A Prescription for Savings Marcia Hams- Community Catalyst Bill Vaughn – Consumer Union

1. A Prescription for Savings Marcia Hams- Community Catalyst Bill Vaughn – Consumer Union Peter Wyckoff – Community Catalyst January 27, 2007 Version 2

2. A Prescription for Savings Marcia Hams- Community Catalyst, Director of Director of Prescription Policy Initiatives - directs state and payer policy initiatives for the Prescription Project, a new national effort. www.communitycatalyst.org Bill Vaughn – Consumers Union, Senior Policy Analyst in the health sector – former staff to House Ways and Means Committee and Director of Government Relations for Families USA http://www.consumerreports.org/cro/aboutus/index.htm Peter Wyckoff – Community Catalyst field staff, founder of Minnesota Senior Federation from 1973-2006 www.mnseniors.org email: pete.wyckoff@yahoo.com Version 2

3. U.S. Drug Prices the Highest in the World and only getting worse 2000 60% More 2003 81% More Average Percentage more that Americans pay for brand drugs then 7 Western Nations Source: Boston University School of Public Health – October 28, 2004 Based on formulary of 1,000+ patent drugs

4. Amount U.S. Pays for patented drugs 2003 compared to: 58% Switzerland 63% Britain 73% Germany 75% Canada 87% Sweden 108% France 118% Italy Source: Health Reform Program Calculations from Patented Prices Review Board reports (Trends in Drug Prices and Expenditures tables) Based on formulary of 1,000+ patent drugs

5. Medicare Part D (January 2006)Percentage of Savings on Drug Costs Compared to Avg. Canadian Rx Costs 52% Avg. Canadian prices PDP Negotiated Rate - 2006 12%

7. The Problem • Out of control industry marketing • Industry influence in government • Quality of care compromised • Pharmaceutical costs out of control • Consumers can’t afford their drugs

8. Rx Marketing to Doctors • Industry spends $12B/year on drug marketing to MDs ($13,000/MD) • 90,000 sales reps (1 for every 5 MDs) • Gifts, lunches, trips, educational grants, entertainment, free samples

9. Rx Marketing to Consumers • Over $4.5 Billion spent by industry in 2006 • Focus on new, expensive treatments • Ads promote drugs for new “diseases” • 50 most heavily marketing drugs accounted for 50% of increased sales

10. Impact of marketing on prescribing • Even small gifts create obligation and influence prescribing decisions • Free samples create loyalty to brand • Doctors sometimes paid to promote expensive new drugs and off-label uses

11. Impact on costs • Marketing is 30% of cost of drugs • Only 10-15% spent on R&D • Expensive me-too drugs marketed • 17% of cost increases due to switches to more expensive drugs • Generics cost 30-80% less

13. A Prescription for Savings The Solution • State and National Perspective • Public Policy Changes • Administrative Change • Institutional Change • Litigation

14. Prescription for Savings from a National Perspective – Bill Vaughn

15. Prescription for Savings from a National Perspective – Bill Vaughn • Mr. Vaughn’s presentation did not include Power Point Slides but provided information on: • House HR 4 – removes limitation on Government negotiating drugs for Medicare Part D, but prohibits a national formulary. • Discussed Veterans Administration drug formulary and myths associated with it. • S 250 (Wyden and Snowe) – lets government negotiate on drug prices with heavy Federal research dollars or unique price problems • Prescription Importation Legislation discussed by Pete Wyckoff with following slides

16. Medicare Prescription Drug & Medicare Reform Act • Must control prescription drug costs if legislation is to: • Provide adequate coverage • Not bankrupt our economy • $400 billion appropriated cost $724 billion • $1.9 trillion liability

17. 2 Real Options to control prescription drug costs • Negotiations and price controls • Opening up U.S. prescription drug pricing to world competition and free trade • 2007 Prescription Drug Importation Debate • Not about safety. • Not about importation, rather is about… • About the cost of drugs for all Americans.

19. Comparison of Prescription Drug Prices – Twin Cities with Canadian and European Survey Taken 5-14-06 – All prices are US dollars (Walgreens.com) - International prices include all professional fees, but not postage

20. Pharmaceutical Market Access and Drug Safety Act of 2007 House H.R.- 380 Senate S-242

21. House Sponsored by Reps. Rahm Emanuel (D-IL), and Jo Ann Emerson (R-KS) Helps all Americans, not just seniors Allows individuals, wholesalers & pharmacists to import from FDA approved facilities in 30 countries Raises drug safety with Platinum standard against counterfeiting 2007 Pharmaceutical Market Access Act

22. Senate Sponsored by Byron Dorgan (D-ND) & Olympia Snowe (R-Maine) – 30 + co-sponsors Allows individuals, wholesalers & pharmacists to import from FDA approved facilities in 30+ countries Raises drug safety with Platinum standard against counterfeiting with additional provisions from House Passed bill Has anti-gaming provisions to stop drug companies from cutting off supply to countries 2007 Pharmaceutical Market Access and Safety Act - S- 242 – Senate Vote Soon

23. Prescription for Savings from a State Perspective – Marcia Hams

24. Reducing Drug Industry Influence; Improving CareGovernment and payer solutionsMedical profession solutionsLegal strategies Community Catalystwww.communitycatalyst.org January, 2006

