Victory for Compounding

Background:
In 2009 a president of a Venezuelan Banking Association sent his team of polo horses to compete in the 2009 U.S. Open Polo Championships. While in the US, a veterinarian prescribed a supplement for the horses to prevent rhabdomyolysis (more info. here). The prescription contained an error, far too high of a dose (oral sources indicate the pharmacist called the veterinarian to verify the high dose and was told it was correct), the pharmacy compounded the prescription as stated and 21 horses died. (More details) The both the FDA and the Florida State Board of pharmacy investigated the compounding pharmacy, Franck's Lab, Inc., which had been compounding veterinarian medication for nearly 25 years. The Florida Board was content with its investigation, but the FDA continued to investigate the pharmacy, including bringing the lawsuit US vs. Franck's Lab, Inc. against the pharmacy and all compounding pharmacies in general.


Results:
On September 13th, Judge Timothy Corrigan of the US District Court for the Middle District of Florida has issued his ruling:

• The FDA does not have authority over compounded medications dispensed by a licensed pharmacy so long as the pharmacy’s activities are not manufacturing. That authority rests with individual state Boards of Pharmacy.
• Congress did not give FDA jurisdictional authority, when it enacted the Food, Drug and Cosmetics Act (FDCA) in 1938, to take enforcement action against a pharmacy that is engaged in traditional compounding practice.
• The FDA cannot use its Compliance Policy Guidelines (CPG) for veterinary compounding issued in 2003 as the basis for enforcement action.
• The regulations enacted by the FDA based on the 1994 Animal Medicinal Drug Use Clarification Act (AMDUCA) are in error. This legislation did not give FDA authority to prohibit the use of bulk active pharmaceutical ingredients APS) in veterinary compounding.
• The size and scope of a compounding pharmacy does not mean the pharmacy is a manufacturer.
• The use of bulk APIs in compounding for humans and the prohibition of bulk APIs for compounding for non-food producing animals is an illogical position for the FDA to take and contraindicated by its own actions over the past 50+ years.

This ruling is a huge event for compounding pharmacies in that it sets the degree to how much the FDA can intervene in traditional compounding activities.

Medco-Express Scripts Too Big?

The background to this update is the acquisition of Medco Health Solutions Inc. by Express Scripts (more info.)

Both Medco and Express Scripts are large Pharmacy Benefit Managers (more info on PBMs) and the combined acquisition would result in a single PBM having a huge share of the market. This has led many to cite the merger as a monopolistic practice.

At the end of August, the Justice Department blocked a merger between AT&T and T-Mobile (video info here). Given the Justice Department's stance on this merger, some are wondering if it is a harbinger of their stances on other mergers which exist.(Cracking the Door)

A number of consumer advocacy groups are filing complaints against the merger, arguing that such a conglomeration would harm consumers. (More info.) Oddly enough NCPA is not one of the groups in this formal proposal.

Express Scripts is already taking the offensive and arguing that such a merger would not harm consumers/patients. (More info.)

My Feelings:
Coporations are under a tremendous amount of pressure to "knuckle under" to increase their bottom line. Basically: increase stock prices or investors will move to a different company. The larger you make a company, the higher the incentive is for the company either to perform ethically questionable activities to increase stock value or to throw its weight around to eliminate the competition, neither of which really helps patients or consumers. Given that the pharmaceutical development/distribution sphere is already highly convoluded and shrouded from public scrutiny, this only encourages larger companies to perform the above stated activites. Competition and economic destruction/creation is good, so long as the playing field remains transparent and balanced. If a few select companies get special privilages due to their size or political power, its the same as a sports team cheating in a game, and the referees looking the other way.

National Average Drug Acquisition Costs (NADAC)

The Center for Medicare and Medicaid Services (CMS) is looking to change its model to set drug reimbursement costs given to open-door--patients can come in and drop off prescriptions--community pharmacies. It is being called the National Average Drug Acquisition Cost (NADAC).

The current model is for states to reimburse open-door community pharmacies based off of a Average Wholesale Price (AWP). Both look at an average cost of medication to a pharmacy as a means to setting a baseline of reimbursement. The difference between this method and the new method proposed is the issue of transparency.

A pharmacy purchases its drugs, sells its drugs and then submits its cost to the state (or Pharmacy Benefit Manager, a.k.a. PBM) for reimbursement. This composes of a time lag between when the product leaves the pharmacy and when the anticipated payment is made. If the price fluctuates, the pharmacy lost control of what drug it would sell for what price. This makes the operation of a business fundamentally challenging and often frustrating.

