TAKE ACTION FOR LOWER DRUG COSTS! HELP SPREAD THE WORD

Consumer Catalyst has launched a social media campaign to raise awareness about how sketchy ‘Pay-for-Delay’ deals hurt consumer health! Join the discussion on twitter and share your story, using the hashtag:

Stop the #RxRacket!

Pharmaceutical companies are colluding to keep drug prices high – and taking that money right out of your pocket.

Did you know drug companies have made more than 160 secret, back-room deals that

• Have kept 100 generic drugs or more off the market for years
• Drive up the cost of each drug by an average of $3,000 a year
• Keep all of our prescription costs high, while divvying up the spoils!

Right now, the Supreme Court is currently deliberating over whether these back-room deals are legal – but we know they’re wrong. Since 2005, as many as 142 different generic drugs have been unfairly kept from consumers, according to government reports. Delaying the launch of a generic drug lets the drug companies make bigger and bigger profits, while patients are stuck footing the bill, or going without the medicines they need.

The Supreme Court heard arguments by the drug companies, and fortunately Justices Kagan and Sotomayor raised consumer concerns – but the Court did not hear the perspective of the thousands of Americans unable to afford their medications. That’s because most people don’t even know that these deals are costing consumers thousands, and our health system billions of extra dollars, each year!

Help us raise awareness of this #RxRacket. The public deserves to know how this decision will affect us all – how thousands of Americans are being forced to choose between skipping their medications or going into credit card debt, just so that drug companies can make even more profit. Not to mention, how health care costs for everyone have gone up, because insurers pay most of these higher costs!

Whatever the Supreme Court decides, help spread the word, so we can help make sure that these deals come to an end, once and for all.

Target drugs: 
If you have taken Cipro, Provigil, or Androgel, you have definitely paid more because of a pay-for-delay settlement. And according to legal experts, it is very probable that many drugs including blockbuster drugs like Lipitor, Plavix and Nexium — have been delayed by pay-for-delay deals.*

We need you to tell everyone you know that this is happening, and help gather and share the stories of people you know that have been negatively impacted.

What you can do:

1. Read the stories shared by two women, Tanna and Karen, who were unable to afford their medications due to pay-for-delay deals that kept generic Provigil off the market for six years. Also, read how the companies’ legal arguments make no sense.
2. Share these posts on Twitter, using the hashtag #RxRacket, and ask others to share their stories too. And follow us at @postscriptrx.
3. Join our community on Facebook to keep up with the campaign and join our email list of impacted consumers by sharing your story.

You can find all the information you would ever need about this issue on our Pay-for-Delay info page. Please also feel free to add your thoughts on this #RxRacket in the comments, below.

Thank you for helping us protect your right to affordable medicine!

*The Full List – Drugs Likely to Have High Prices from ‘Pay-for-Delay’ Deals:
Adderall XR, Aggrenox, Altace, Arthrotec, Caduet, Carbatrol, Clarinex, Comtan, Duac, Effexor XR, Eloxatin, Ethyol, Femcon Fe, Fentora, Flomax, Lipitor, Lamictal, Levaquin, Lexapro, Loestrin-24 Fe, Loprox, Lotrel, Lybrel, Namenda, Naprelan, Nexium, Niaspan, Niravam, Olux, Opana ER, Ortho Tri Cyclen Lo, Oxytrol, Plavix, Propecia, Razadyne, Razadyne ER, Rythmol SR, Sinemet CR, Skelaxin, Solodyn, Stalevo, Tricor 145mg, Vanos, Vfend, Wellbutrin XL (150 mg), Xopenex, and Zantac!

This past Tuesday, PhRMA was before Congress.  Not  lobbying to block price negotiations or generic competitors, but attending a hearing in their honor (click here for details of the hearing).  Chairman Henry Waxman, of the House Energy and Commerce Committee, has called upon PhRMA to explain their recent price increases exposed by AARP  mid-November in its Rx Watchdog Report.

At Tuesday’s hearing, Rep. Waxman put the price increase in perspective. He said:

Our nation is trying to recover from the largest economic downturn since the Great Depression. The Consumer Price Index has actually dropped over the last year. Social Security checks will remain stagnant. Millions of Americans have lost their jobs and their health insurance.

