New Survey Counters Claims Regarding Single Source Therapies in Medicare Part D

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WASHINGTON, D.C. (February 26, 2007) – The Biotechnology Industry Organization (BIO) today released a study which found that Medicare Part D plans offer significant discounts on single-source therapies and provide greater access to many single-source innovative therapies not available through the Department of Veterans Affairs (VA) pharmacy benefit or mail-order pharmacies such as Costco.com and drugstore.com. This price survey, compiled using publicly available information, contradicts the claim by Senators Snowe and Wyden in a letter to the editors of the Washington Post on January 22nd that Costco and drugstore.com offer even cheaper prices than Part D plans “without limiting the drugs available.”

“Medicare beneficiaries are saving an average of $1,200 per year on the cost of medication and a vast majority are satisfied with the plan they chose,” stated BIO President and CEO Jim Greenwood. “This study underscores our belief that mandatory government negotiation under Part D is unnecessary and would likely reduce patient access to innovative therapies without providing significant savings to seniors or to the government.”

BIO’s sample of 25 single source drugs and biologics, none of which are among the drugs most commonly prescribed to seniors, represent the industry’s latest innovative treatments for rare cancers, rheumatoid arthritis, HIV/AIDS, and multiple sclerosis.

The negotiated Part D prices for all of the therapies in BIO’s survey were lower than the cash prices listed on the Costco and drugstore.com websites. The average mail-order Part D prices were found to be as much as 20% lower than drugstore.com and 17% lower than Costco internet mail-order cash prices. These discounts equated to average Part D savings of nearly $137 per therapy per month compared to drugstore.com and $142 per therapy per month compared to Costco.

When actual out-of-pocket spending on drugs covered under Part D is compared to cash prices for those drugs, beneficiary savings are even greater. The vast majority of beneficiaries pay much less than the negotiated Part D retail prices when they fill their prescriptions at the pharmacy. Negotiated discounts between manufacturers and Part D plans, combined with negotiated rebates, also translate to reduced beneficiary monthly premiums and cost-sharing amounts.

The survey also found that certain innovative therapies were not available through either Costco or drugstore.com, with many also excluded from the VA national formulary. For example, neither drugstore.com nor Costco offered advanced, targeted cancer treatments (Sutent, Nexavar, and Sprycel) which were all found on every PDP formulary examined in the survey. These and several other therapies in the study also were not available through the VA national formulary.

The non-partisan Congressional Budget Office (CBO) recently concluded that the federal government would not be able to generate any savings through direct negotiations under Part D without limiting patient access to drugs, stating that without restricting access to medicines, the federal government would, “lack the leverage to obtain significant discounts.”

“BIO urges the Senate to review this data before considering legislation such as S. 250, the Medicare Enhancements for Needed Drugs Act of 2007, which would require the federal government to negotiate directly with the manufacturers of ‘single source drugs without therapeutic equivalents’ covered under Part D,” Greenwood stated. “These therapies, which account for only a small share of overall drug spending, treat rare and devastating diseases for which there are few other treatment alternatives.”

“The goal of the federal government should be to promote biomedical research into cures for rare and underserved diseases, as it has done with policies such as the Orphan Drug Act,” Greenwood concluded. “S.250 would not only undermine a successful benefit but would also deter exactly the kind of cutting-edge research that will be beneficial to future Medicare patients suffering from diseases for which there currently are few treatment options,”

The full study can be accessed at: http://www.bio.org/advocacy/letters/survey-savings-part-d

About BIO
BIO is the world's largest trade association representing biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. BIO members are involved in the research and development of innovative healthcare, agricultural, industrial and environmental biotechnology products. BIO also produces the BIO International Convention, the world’s largest gathering of the biotechnology industry, along with industry-leading investor and partnering meetings held around the world. BIOtechNOW is BIO's blog chronicling “innovations transforming our world” and the BIO Newsletter is the organization’s bi-weekly email newsletter. Subscribe to the BIO Newsletter.