prescription drug benefit and lower overall prescription-drug spending growth projections.”

Mr. Merritt added, “While these trends are positive, policymakers should not assume they are a given over the next decade. Lobbyists for brand-name drugmakers and drugstores are working hard to undermine the very tools that have led to sharply reduced prescription-drug spending trends. These gains are at risk.”

The new study, “Health Spending Projections through 2015: Changes on the Horizon,” was conducted by researchers at the Centers for Medicare & Medicaid Services and posted on the Health Affairs website. Among the key findings:

Medicare prescription drug plans are seeing deeper-than-expected discounts in the new Medicare drug benefit. According to CMS researchers, Medicare PDPs are seeing discounts in 2006 of 27 percent â?? up markedly from earlier projections of 15 percent discounts.

Deeper-than-expected discounts in the Medicare prescription drug benefit are driving overall prescription-drug trend estimates lower. According to CMS, the introduction of the Medicare prescription drug benefit slows projected prescription drug expenditure growth from 8.1 percent to 7.7 percent in 2006.

CMS’ new findings continue a trend first reported last month. Last month, in a separate analysis for Health Affairs, other CMS researchers found that prescription drug spending in 2004 slowed to its lowest growth rate in the past 10 years, rising 8.2 percent. CMS researchers cited four key reasons for the slowdown in prescription drug spending: 1) rapid growth in the use of lower-price generic drugs; 2) increased use of over-the-counter medications; 3) a shift toward greater mail-order pharmacy dispensing; and 4) reduced consumption of certain drugs over safety concerns.

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The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmacy benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando, 202-207-3614
Charles Coté 202-207-3605

Drugmakers Set Drug Prices, Not Medicare PDPs

(Washington, DC)—A new report released today by the minority staff of the House Government Reform Committee examining prescription-drug price increases in the new Medicare prescription drug benefit is at odds with numerous studies documenting the savings the drug benefit is providing to seniors and fails to recognize that Medicare prescription drug plans (PDPs) do not set drug prices, but negotiate discounts with drugmakers, the Pharmaceutical Care Management Association (PCMA) said today. In addition, the report fails to acknowledge the savings available to seniors through increased use of generics and mail-service pharmacies.

PCMA is the national association representing America’s pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 200 million Americans with health coverage provided through small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare.

“Regrettably, this new study ignores two fundamental cost-savings options available to Medicare beneficiaries: mail-service pharmacies and generic drugs. It also ignores recent news that premiums in the new drug benefit are 30 percent lower than anticipated,” said PCMA President Mark Merritt.

Mr. Merritt added, “According to two recent, separate analyses of Medicare drug prices on the top 25 drug seniors use most, Medicare PDPs are doing their part to hold down drug prices for seniors and disabled beneficiaries, especially when compared to what cash-paying consumers with no drug coverage would pay at pharmacies. Medicare PDPs do not set drug prices, but negotiate discounts based on what drugmakers choose to charge. PCMA’s own data shows that Medicare PDPs are generating deep discounts â?? averaging 35 percent at drugstores and 46 percent through mail-service pharmacies â?? while providing seniors access to a wide range of clinically proven brand-name and generic drugs.”

Using the Government Reform Committee’s minority staff report’s logic, one could in fact derive a completely different and opposite conclusion: by looking at the lowest-priced drugs, instead of an average, the report would find drug savings that are 14 percent deeper than the minority staff’s own analysis of these same basket of drugs (see below).

PCMA believes the Government Reform Committee’s report also contains the following flaws:

The Government Reform Committee’s minority staff report is at odds with other recent data showing meaningful discounts in Medicare part D. Recently, PCMA conducted an analysis of Medicare drug prices examining drug prices posted on Medicare’s “Prescription Drug Plan Finder” for the top 25 drug products most commonly used by seniors in five national prescription drug plans (PDPs). PCMA’s analysis of drug prices was based on PDP negotiated prices of February 3, 2006. The findings are contained in a recent report, Medicare Drug Discounts Real & Holding Steady. PDPs are saving the Medicare program and beneficiaries an average of 35 percent on medications purchased at retail pharmacies and 46 percent on medications purchased through mail-service pharmacies.