Yet, the brand-name prescription drug industry raised prices by more than 9% over the last year.

Rep. Waxman also noted that the health reform bill passed by the House last month will both provide insurance coverage to “36 million citizens who would otherwise be without it” but he cautioned legislators must not “write the pharmaceutical industry a blank check as we reform the health care system.”

Rep. Waxman also praised the approach under the House bill:

The House health care reform bill strikes an important balance that puts consumers and taxpayers first. In return for the billions of dollars in new market opportunities, we require that the drug industry provide additional discounts for the Medicaid program. And we end the multi-billion dollar windfall that the industry received when dual-eligible enrollees were switched from Medicaid to Medicare Part D drug coverage.

The House bill uses the money raised from these industry concessions to help millions of Americans afford health care coverage and to close the Part D donut hole.

At the hearing, Kathleen Stoll, Deputy Executive Director, Director of Health Policy at Families USA, testified that:  “In recent years, Americans have spent a significantly larger amount on prescription drugs. In fact, total spending on prescription drugs in the United States nearly doubled between 2000 and 2007, rising from $120.6 billion to $227.5 billion.”

Ms. Stoll praised the House health care reform bill, noting that it would improve access to prescription drugs by requiring coverage for drugs in all health plans sold in the individual market, and by eliminating annual and lifetime caps on benefits, and capping out-of-pocket costs.

The  chair of the board of AARP, Bonnie Cramer, also testified about the effect of rising drug prices on AARP members, seniors, and other consumers. She noted the costly impact of rising drug prices on government spending for subsidized seniors under Medicare Part D, and for seniors or others on Medicare Part B.  Her testimony noted that the specialty, or biologic drugs covered under Part B are the biggest current drug cost.  for the program’s entire $17 billion spend on drugs in 2007.

The top six biologics represented $7 billion of the total [$17 billion in Part B drug costs in 2007], or 43 percent of all Part B drug spending. To put this in context, Medicare Part B spending for one biologic drug – Epoetin alfa – in 2007 ($2.6 billion) was greater than FDA’s , with over 10,000 employees, entire FY2008 budget (2.3 billion).

Ms. Cramer also voiced concerns for the “millions of Americans … that fall into the donut hole each year.” And she noted that the number of part D plans charging 33% co-insurance for the very high priced specialty drugs has risen from only four of the nearly national plans to “more than half” of the Part D plans today.  This means that drug price increases are felt directly by the patient. Ms. Cramer put this in perspective as follows:

… rheumatoid arthritis medicines such as Enbrel and Humira averaged $1,633 per prescription in 2008. The average cost of a multiple sclerosis drug was $2,006. At 33 percent coinsurance, enrollees cost would exceed $500 per prescription. Most patients with either of these conditions filled at least eight such prescriptions in 2008.

The AARP report revealed the shocking price increase of 9.3 % for brand-name drugs, 10.3% for specialty drugs.  This is contrasted to the 7.8% decrease in the price of generic drugs during the same 12-month period ending September 30, 2009.  The report notes that all but one of the top 25 selling brand name drugs used by Medicare Part D plans rose from between 4.8% and 19.7%, and all but two of the top 25 specialty drugs also rose in cost, some by as much as 28.2%. Ten of these best-selling specialty drugs rose by more than 12%. This is happening at a time when the economic recession had driven the prices of most other goods and services down.

The New York Times covered the reports release, and noted that  the drug industry’s own major consulting firm, IMS Health, reversed their earlier market prediction of a 1% declines in sales for 2009, and now predicts a 4.5% growth in drug sales.  This means $21 billion in added drug costs in 2009, a windfall profit for the industry as the rest of the country grapples with record unemployment and ongoing recession.

Impacts of the price increase:
The new price increases have reversed the trend and produced two results — an immediate profit increase for 2009-2010; and a significantly higher base price for their future revenues once the approximately 30 million newly insured customers are added through the passage of health reform.  Drug companies set the price for the drugs they sell, and can raise or lower them at any time.  Additionally, the companies offer rebates and other discounts based on their price to different insurers, state Medicaid agencies and federal agencies.  The higher the base price, the more leverage for the drug company in negotiating with purchasers.  The result of this market manipulation is an approximately $120 Billion profit.

