From the Director

States continue to struggle to balance their budgets while maintaining affordable prescription drug coverage in Medicaid and for seniors.  One strategy is to recover savings as expensive "blockbuster" drugs go off patent.  States are also suing drug companies, and receiving large financial settlements, for fraudulent marketing practices, and conducting audits of state contracts.  Read more below.    

Prescription drug issues continue to be front and center in trade policy, as the pharmaceutical industry seeks to insert ever-more-expansive language on intellectual property into free trade agreements.  At least one governor, former NLARx chair Vermont Governor Peter Shumlin, understands the issue and has written to President Obama and US Trade Representative Ron Kirk urging caution and language that does not threaten state Medicaid and 340B pricing and PDL procedures.  Read the letter here, and learn more about trade policy and prescription drug access here.  

Check out summer conferences of interest including the Pharmed Out Conference June 16-17 at Georgetown here and the 340B conference July 11-13, also in Washington D.C.,  here.  In addition, NCOIL will focus on trade issues, including as it applies to pharmaceutical policy, on July 14 during its Annual Meeting in Newport.  Articles of interest from around the pharmaceutical world are here; we post almost daily on our Facebook page, which you should check for more up-to-the-minute news and resources.   Sincerely, Sharon Treat    

States Look to Generics, Fraud Suits, and Cuts to Fill Budget Holes in Medicaid as They Struggle to Balance Their Budgets 

As NPR reports, 15 states are trying to cut back Medicaid programs in an effort to balance their budgets this year.  While the federal government pays more than half of the States' Medicaid bill, the share states pay consumes 22 percent of the average state's budget -- often more than they pay for education, transportation or other large budget items.   

States looking to cut costs without cutting access to health care should consider a top-to-bottom audit of pharmaceutical contracts. The State of Washington recently conducted an audit of its workers' compensation prescription drug contracts and identified a number of areas where savings could be achieved, including greater generic substitution. The audit conducted by Texas a few years ago, which recommended changes in pharmacy benefit manager (PBM) oversight,  remains a model for other states to follow. For an overview of state options to contain pharmaceutical costs, check out information from the National Conference of State Legislatures as well and the NLARx website.  

States also are suing drugmakers and recovering Medicaid overpayments resulting from fraudulent and deceptive marketing.  Last week, a South Carolina judge decided that Johnson & Johnson must pay $327 million for deceptive marketing of its Risperdal antipsychotic. This is the third of 10 state lawsuits on Risperdal.  Read the Pharmalot story.   South Carolina has also filed suit, as has Louisiana and Utah, concerning fraudulent marketing of the expensive diabetes drug Avandia.  Read this report on the exponential growth of fraud and financial settlements recovered by the states and the federal government. 

One bright spot for states is the number of expensive and frequently prescribed brand-name drugs that have gone off-patent recently or will in the near future, drugs responsible for much of the $300 billion spent on brand-name pharmaceuticals each year.  Generic versions of these drugs can translate to significant savings. Blockbuster drugs expected to go off patent this year include Lipitor (used for high cholesterol), Xalatan (glaucoma) and Zyprexa (schizophrenia).  In 2012 patents are scheduled to expire for Clarinex (allergies), Lexapro (depression), Avandia (diabetes), Plavix (blood clots), Seroquel (psychosis) and several drugs used to combat cholesterol and high blood pressure. Read this AARP Report.   

Unfortunately, the eventual savings from the availability of generic versions are frequently undercut initially by price hikes in the brand name drugs just prior to patent expiration and pay-for-delay deals cut by the brand name manufacturers with the generic companies.  The Federal Trade Commission recently released its annual pay-for-delay report , which found there were sixty percent more pay-for-delay agreements - thirty-one compared to nineteen - from October 2009 to September 2010 than in the previous year. FTC Chairman Jon Leibowitz said, upon release of the MMA report, that "[c]ollusive deals to keep generics off the market are already costing consumers and taxpayers $3.5 billion a year in higher drug prices. The increasing number of these deals is a win-win proposition for the pharmaceutical industry, but a lose-lose for everyone else." Read more in UPenn's RegBlog.

340B Prescription Drug Program Front-and-Center in Trade Debate