The Government Reform Committee’s minority staff report fails to include any generic drugs. Twelve of the top 25 drugs used by seniors â?? based on the number of prescriptions written â?? are generic drugs. Generics typically cost 30 to 60 percent less than their brand-name counterparts. In 2006, an estimated $11 billion in drug sales are expected to lose patents and generic alternatives for at least 15 branded drugs will become available.

The Government Reform Committee’s minority staff report fails to look at the savings available to seniors through mail-service pharmacies. All seniors have access to a Medicare part D plan providing access to prescriptions through mail-service pharmacies. Mail-service pharmacies typically provide a 10 percentage-point savings beyond the discounts available to seniors at chain drugstores and independent pharmacies. According to an August 2005 analysis from the Lewin Group, utilizing mail-service pharmacies to their full potential in Medicare would save seniors and the program $86 billion over the next ten years.
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The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmacy benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando, 202-207-3614
Charles Coté 202-207-3605

(Washington, DC)—Bipartisan legislation introduced today by Senators Debbie Stabenow (D-Mich.) and Trent Lott (R-Miss.), “The Lower PRICED Drugs Act,” is an important step forward in helping to expand consumers’ access to clinically proven, cost-effective generic prescription drugs and provides an immediate pathway for policymakers seeking to reduce prescription drug costs for consumers and private and public purchasers, the Pharmaceutical Care Management Association (PCMA) said today.

PCMA is the national association representing America’s pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 200 million Americans with health coverage provided through small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare.

“An absolute key to improving affordability is getting generic drugs to market as quickly as possible,” said PCMA President Mark Merritt. “PCMA applauds Senators Lott and Stabenow for recognizing the important role that generic drugs play in promoting healthy outcomes and reducing prescription drug costs for consumers and purchasers.”

Mr. Merritt added, “PBMs have played a central role in increasing the use and acceptance of generic drugs. Just last month, federal researchers identified increased access to generics as one of the chief causes driving prescription-drug trend to a 10-year low. PCMA urges policymakers to build on this work by enacting common-sense reforms that enable consumers to more quickly access therapeutically equivalent, cost-effective generic drugs.”

PCMA believes strongly that increased access to generic drugs is an important tool to reducing prescription drug costs. Generics typically cost 30 to 60 percent less than their brand-name counterparts. As a result, a 1 percent increase in generic use can result in up to a 1 percent decrease in overall drug costs. In 2006, $11 billion in drug sales are expected to lose patents, with generic alternatives becoming available for at least 15 branded drugs. In total, over the next five years, an estimated $50 billion in brand-name drugs will lose patent exclusivity, thereby presenting consumers and purchasers with significant cost-saving opportunities.[1] A recent analysis found that one large PBM was able to help consumers, clinicians, and purchasers achieve a near 90-percent generic dispensing rate in the first month when a generic alternative became available, with mail-service pharmacies dispensing an even higher rate of generics.[2]

Last month, researchers from the Centers for Medicare & Medicaid Services found that prescription drug spending in 2004 slowed to its lowest growth rate in the past 10 years, rising 8.2 percent. CMS researchers cited four key reasons for the slowdown in prescription drug spending: 1) rapid growth in the use of lower-price generic drugs; 2) increased use of over-the-counter medications; 3) a shift toward greater mail-order pharmacy dispensing; and 4) reduced consumption of certain drugs over safety concerns.

[1] “Study Reveals $20 Billion in Untapped Generic Drug Savings,” Express Scripts, October 25, 2005

[2] “New Analysis: Recent Generic Blockbusters Show Huge Gains, Consumer
Adoption Rates Accelerate,” Medco Health Solutions, January 18, 2006.