PhRMA appears to have gone back on their deal by changing the prices so radically and shifting an $80 Billion loss into a $120 Billion profit-grab.  PhRMA has been one of the most vocal supporters of health reform—they should be given that they have literally billions to gain if the law passes.  Drug industry  ads in support of reform, rather than in opposition, have been a welcomed on Capitol hill.  But the good will PhRMA generated supporting reform may have been    shaken by the recent price increase.

This profiteering has caught the attention of Congress.  The House Energy and Commerce’s subcommittee on Health is investigating this price increase, presumably with an eye towards strengthening the drug cost containment measures in the health reform bill.  Up until now, many drug cost containment initiatives have been off-limits due to the ‘PhRMA deal’.  PhRMA made a deal with President Obama and some Congressional leaders last Spring that was to  provide $80 billion in drug savings over the next 10 years, mainly through discounts to brand name drugs in the Medicare D doughnut hole..  In exchange, they would support health reform.  One of the biggest potential areas for savings that was declared off-limits by industry is the ability for Medicare to negotiate drug prices.

Even Senator Baucus, who chairs the Senate Finance Committee, and brokered the deal with Pharma on behalf of the Senate, has said that the total amount in future saving legislators will require from Pharma is “still in discussion.”

Tuesday’s Congressional hearings may help influence the current Senate debate, and the negotiations in the conference process (which would reconcile the differences between the legislation passed by the House and any future Senate bill.) We hope our Congressional leaders will see the stark reality exposed by the AARP Watchdog Report – that Pharma’s control of drug prices makes their proffered discounts illusory and holds us all hostage to their profiteering.

PAL’s most important lawsuit and settlement to date wins final approval!

Yesterday, the Massachusetts federal District Court approved class action settlements with publishers First Databank and MediSpan that will require the roll back the illegally inflated prices of over 400 drugs!

PAL coalition members AFSCME District Council 37 Health and Security Plan in New York, and New England Carpenters Health Benefit Fund here in Boston brought the lawsuit against these two publishers, and the pharmaceutical wholesaler McKesson, for their role in unilaterally raising the prices of over 400 drugs through their alleged manipulation of the published “average wholesale price” or AWP. Though the system of pharmaceutical pricing and reimbursement is complex, the AWP is a benchmark that is used by insurers and government programs to reimburse pharmacies. It also effects the cost to cash-paying customers. It is alleged that defendants First Databank, Medispan, and McKesson raised the AWP, while keeping the actual cost (called a ‘wholesale acquisition cost’) the same. This done to give  the large chain and other pharmacies, many of which are McKesson’s customers, an increased return on each of these drugs.

It has been estimated that this 5% increase in the cost of hundreds of drugs by the defendants may have cost consumers, insurers, and government programs over $2 billion in additional drug expenses.

It is estimated that the “rollback” of the price of these 400 drugs could yield between $1.5 Billion or more in future savings on drug costs. Perhaps of even greater importance, this lawsuit, along with other litigation (AWP, Remicade, Lupron) by PAL members, has exposed the weaknesses of the pharmaceutical pricing system that have allowed drug makers and wholesalers to manipulate or “game” the benchmark prices that government programs and insurers use for reimbursement.

The Judge in the case did allow a six month delay before the rollback of the drug prices, ” to alleviate the impact on independent and rural pharmacies.” This addressed the concern raised that small ‘mom and pop’ pharmacies may be forced to bear the full cost of the price rollback if they were unable to renegotiate their supply contracts for drugs with manufacturers and wholesalers.

The settlement also provides $2.7 million to be distributed along with the $350 Million in the preliminary McKesson settlement.

Thanks to PAL members New England Carpenters Health Benefit Fund, and AFSCME District Council 37 Health and Security Plan in New York for their work in bringing this important lawsuit.

Follow these links to see a copy of the Judge’s decision, the First Databank settlement, the Medispan settlement, or the pending McKesson settlement.