25. Solutions • Federal regulation and payer policies • State regulation and payer policies • Private insurer policies • Medical profession self-regulation • Litigation

26. State Regulation and Policy Solutions • Increase the use of evidence-based, independent information by doctors, hospitals and public payers • Regulate and reduce conflicts of interest

27. Evidence-Based prescribing strategies • Evidence-based review and prescribing policies • Expand use of generic drugs • Physician education

28. Evidence- Based Review and Prescribing Policies • Drug Effectiveness Review Project: used by 15 states • Statutory requirements to use EBM as basis for public purchasing (WA) • State Preferred Drug Lists

29. Expand Use of Generic Drugs • Average now 56% of all drug sales • 70% at Kaiser Permanente • Generic substitution laws not sufficient • Need MD education and/or prior approval

30. Physician Education: Academic/Counter Detailing • Evidence based information to physicians in offices • Pennsylvania project in Medicaid, senior programs, state employees • Health plans such as Kaiser, Health Partners can do in-house

31. State Level Solutions: Reducing Conflicts of Interest • Gift bans and disclosure • Data mining • Clinical trials registries

32. Disclosures of or bans on industry marketing • Vermont statute (2002): individual MD reports to AG which publishes report • Minnesota statute (1993): $50 limit for gifts but education and many other exemptions • West Virginia (2004): Broad disclosure but individual MD names excluded from public

33. Bans on sale of prescriber data to drug industry • Industry purchases prescribing data from pharmacies and lists from AMA • Used to micro-market to MDs • New Hampshire statute (2006) bans • PhRMA challenging NH law

34. Clinical Trials Registries • Register all studies • Combats publication bias, deceptive reporting of results • Maine (2005) passed comprehensive statute. Also statute in VA with bills pending in NV, and IL.

35. Medical Profession Self Regulation • Academic Medical Centers • Medical Societies • Hospitals • Individual physicians

36. AMC standards Proposed in JAMA, 2006 • Gifting • Drug samples • Drug formularies in hospital • Continuing Medical Education • Funds for physician travel • Speakers bureaus and ghostwriting • Consulting and research grants

37. Medical Profession action: • AMCs: Yale, Univ. Penn, Stanford, UC Davis • Physician leaders expose problem, call for action in books/articles • AMSA (medical students) PharmFree campaign • No Free Lunch campaign

38. Litigation Strategies: Prescription Access Litigation Project Use class action lawsuits and public education to: • Make prescription drugs more affordable • End illegal drug company marketing and price tactics

39. The PAL Coalitionbringing a range of consumer constituencies together • 125+ organizations from 35 states and the District of Columbia: • State-based consumer groups (including PIRGs in 10 states) • Senior groups • Unions • Health & welfare funds • Non-profit health plans • Other national organizations

40. Challenge Company Schemes • Keeping Generics off the Market • Relafen, Buspar • Deceptive Marketing • Nexium, Vioxx, Zyprexa • Gaming the pricing system • Average Wholesale Price, First Databank

41. PAL Case Settlements • Buspar: $90 million • Relafen: $75 million • Lupron: $150 million • Augmentin: $29 million • GlaxoSmithKline: $70 million • First Databank: Rollback worth $4 billion

42. Strategies for Rx Reform Campaigns • Analyze problem and needs • Define policy solutions • Voluntary • Administrative • Statutory change • Litigation • Recruit leadership

43. Rationales for Rx Reform • Need for affordable coverage of Rx • Protection of existing programs and plans • Sustaining comprehensive expansions • Establishing trust in medicine • Combating industry influence

44. Institutional Change • Leaders and allies • Rationale for action • Medical professionalism & standards • Pressure from media, legislation, litigation, community • Quality, cost considerations • Design and implement solutions • Collaboration with other organizations

45. Advocacy Campaigns • Recruit allies and develop coalition • Develop solutions and strategy • Identify legislative/policy maker champions • Build public support/grassroots • Media • Funding

46. Minnesota physician and consumer education campaign • Minnesota Senior Federation---consumer leader of broad coalition • CRBestBuy Drugs: the educational tool • Medical society, health plan active involvement and innovation • Support of Governor • Academic resources and evaluation

47. METHODS: (1) Drug Effectiveness Review Project (DERP) • Pioneering work under leadership of former Oregon Governor John Kitzhaber • Drug Effectiveness Review Project – Oregon Health & Science University Evidence-Based Practice Center • Partnership (DERP) now includes 15 states and two non-profit organizations • Systematic reviews by AHRQ’s Evidence-Based Practice Centers • Process: transparent, unbiased, rigorous, highly regarded

48. METHODS: (2) Medical Input and Prices • Input from medical consultant • Data on average national retail price paid by cash-paying consumer • CU team reviews effectiveness and cost • Input from CU’s medical advisor, health editorial team, statistician, 2-3 outside medical peer reviewers for each category

49. METHODS: (3) Identifying CR Best Buy Drugs • CU team reviews the effectiveness and cost data, and selects one or more drugs that: • Are in the top tier of effectiveness • Have a safety record as good as others in the category • Have an average price substantially lower than the most costly drug in the category

50. BEST BUY DRUGS: Cholesterol–Lowering Drugs/Statins For moderate cholesterol reduction: • Generic lovastatin: 10 mg or 20 mg For substantial cholesterol reduction: • Atorvastatin (Lipitor)