Good access to generic forms of pharmaceuticals has played a
primary role in keeping down the cost of the Medicare Part D drug
program, Centers for Medicare & Medicaid Services Mark B.
McClellan said Sept. 20.
One of the two main reasons behind the lower-than-expected Part D
premiums has been CMS's emphasis on ensuring that consumers receive
personalized counseling so that they will make “wise
decisions” about their drug needs, he said.
This is being accomplished through the use of Internet tools that
allow beneficiaries to “plug in medicines” and receive
information on how to use generics and lower-cost brand-name drugs,
McClellan said in comments to the Annual Policy Conference of the
Generic Pharmaceutical Association (GPhA), meeting in Washington.
CMS has developed an outreach and education network to help
consumers with their drug choices and also has made available
formulary tools to help physicians. “This personalized support
has generic drugs as an important focus,” McClellan
said.
Wide Availability.
The second reason is the “wide availability” of the
lower-cost generics, which McClellan said is responsible for a
slowdown in prescription spending growth in general and in Part D in
particular. McClellan has announced he will leave his post in
October.
According to CMS data, in the first half of 2006, 60 percent of all
prescriptions filled by the major Part D drug plans were for generics,
as compared to 52 percent for the rest of the U.S. population.
The lower cost of these drugs has allowed Part D plans to provide
inexpensive or even free generic coverage, which, McClellan said, will
help to keep beneficiaries “out of the doughnut hole.”
Further, Medicare Advantage plans typically have even higher
generic utilization rates due to their longer experience with drug
coverage, he said.
McClellan predicted that this trend will continue because generic
use is a “fundamental” aspect of the Part D benefit. Part
D plans may add generics to their formularies as soon as they are
approved by the Food and Drug
Administration.
Medicaid Requirements.
Generic drugs are just as important for controlling costs in the
Medicaid program, McClellan said. He noted that the Department of
Health and Human Services Office of Inspector General said recently
that generics are dispensed by the state programs an average 89
percent of the time when available.
Although some states have policies that lead to lower substitution
rates, CMS has issued guidance to the states about best practices that
have been proven to lower costs and not compromise safety, he
added.
The Deficit Reduction Act of 2005 required CMS to make some changes
in the area of drug pricing in the Medicaid program. McClellan said
the agency is working on proposed regulations, which will be out in
the next few months, to implement them.
For example, the DRA required the increased reporting of average
manufacturers prices (AMPs) and best prices that are used in the
Medicaid program. CMS is to provide AMPs to states on a monthly basis
and to update information posted on at least a quarterly basis.
McClellan said CMS is collecting information to better inform
states of prices and is developing a proposed regulation to promote
the use of appropriate payment methods by states.
DRA also amended the definition of AMP to exclude customary
prompt-pay discounts. The law required CMS to promulgate a regulation
clarifying the manner in which AMP is to be determined. McClellan said
that within a few months CMS will publish a proposed revised
definition of AMP. The agency is collecting AMP data that excludes
price concessions and discounts.
The CMS administrator said CMS also plans to release a proposed
rule shortly regarding “authorized generics,” in which a
brand-name company introduces its own generic drug to compete with a
generic company's version during an 180-day exclusivity period.
DRA required manufacturers to include authorized generics when they
report AMP and best price. Were they to be excluded, McClellan said,
CMS and the states would lose money.
More information about the conference is available via
http://www.gphaonline.org//AM/Template.cfm?Section=Home.