Is the PPACA Annual Tax on Branded Drugs Contributing to Higher Drug Costs?

PBIRx®
Intelligent Solutions in Pharmacy Benefits
12 Wheelers Farms Road, Milford, CT 06461
(888) 797-2479

Hidden in the many pages of the original  2010  Patient Protection and Affordable Care Act (ACA), is Section 9008 from the Internal Revenue Service, which requires an annual fee on each covered entity engaged in the business of manufacturing or importing branded prescription drugs to “specific government programs”, to be paid not later than September 30th of each year.    “Specific government programs” refers to Medicare Parts B and D, Medicaid, Department of Veterans Affairs, Department of Defense and the Tricare retail pharmacy program.

On July 28, 2014, the Internal Revenue Service (IRS) issued final regulations (26 CFR Parts 51 and 602) on the fee, which is treated as an excise tax for purposes of subtitle F of the Internal Revenue Code (Code) (sections 6001-7874).  The final regulations describe the rules related to the fee, including how the IRS computes it and how covered entities pay it.  The fee is assessed, collected, enforced, subject to examination and summons and subject to confidentiality rules in the same manner as taxes imposed by the Code.  The fee applies to calendar years beginning after December 31, 2010.  

In general, the fee is imposed on each covered entity with aggregated branded prescription drug sales of over $5 million to specified government programs or pursuant to coverage under such programs.

There were a few articles in June about the rising drug costs by Pfizer – 91 drugs rose by an average of 20% in 2017.   How much of that price increase is due to the IRS’s required brand fee/excise tax?   Obviously the brand manufacturers are going to pass this fee down the chain of payers including pharmacies, wholesalers, plan sponsors and, of course, consumers.    

The Washington Examiner article dated June 2, 2017, commented that pharmaceutical companies price their drugs high to recoup the soaring research and development costs. Consumer and patient advocacy groups complain that there is no way to determine how much of the revenue goes to actual research versus marketing.  However, few mention the required fee/tax, payable to our government by covered entities, i.e. pharmaceutical manufacturers , as being another contributor of the two to four  increases in Average Wholesale Prices on drugs per year.

If you would like to learn more about these fee calculations, please go the IRS website at:

PBIRx has been exclusively providing intelligent solutions to clients in the management of pharmacy benefit costs since 1993. With a staff that includes IT personnel, actuaries, financial analysts, clinical pharmacists, attorneys, HIPAA Compliance Officers and many more experts, PBIRx’s mission is to create optimal health care outcomes while minimizing overall health care costs. For more information, please visit www.pbirx.com or call (888) 797-2479.

Voluntary Drug Recall

PBIRx®
Intelligent Solutions in Pharmacy Benefits
12 Wheelers Farms Road, Milford, CT 06461
(888) 797-2479

Lupin Pharmaceuticals, Inc. has announced that they voluntarily recalled Mibelas 24 Fe (Norethindrone Acetate and Ethinyl Estradiol 1mg/0.02 mg chewable and ferrous furnarate 75mg) Tabelts -- Lot L600518 with an expiration date of 5/18.

A packaging error occurred and the weekly tablet orientation has been reversed whereby the first four days of therapy would have had four non-hormonal placebo tablets as opposed to the active tablets.

This product is an oral contraceptive indicated for the prevention of pregnancy.  The products are packaged in blistered packs containing 28 tablets.  

Customers who have these products should contact their physician and return the prescription to the place of purchase.

PBIRx has not only notified its Clients who have members on this drug, but also worked with the client’s various PBMs to be sure that the members are notified.

To view the full announcement, go to https://www.fda.gov/Safety/Recalls/ucm560904.htm

PBIRx has been exclusively providing intelligent solutions to clients in the management of pharmacy benefit costs since 1993. With a staff that includes IT personnel, actuaries, financial analysts, clinical pharmacists, attorneys, HIPAA Compliance Officers and many more experts, PBIRx’s mission is to create optimal health care outcomes while minimizing overall health care costs. For more information, please visit www.pbirx.com or call (888) 797-2479.

New Rheumatoid Arthritis Drug

PBIRx®
Intelligent Solutions in Pharmacy Benefits
12 Wheelers Farms Road, Milford, CT 06461
(888) 797-2479

On May 22, 2017, the FDA approved a new drug, Kevzara (sarilumab), manufactured by Sanofi/Regeneron Pharmaceuticals, indicated to treat adults with moderate-to-severe rheumatoid arthritis who have had an inadequate response to one or more disease-modifying antirheumatic drugs.  The patient receives one injection every two weeks at a cost of approximately $39,000 per year.  