Recently, we posted an entry here titled “What is Abbott trying to hide? Maker of Norvir asks Court to deny public the right to see documents.” We’re pleased to report that the Court denied Abbott’s motion to keep some documents under seal. We analyze these documents below.

In 2003, Abbott Laboratories (NYSE:ABT) raised the price of its HIV/AIDS drug Norvir (ritonavir) by 400% overnight. Norvir is used in combination with other “protease inhibitors,” (PIs) and it “boosts” the effectiveness of the PI it’s used with. Abbott also makes a combination pill called Kaletra that includes both Norvir and its own PI – when they raised the price of Norvir, they didn’t raise the price of Kaletra.

Prescription Access Litigation coalition member SEIU Health and Welfare Fund filed a national class action lawsuit against Abbott. The lawsuit claimed that Abbott violated federal anti-trust laws, alleging that Abbott raised Norvir’s price in order to boost sales of Kaletra, at the expense of competing PI drugs that require Norvir as a booster. In a nutshell, the lawsuit argued that Abbott tried to “leverage” its patent-protected monopoly over Norvir into a monopoly over the market for protease inhibitors.

As we’ve discussed before, Abbott has fought throughout the litigation to keep documents regarding the price increase of Norvir sealed. Abbott’s lawyers recently argued that a set of documents that they wanted shielded from public view contain “highly confidential information related to … how Abbott analyzes, views and makes strategic business decisions in the HIV pharmaceutical market.” [Order, p2.

But after a Judge recently ordered some of the documents unsealed (a copy of the Judge’s order is here) it became clear why Abbott wanted to keep what was in these documents hidden from public view.

First, these documents revealed Abbott’s disregard of how a price increase would affect HIV/AIDS patients. An email from Abbott executive Jesus Leal shows three strategies that Abbott considered to drive up sales of Kaletra, despite the potential interference with patients’ existing or future treatment regimens.

One strategy was to sell Norvir in three ways: as an ingredient in Kaletra, as a separate pill priced at five times its former price, or at the original price in a liquid form that Abbott executives admit tasted “like someone else’s vomit.” Given that many protease inhibitors have nausea as a possible side effect, even considering a strategy that would force the many HIV patients who could not afford a five-fold price increase resort to taking the foul-tasting liquid Norvir is reprehensible.

Another strategy considered was to stop selling Norvir altogether, and offer only Kaletra. But switching to Kaletra is not medically appropriate for many HIV/AIDS patients, because they eventually have to change to different PI drugs as the virus mutates and becomes resistant. A premature switch to Kaletra would deprive patients of a treatment option that they would otherwise have held in reserve until absolutely necessary.

Further, one side effect of Kaletra is hyperlipidemia (high cholesterol), which leads to higher risks of heart attack and stroke. Thus Kaletra may be less appropriate for some HIV patients than other treatments which combine Norvir(ritonavir) and other PI drugs as necessary.

Abbott considered – and eventually adopted -- a third strategy – continue selling Kaletra, but increase Norvir’s price to five times its former price. Since this time, Kaletra sales have grown significantly, from $400 million in 2003, to between $682 and $900 million in 2004, and $1.14 billion in 2006.

Exhibit 18 also reveals that Abbott planned to argue that their price increase was necessary because it was “no longer feasible for Abbott to provide a production line of Norvir capsules at the current price.” Abbott executives speculated that a price increase had a notable weakness - the company would face “exposure on price if forced to open books.” They were right. Their own released documents show that it was profit motivations and market factors, not ‘feasibility’ that caused Abbott’s unconscionable 400% price increase of the widely needed drug Norvir.

It is apparent from these documents that patient and consumer concerns were secondary to, if not absent from, Abbott’s financial considerations. One released document [Exhibit 39] has a chart summarizing a proposed slide presentation on the price increase. Not surprisingly, the one slide summary labeled “Public Relations and Activist Slide” has no summary at all, just a question mark “(?).” This shows that Abbott knew that it would be lambasted by activists for its unconscionable price increase, and that there was no good response to this criticism.