The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmacy benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando, 202-207-3614
Charles Coté 202-207-3605

Mail-Order Pharmacy Option Has Potential to Save Medicare Program & Seniors $86 Billion over 10 Years

(Washington, DC)-America’s seniors overwhelmingly believe the mail-order pharmacy option is a “good idea” and more than one-third of seniors say access to a cost-effective mail-service pharmacy option makes them “more likely” to enroll in the new Medicare prescription drug benefit, according to a new poll of seniors released today by the Pharmaceutical Care Management Association (PCMA). PCMA is the national association representing pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 200 million Americans.

The mail-order pharmacy option is typically used for 90-day prescriptions for long-term maintenance drugs treating chronic conditions such as high-blood pressure and high-cholesterol. The mail-order pharmacy option typically provides consumers and payors with an additional savings of about 10 percent beyond discounts available through chain drugstores and independent pharmacies.

“PCMA’s new polling data suggest that the mail-order pharmacy option has the potential to transform the Medicare prescription drug benefit,” said PCMA President Mark Merritt. “Just last month, CMS researchers credited mail-order pharmacies as one of the chief causes for prescription-drug trend dropping to its lowest growth rate in a decade. With mail-order pharmacies providing deeper discounts than retail pharmacies and seniors more likely to enroll in the Medicare drug benefit when having this option, now is the time to do everything we can to promote and enhance the Medicare mail-order pharmacy option for seniors. Using the mail-order pharmacy option to its full potential could save Medicare and seniors $86 billion dollars over the next ten years.”

The poll of 801 Americans 65 years and older was conducted January 9-11, 2006 by Whit Ayres of Ayres, McHenry & Associates of Alexandria, Va. The survey’s margin of error is Ã?±3.46 percent. The summary of findings is attached. Among the key findings from the Ayres, McHenry & Associates survey:

Ã?· Seniors overwhelmingly believe that it is a good idea for seniors to have the option to get their drugs by mail order, and that Medicare and insurance companies should offer mail order as an option for seniors to get their prescription drugs. By an 83 to 6 percent margin, seniors say that it is a good idea “for seniors to have the option to get their prescription drugs by mail order.” Similarly, by a 75 to 7 percent margin, seniors say that Medicare and insurance companies should offer mail order as an option for seniors to get prescription drugs.

Ã?· Over one-third of seniors say that a mail order option would make them more likely to sign up for the Medicare prescription drug benefit. Thirty-seven percent of seniors say that knowing that they “could get a 90-day supply of prescription drugs by mail at a cost savings” makes them more likely to sign up for the new benefit, while 55 percent say it has no effect on their decision to sign up.

�· Nearly nine in ten seniors who could be candidates for using mail-order pharmacies regularly take prescription drugs to treat an on-going health condition, with more than two-thirds of them taking three or more drugs on a daily basis. Eighty-five percent of seniors regularly take prescription drugs to treat an on-going health condition. Among those who take drugs regularly, 43 percent take three to five drugs per day, 20 percent take six to ten drugs per day, and 6 percent take more than ten drugs per day.

With the poll finding that 85 percent of seniors report regularly taking prescriptions to treat an ongoing health condition, the cost-savings and quality-improvement opportunities available to Medicare and beneficiaries could be tremendous. An August 2005 Lewin report found that the Medicare program and beneficiaries could save $86 billion over the next ten years if the mail-order pharmacy option were used to its full potential in Medicare.

Seniors and disabled beneficiaries currently enrolled in the new Medicare prescription drug benefit are receiving deep discounts - here and now — through the mail-order pharmacy option. A PCMA analysis released earlier this month found that in the first month of the new Medicare prescription drug benefit, seniors choosing the mail-order pharmacy option were achieving discounts averaging 46 percent and $18 dollars per month per prescription. For seniors taking multiple drugs - and PCMA’s new polling data finds over 25 percent of seniors take 6 or more drugs daily — the savings can add up quickly.