This new drug will come with a boxed warning that cautions it may predispose patients to bacterial, fungal, viral or other infections.  Before use, patients should be tested for latent tuberculosis. PBIRx will continue to keep our members informed of the latest drugs available as well as their possible side effects.   PBIRx has been exclusively providing intelligent solutions to clients in the management of pharmacy benefit costs since 1993. With a staff that includes IT personnel, actuaries, financial analysts, clinical pharmacists, attorneys, HIPAA Compliance Officers and many more experts, PBIRx’s mission is to create optimal health care outcomes while minimizing overall health care costs. For more information, please visit www.pbirx.com or call (888) 797-2479.

Lower Cost Basaglar Will Compete with Higher Cost Basal Insulins

PBIRx®

Intelligent Solutions in Pharmacy Benefits

612 Wheelers Farms Road, Milford, CT 06461

(888) 797-2479

Basaglar, a Lilly/BI (insulin glargine injection),  a “long acting human insulin product” for pediatric type 1 diabetes mellitus and adult type 2 diabetes mellitus,  is the first FDA approved “follow on biologic” in the insulin class launched on December 15, 2016.  Lantus, a Sanofi highly prescribed insulin glargine injection, alternative form to Basaglar, will definitely be affected due to Basaglar’s lower cost.  Lantus was the top selling insulin in the US for the past decade or more with over $5 billion in sales in 2013 and now its reign is finally coming to an end.

Long–acting insulin (basal insulin) plays an extremely important role in the treatment of diabetes in children and adults. Lantus was the first basal insulin approved by the FDA in 2000 and has dominated the insulin market for years.  Lantus had significant and consistent price increases throughout its tenure including two in 2013, which increased its cost by over 15 percent.  The cost of this life saving medication has taken a dramatic economic toll on payers and patients alike.  The impact of its price increases was most dramatic because diabetes is an ever growing epidemic that accounted for $245 billion in health care expenses in 2012.  Now there is finally some relief for those who have been so affected by the costs of insulin.

Basaglar’s current list price for a pack of five pens is $316.85, which puts it at a 15 percent lower cost to Lantus (Lilly/BI) and Toujeo (Sanofi), a 21 percent lower cost to Levemir (Novo Nordisk, insulin detemir injection) and a 28 percent lower cost to Tresiba (Novo, insulin degludec).  Plan Sponsors offering pharmacy benefits to their employees or members need to be talking to their PBMs and Pharmacy Benefit consulting partners to determine current Lantus utilization along with PBM Lantus rebates to determine if there is a significant cost savings by preferring Basaglar. 

Consulting firms like PBIRx, that focus both on how to achieve positive health outcomes and how to lower prescription drug costs for their clients, will discuss strategies that save money and improve health, versus PBM strategies that focus solely on optimal PBM profits.  Based on individual client’s needs and cultures, PBIRx’s strategies will include taking advantage of Basaglar’s lower cost while focusing on what is best for each client, i.e. do not restrict Lantus, but offer lower copay for Basaglar; implement exclusion that requires Basaglar for all new long acting insulin utilizers; implement Basaglar as first step for long acting insulin, etc.

Bagaslar has already been introduced in several countries under the name Abagaslar.   In some countries switching requires a managed care approach with blood glucose monitoring along with possible dosage adjustment.  Currently in the U.S., the doctor must write a Basaglar prescription; though many states are enacting laws and regulations that allow pharmacists, sometimes only with patient consent, to substitute with the new, or a similar product. 

Lantus cost per Rx is estimated at $600 to $800 per prescription and is in the top ten of plan drug costs.    With the estimated current Basaglar 15 percent lower and conceivably 30 percent lower cost in the future, clients are looking seriously at this savings opportunity. CVS/Caremark and United Health have already moved Lantus off of the 2017 national formularies in favor of Basaglar  

At the IDF conference in December, Dr. Matthew Riddle estimated that “50 percent of all people with type 2 diabetes would benefit from biosimilar insulin glargine (Bagaslar), compared to just 25 percent of patients benefiting from the reduced hypoglycemia and flatter glucose profile seen with next-generation brand name basal insulin analogs such as Novo Nordisk’s Tresiba and Sanofi’s Toujeo.” https://diatribe.org/fda-approves-new-insulin-glargine-basaglar-first-biosimilar-insulin-us.   