The only remorse or reservation shown in these documents was a comment by Abbott’s Vice President of Global Pharmaceutical Development, John M. Leonard, M.D. He responded to Abbott’s proposals to limit access to Norvir “I think we are on the right (but uncomfortable) track.” [Exhibit 28] ‘Uncomfortable’ is a gross understatement given that the price hike Abbott was proposing increased the annual cost of Norvir for an uninsured patient from $1,300 to $6,600 a year.

The true purpose of the price increase demonstrated: Boost Kaletra sales

The documents also showed that Abbott quintupled the price of Norvir in response to the declining market share of Kaletra relative to protease inhibitors made by competitors. Kaletra sold almost $400 million in 2003 but new PI drugs having fewer side-effects made by other drug companies threatened Kaletra’s future sales.

One slide summary in Exhibit 28 shows that Abbott knowingly increased Norvir’s price in order to push the cost of using a competing drug Reyataz to a “significantly higher price.” This, Abbott speculated, would create “formulary pressures” i.e. pressures on insurers to cover Kaletra instead of Reyataz, or to increase the co-payment that consumers would have to pay for Reyataz.

Another slide summary showed that Abbott saw the treatment improvements from Reyataz not as a boon to HIV/AIDS treatment and to patients, but as a form of unfair gain by their competitor Bristol-Meyers-Squibb (BMS) at the expense of Abbott. Ironically, Abbott didn’t consider raising its price by 400% to be unfair gain at the expense of HIV/AIDS patients.

These released documents don’t reveal much about Abbott’s price hike that wasn’t already known (see, for instance, an article that originally ran in the Wall Street Journal here) but they do reinforce how coldly calculating Abbott was in considering how best to put profits before HIV/AIDS patients.

Abbott recently submitted a Motion for Summary Judgment to the Court hearing the Norvir class action. If this motion is denied, a trial in the case is currently scheduled for August 2008.

Readers, what do you think of the released documents? Do they change your opinion of Abbott? Or just reinforce it? Please post your thoughts in the comments.

And by the way, here are links to all the documents the Court agreed to unseal:

• Exhibit 1 (Rebuttal Expert Report of Joel W. Hay, PHD.)
• Exhibit 4 (08-09-2004 Depisition of Abbott executive Jesus Leal)
• Exhibit 5 (08-11-2004 Deposition of John Leonard)
• Exhibit 8 (12-19-2005 Deposition of Jodi Devlin)
• Exhibit 14 (9-3-03 Strategic Plan)
• Exhibit 18 (09-12-2003 Email from Jesus Leal re three pricing options for norvir)
• Exhibit 20 (07-13-2003 Email from Michelle Jones re 07-13-2003 PR article regarding Reyataz efficacy with Norvir)
• Exhibit 27 (09-10-2004 Deposition of Abbott executive Heather Mason)
• Exhibit 28 (09-22-2003 Email from Dr. John Leonard re Kaletra’s decline and Norvir’s growth with introuction of competitor pi’s)
• Exhibit 29 (08-04-2003 Emails from William Dempsey and John Thomas)
• Exhibit 32 (09-10-2003 Email from Joseph Serio Jr re decline in Kaletra market share)
• Exhibit 38 (Notice of Rescheduled meeting dated 09-25-2003)
• Exhibit 39 (09-29-2003 Email from Jesus Leal re Slide list)
• Exhibit 45 (2006 Jan Monthly Market Research Report re HIV drugs)
• Exhibit 47 (03-24-2006 Declaration of Michael P. Hannan, Product Director, Protease Inhibitors, Glaxo-Smith-Kline)
• Exhibit 49 (12-14-2007 Deposition of Douglas F. Greer, PHD re Profitability of PI’s developed for use with Norvir)
• Exhibit 50 (08-08-2007 Deposition of Dale Kempf re Patent issues)
• Exhibit 51 (07-24-2007 Deposition of Dr. John M. Leonard, Abbott VP)

A $125 million settlement has been announced in a major class action lawsuit involving members of the Prescription Access Litigation (PAL) coalition. The case, In re Pharmaceutical Industry Average Wholesale Price Litigation, was originally filed in 2002, and claimed that the defendant drug companies intentionally inflated reports of the Average Wholesale Prices (AWPs) on certain prescription drugs administered in doctors’ offices and paid for by Medicare Part B. The PAL member organizations that are plaintiffs in the lawsuit are:

• Citizen Action of New York
• Health Care for All
• New York Statewide Senior Action Council
• Vermont PIRG
• Wisconsin Citizen Action
• Pipefitters Local 537 Trust Funds

Until 2006, the published AWP was used to set the price that Medicare and consumers making Medicare Part B co-payments pay physicians for these drug. Private insurance companies and other third-party payors also use the AWP to determine how much to pay physicians. The lawsuit contends that
consumers and third-party payors paid more than they should because of the drug companies’ false AWP reporting.

The settlement includes branded and generic drugs used primarily in the treatment of cancer, HIV and other serious illnesses. Under the terms of the settlement 82.5 percent of the settlement fund is designated for third-party payors’ claims and the remaining 17.5 percent is designated for consumer claims.

The defendants included in today’s settlement are:

• Abbott Laboratories
• Amgen Inc.
• Aventis Pharmaceuticals Inc.
• Hoechst Marion Roussel
• Baxter Healthcare Corp.
• Baxter International Inc.
• Bayer Corporation
• Dey, Inc.
• Fujisawa Healthcare, Inc.
• Fujisawa USA, Inc.
• Immunex Corporation
• Pharmacia Corporation
• Pharmacia & Upjohn LLC
• Sicor, Inc.
• Gensia, Inc.
• Gensia Sicor Pharmaceuticals, Inc.
• Watson Pharmaceuticals, Inc.
• ZLB Behring, L.L.C.

Drugs covered in this settlement include Aranesp, Epogen, Neupogen, Neulasta, Anzemet, Ferrlecit and Infed. A full list of the drugs covered by the settlement is available here.

Medicare Part B recipients, health plans and individuals who paid for these drugs but were not on Medicare will be eligible to receive payments from this settlement once the Court finally approves it. The following types of individuals and entities will be eligible:

• Patients on Medicare Part B who paid a percentage (i.e. not a fixed copayment, but 10%, 20%, etc.) of the cost of one of the drugs in the case, taken between Jan. 1, 1991 and Jan. 1, 2005.
• Health Plans and other Third Party Payors who paid all or part of a Medicare Part B recipient’s percentage co-insurance for one of the drugs.
• Individuals not on Medicare Part B who paid all or part (a percentange) of the cost of one of the drugs taken between Jan 1, 1991 and March 1, 2008.
• Health plans and other Third Party Payors who paid all or part of the cost of one of the drugs taken by an individual not on Medicare part B between Jan 1, 1991 and March 1, 2008.

The Court will hold a “preliminary approval” hearing this Friday. If the Court grants preliminary approval to the settlement, notices will be mailed to Medicare Part B recipients and Third Party Payors, and published online and in a variety of national publications. Class members will have the opportunity to file a claim form, object to the settlement, opt out of the settlement or file an appearance with the Court. The court will eventually hold a final hearing to approve all settlement details.

This settlement is the third one announced in this AWP litigation. Iin August 2006, GlaxoSmithKline (NYSE: GSK) agreed to a nationwide $70 million settlement and in May 2007 AstraZeneca agreed to a $24 million settlement to Medicare Part B Zoladex users nationwide. After a trial in late 2006 and early 2007, the court in November 2007 ordered AstraZeneca (NYSE: AZN) and Bristol-Myers Squibb (NYSE: BMS) to pay nearly $14 million to insurance companies and consumers in Massachusetts for the companies’ roles in unfair trade practices. Those companies are appealing that ruling.

The court is expected to set a trial date for remaining claims against AstraZeneca and BMS on behalf of insurance companies and consumers outside of Massachusetts.

• To see the settlement, go here.
• For more information on the lawsuit and other documents filed with the Court, go here.
• To see the list of drugs included in the settlement, go here.
• For details on the GlaxoSmithKline settlement, go to gsksettlement.com.
• For details on the Astra Zeneca Zoladex settlement, go to astrazenecaawpsettlement.com

We want consumers to know about this important settlement. Please help us spread the word by adding a digg to this story on digg.com