The poll’s summary of findings as well as the Lewin report and PCMA Medicare part D drug discount analysis are all available at www.pcmanet.org.

The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmacy benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando, 202-207-3614
Charles Coté 202-207-3605

PDPs Generating 35 Percent Discounts at Retail Pharmacies, 46 Percent Discounts at Mail-Service Pharmacies

(Washington, DC)—One month into the new Medicare prescription drug benefit, discounts on the top 25 drugs prescribed to seniors and the disabled are holding steady with an average 35 percent savings on drugs purchased at a retail pharmacy compared to cash-paying customers and 46 percent for drugs purchased through the mail-service pharmacy option, according to a new analysis of Medicare drug prices released today by the Pharmaceutical Care Management Association (PCMA). PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 200 million Americans with health coverage provided through large and small businesses, health insurers, labor unions, and Medicare.

PCMA’s analysis of Medicare drug prices is based on prices posted on Medicare’s “Prescription Drug Plan Finder” for the top 25 drug products most commonly used by seniors in five national prescription drug plans (PDPs). PCMA’s analysis of drug prices was based on PDP negotiated prices of February 3, 2006.

“PDPs are working hard to provide seniors and the disabled with an affordable benefit that provides choice and coverage for the drugs they need. Thirty days into the new Medicare prescription drug benefit, PCMA’s Medicare drug-pricing analysis finds that drug discounts for Medicare beneficiaries are real and holding steady,” said PCMA President Mark Merritt. “While PDPs and PBMs do not set drug prices, they do generate discounts and are doing their part to help reduce prescription drug costs for Medicare beneficiaries. These data are an encouraging sign for beneficiaries paying part D deductibles or concerned about their drug costs in the donut hole as well as the overall costs of the Part D program.”

The findings are contained in a new report, Medicare Drug Discounts Real & Holding Steady. Among the key findings:

�· PDPs Providing Significant Discounts: PDPs are saving the Medicare program and beneficiaries an average of 35 percent on medications purchased at retail pharmacies and 46 percent on medications purchased through mail-service pharmacies.

Ã?· Real Savings on Brands: Medicare’s average savings on brand-name medications ranges from 18 percent at retail pharmacies to 26 percent at mail-service pharmacies.

Ã?· Real Savings on Generics: Medicare’s average savings on generic drugs ranges from 52 percent at retail pharmacies to 66 percent at mail-service pharmacies.

Ã?· Dollar Savings on Individual Drugs: Medicare’s savings on individual drugs averages nearly $14 at retail and nearly $19 at mail-service pharmacies for a comparable supply.

�· PDP Discounts Holding Steady: Discounts negotiated by Medicare Prescription Drug Plans are essentially unchanged from a similar PCMA survey completed in November 2005.

A PDP’s “negotiated price” for a brand-name drug is typically derived by applying a percent discount negotiated by the PBM to the average wholesale price (AWP). Since November 2005, increases in PDP “negotiated prices” for brand-name drugs have closely tracked increases in AWP price inflation from the brand-name drug makers. During this period, both AWP price inflation as well as PDP “negotiated prices” for brand-name products have increased roughly 5 percent.

The full survey is available on PCMA’s website at www.pcmanet.org.

The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmacy benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando, 202-207-3614
Charles Coté 202-207-3605

Ayres, McHenry & Associates Poll on Mail-Order Pharmacy Option in Medicare

CMS Study: ââ?¬Å?Health Spending Projections through 2015: Changes on the Horizonââ?¬?

Ayres, McHenry & Associates Poll on Mail-Order Pharmacy Option in Medicare

CMS Study: ââ?¬Å?Health Spending Projections through 2015: Changes on the Horizonââ?¬?

Ayres, McHenry & Associates Poll on Mail-Order Pharmacy Option in Medicare