PBIRx can discuss with clients how to manage these new generation insulins to achieve protection of cost trends while allowing access to any patient that may benefit.  PBIRx does this through their custom RxSAVINGS clinical programs that are carefully constructed by their staff of PharmDs to utilize the latest product information, treatment guidelines, and the expertise of the prescribing physician.

PBIRx has identified all Lantus utilizers for all of our clients by plan cost, number of prescriptions, number of members and number of prescribers.  Along with our clinical team of pharmacists and the client’s PBM clinical team, strategies are currently being discussed so that our clients and their members can take advantage of savings sooner than later. 

Skin Patch Proves Effective for Peanut Allergies, EpiPen Rival Is On Its Way

PBIRx®

Intelligent Solutions in Pharmacy Benefits

612 Wheelers Farms Road, Milford, CT 06461

(888) 797-2479

Did you know that as many as 8 million Americans, roughly 2.5% of the U.S. population, has food allergies? Focusing on children, peanut allergies are known to be the main cause of anaphylaxis, and EpiPens have long been used to aid such individuals when a severe and potentially life-threatening reaction occurs. However, with recent price hikes on the EpiPen, this type of treatment has become unaffordable for many.   An alternate form of treatment is necessary and, fortunately, there may be an answer to this (or two).

According to a recent article from the National Institutes of Health, “a wearable patch that delivers small amounts of peanut protein through the skin shows promise for treating children and young adults with peanut allergy, with greater benefits for younger children.” These findings come from a clinical trial that has been ongoing, and the treatment’s official name is epicutaneous immunotherapy (or EPIT). 

In the article, Daniel Rotrosen, M.D., director of NIAID’s Division of Allergy, Immunology and Transplantation (DAIT), explains how this treatment is designed to work. Ultimately, the goal of epicutaneous immunotherapy is to “engage the immune system in the skin to train the body to tolerate small amounts of allergen”.   Compared to other oral treatments that proved to be hard for about 10-15% of children and adults to tolerate, the patch appeared to be more effective and was found to be a safe and well-tolerated treatment.

Alongside this announcement comes the announcement of a rival to the EpiPen – Kaléo, Inc.’s Auvi-Q auto-injector. With the EpiPen’s recent increase in cost, Kaleo explains that they understand the challenges patients are currently facing, and it is their goal to provide affordable access to their auto-injector. The Auvi-Q device contains the same epinephrine drug that is found in Mylan’s EpiPens, comes with a voice-prompt system that helps patients as they use it, and is equipped with a needle that will automatically retract after administration is complete. Currently, no list price has been announced by Kaléo, Inc.

PBIRx has been exclusively providing intelligent solutions to clients in the management of pharmacy benefit costs since 1993. With a staff that includes IT personnel, actuaries, financial analysts, clinical pharmacists, attorneys, HIPAA Compliance Officers and many more experts.

Rising Drug Costs, the Government, and the 2016 Election

PBIRx®

Intelligent Solutions in Pharmacy Benefits

612 Wheelers Farms Road, Milford, CT 06461

(888) 797-2479

Election year is always bound to include debate and discussion over major topics that the public has their eyes and ears on, and this year, one of the most pressing that we are following is rising drug costs - one piece of the health care puzzle that has been at the forefront of many conversations.

Thanks to recent price hikes, such as the one seen with EpiPens, it appears that more people are looking for answers from officials about the issues surrounding exceedingly high prescription costs. During a forum sponsored by RealClearHealth and Express Scripts earlier this month, congressmen and industry leaders took an interest in how the rising cost of drugs should be addressed. While some attendees from the left feel that caps on prescription drugs or negotiations between the Centers for Medicare & Medicaid Services and pharmaceutical manufacturers are the answers, others are looking for more transparency and expressed that there needs to be more congressional oversight. Another opinion is that the FDA needs to have a more efficient process for approving new drugs, as they currently have a “backlog of generics to approve,” which encourages prescription costs to keep rising (additional details about the forum available here, via RealClearPolitics).

The Presidential Candidates and Their Health Care Plans

A recent article by MedCity News reports that Democrat Hillary Clinton just announced her plan for how she will respond to “unjustified price hikes for long-available drugs.” Considering that drug makers have hiked prices for about 400 generic drugs by more than 1,000% between 2008 and 2015 alone, part of Clinton’s plan is to “establish dedicated consumer oversight at our public health and competition agencies.” She strives to bring together representatives of federal agencies that are responsible for ensuring health and safety, as well as fair competition, in order to create a group that is dedicated to protecting consumers from such price increases. Should we experience another price hike similar to what happened with EpiPens, for example, it would be this group’s duty to respond (read the full details of Hillary’s health care plans here).