With AWP, there are ways states, PBMs (and even pharmacies, hence the introduction of Maximum Allowable Costs, a.k.a. MAC) try to circumvent or change the amount reimbursed in order to try to save money. This often leaves the pharmacy stuck with the bill. The hope is that NADAC will make the amount a pharmacy receives in reimbursement transparent so pharmacies can more accurately count for what payment they will receive.

Low Drug Costs to Get In

The Details:
An interesting angle to NCPA's push for The Medicare Access to Diabetes Act.

Market analysis is seeming to show that Wal-Mart is using its low cost prescriptions, to the point of losing money per prescription filled, as a means to get customers in the door, only to increase the costs on other items (here diabetes supplies) to make up the difference.

My Feelings:
There are many angles of consideration here, and one of these days I will try to exhaustively list my feelings on the issue. In short: I am in NCPA because I feel independent business is vitally important to a thriving economy, and Wal-Mart has caused many independent businesses to go out of business. Yet, it is not Wal-Mart that does that, since it is the customers who opt to go to Wal-Mart who do so. In economic terms Wal-Mart has operated efficiently, and should be respected for such. My supreme concern is that the economic playing field be balanced and open. If one business is allowed to muscle its way through because of its size, and because it can sustain a larger game of attrition or it can get away with questionable practices, then the customer/patient suffers.

Vermont Pharmaceutical Information Ruling by Supreme Court

The Details:
The U.S. Supreme Court made a ruling on Thursday (June 23) on a case of pharmaceutical information in Vermont.

The case involved the sale of prescribing information (only what doctor prescribed what drug, not to whom) from pharmacies to "data miners," who would in turn compile the information and sell it back to pharmaceutical manufacturers, who would in turn use the information to fine tune their marketing strategies to doctors.

Vermont law made the above practice illegal, but allowed the sale of prescribing information for other non-marketing reasons, such as health research.

The Supreme Court ruled that the Vermont law was invalid since it unconstitutionally burdened the pharmaceutical manufacturer's free speech, i.e. marketing, in comparison to the other entities who had access to the information.

My Feelings:
This is a tough one in my opinion. If the law allows one entity to receive the information, but bans another, it is by definition unfair and discriminatory. But, at what point does that unfairness or discrimination become unconstitutional?

What I find most interesting, and maybe slightly disturbing, is that the acquisition of information is considered part of free speech. Creation and dissemination, yes, but acquisition?

Pharmacy Benefit Managers

For those interested in going into independent pharmacy, one will quickly hear about Pharmacy Benefit Managers, or PBM's. Essentially these are the insurance companies that go out and market an insurance plan to businesses or individuals in order to cover their perscriptions. They are also the entities that pharmacies need to work with and through in order to get reimbursements for drugs sold to individuals under the respective insurance plans.

One of NCPA's largest complaints, and I fundamentally believe rightfully so, is that PBMs do not act fairly. Two major reasons for this are their size and the lack of transparency to observe what they are doing. This sets up economic incentives for PBMs to perform questionable behavior, succumming to the market pressure to maximize bottom lines.

Here is a good summary of some of the issues and complaints that are against PBMs.

NCPA Legislative Conference 2011 Summary

NCPA had its 2011 Legislative Conference in Washington D.C. The major pieces of legislation that were pushed were:

1) A push for congress men and women to join the pharmacy caucus. This would demonstrate that the member of congress is publicly saying they are concerned about the issues of pharmacy.

2) The Pharmacy Competition and Consumer Choice Act. House Version: HR 1971, Senate Version: S 1058. These bills aim to make Pharmacy Benefit Managers (PBMs) more transparent. To understand more about PBMs read here.

3) The Medicare Access to Diabetes Supplies Act. House Version: HR 1936. In order to try to lower government spending, the Centers for Medicare and Medicaid Services (CMS) feel that having diabetic supplies covered under Medicare Part D being sold only through those who can bid the lowest price would reduce overall spending. What this means is whoever could offer the lowest Diabetes supplies reimbursement, would get sole Medicare Part D funding to cover the sales. This would mean that only large chain organizations could offer Medicare Part D covered Diabetes supplies without 1) charging patient full market price or 2) selling Diabetes supplies at a business loss. Essentially bottom line cost reduction will reduce availability, which would especially hurt rural areas and independent pharmacies.

4) The Medication Therapy Management (MTM) Benefits Act of 2011. House Version: HR 891. This bill seeks to lower the requirements (conditions and number of drugs) a patient must have in order to have MTMs covered under Medicare Part D. This is to increase the pharmacist's role in MTMs, by allowing more reimbursements for time spend doing MTMs to more patients.