Republican Donald Trump has also expressed his viewpoint on health care reform, with one of his main priorities being to repeal Obamacare. Should he be elected President, some of his other plans include:

1. To require price transparency from all health care providers, while permitting individuals to find the best prices for their medical needs.
2. To remove existing barriers to entry into free markets for drug providers that are offering reliable, safe, and cheaper products.
3. To give individuals the opportunity to fully deduct their health insurance premium payments from their tax returns under the current tax system.

Initiatives such as these have been designed for the purpose of reducing health care costs for more Americans, according to the campaign. Additional details about Trump’s plans can be found here.

Other Government and Health Care News

Insurers such as UnitedHealth Group Inc., Aetna Inc., and Humana Inc. recently announced that they will be pulling back from the Obamacare individual insurance market next year, and as such, earlier this month, President Obama and other health advisers met with other insurance companies to discuss how the marketplace can be strengthened before the open enrollment period begins in November. The President did openly acknowledge that improvements could be made to benefit both consumers and insurers, and says that his administration will focus on enrolling individuals who are still without health coverage, such as young adults. More on this available here, via The Financial Express.

As election day gets closer, be sure to connect with PBIRx on social media and check our blog regularly for updates on health care’s role in the election. For additional information, please call (888) 797-2479.

Valeant Pharmaceuticals' Drug Costs Continue To Concern

PBIRx®

Intelligent Solutions in Pharmacy Benefits

612 Wheelers Farms Road, Milford, CT 06461

(888) 797-2479

In late June, PBIRx first identified the over 500% cost increase of Glumetza, which continued to quadruple overnight. For those of you who are not familiar with Glumetza, it is a drug used for the treatment of diabetes, with Glumetza being manufactured by Salix Pharmaceuticals (Salix was acquired by Valeant for $15.8B earlier this year). Upon learning about this cost increase, PBIRx developed an algorithm and identified any Glumetza utilizing member from our vast database of clients. Then, the PBIRx Clinical Staff researched evidence based alternative efficacious lower cost medication options, notified each client for approval to have their specific PBM facilitate communication with the Glumetza utilizer(s)’ prescribing doctor to provide information on the significant cost increase for Glumetza, along with the  lower cost alternatives. This very time sensitive action resulted in thousands of dollars in savings for PBIRx clients.

However, it is important to note that the increase in Glumetza’s cost is not the only piece of news raising concerns about Valeant Pharmaceuticals International. Another drug, Cuprimine, which is used to treat several health conditions such as Wilson’s disease and rheumatoid arthritis, also saw a cost increase, making it much more difficult for patients to comfortably pay health care bills. But the patients are certainly not the only group of people raising an eyebrow at the recent spikes - lawmakers are too.

Just last month, the New York Times reported that “Valeant’s habit of buying up existing drugs and raising prices aggressively, rather than trying to develop new drugs, has also drawn the ire of lawmakers and helped stoke public outrage against the growing trend of higher and higher drug prices imposed by big drug companies.” In fact, this year alone, Valeant has raised their prices on brand-name drugs approximately 66%, making this one of the greatest increases seen when compared to other drug companies.

So what is being done about Valeant’s latest actions? More recent news from the New York Times explains that Valeant has been issued two federal summonses (one from Manhattan and one from Massachusetts) as a result of their pricing, distribution and patient support practices. Although this does not necessarily mean a charge or settlement will occur, it is worth it to note that action is being taken to try and investigate the situation further.

Philidor’s Connection

Along with the recent news about Valeant, we also feel it is important to briefly touch on Philidor Rx Services and their connection to this pharmaceutical company. Some sources suggest that Philidor was not acting honestly (for example, they changed prescriptions to get insurers to pay for drugs) and as a result, many large PBMs such as Express Scripts, CVS Caremark and OptumRx have removed Philidor Pharmacy from their network. Not to mention, Valeant has announced that they are terminating their relationship with Philidor as well. As a providing entity, if you have members that use Philidor, they must receive a new prescription from their doctor or work with Philidor to have their prescription transferred.

For all of the latest on this topic and other industry news, be sure to connect with us on all of our social media profiles. Then, for more information about how PBIRx can help you with your pharmacy benefits, please visit www.pbirx.com or call (888) 797-2479 today.