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Executive Summary

Federal and state drug cost containment efforts should focus on "me-too" drugs, Senate Aging Committee Chairman Pryor (D-Ark.) told a Nov. 16 hearing on drug prices. In his opening remarks, Pryor stated: "I believe that everyone here knows what the [pharmaceutical] industry cannot afford to admit: we can and we should and we must be bargaining over the price of me-too drugs." The committee considers the label "me-too" drugs to be synonymous with FDA's "C"-rated approvals. "I think the FDA definition of a 'C' drug is the best definition of a 'me-too' drug -- that is, one which makes no significant new contribution to currently available therapies," Pryor said. In his remarks, Pryor also responded to a Nov. 15 PMA report in which the association took issue with a committee briefing paper distributed at Pryor's July 18 hearing on drug pricing (see story, p. 16). The committee "never said that the 'me-too' drugs have 'little or no value,'" Pryor maintained. "We just said we didn't want to pay new drug prices for old repackaged drug therapies." Pryor also asserted that pharmaceutical firms, which have rationalized price increases as necessary for funding R&D efforts, "spend almost half of their research and development budget on 'me-too' drugs." At an informal "discussion session" following the hearing, Genentech Government Affairs Director Marty Rose maintained that FDA "C" rated drugs are not "me-too" therapies. Previously a group leader in FDA's Cardio-Renal Drugs Review Division, Rose asserted that a rating given at the time of a drug's approval did not always represent the final word on a drug's value. He argued that some "C" drugs later turn out to be the best treatments in their category because they are well understood by physicians due to their broad market exposure. Pryor held the discussion session as an adjunct to the hearing in order to provide a more relaxed but still on-the-record forum for responses to earlier testimony. He invited all members of the audience to attend, but representatives from only two pharmaceutical companies participated -- Genentech and Somerset Pharmaceuticals. Neither PMA nor any drug companies testified at the hearing. Pryor noted during an early exchange with committee members that "manufacturers have said they would sit down and meet with senators in private," but "I think this subject is more of a public issue." However, Sen. Warner (R-Va.) sided with the drug companies. Warner suggested that the committee should "give companies the chance to speak to us" while in "fairness" honoring the companies' concerns over confidentiality. Sen. Heinz (R-Pa.) agreed with Warner. Calling the situation "a stand-off," Heinz said he would "like to set up a meeting with drug firms." Heinz, in his opening statement, called for "protections for all older citizens" from increasing drug costs and urged that "now is the time to pull from the ashes the most viable elements" of the Catastrophic Care drug benefit. Heinz highlighted drug utilization review as "one [element] in particular" that he would support "resurrecting." In addition to DUR's contribution to cost-savings, Heinz said that such a program could include a "comprehensive record of the patient's treatment program and built-in alerts to notify the pharmacist of allergies or potential adverse drug interactions." Pryor asked witnesses at the hearing representing third party payers what they thought "would happen" if HHS Secretary Sullivan and the leadership from the appropriate congressional committees sat down with drug manufacturers and "said, 'enough is enough'" with regard to price increases. Tery Baskin, chairman of the PACE Alliance retail pharmacy buying group, answered: "In my opinion, you'd have one price for everyone." However, Michael Berryman, chairman of the Virginia Board of Medical Services, was less sanguine about the long-term benefits of such an approach. He indicated the solution was more of a "quick fix" and that prices might continue to increase. Norrie Wilkins, VP-pharmaceutical management for the Partners National Health Plans, suggested that "before you negotiate, you need to build" a "clinical program and a policy structure." Until then, "I don't know that you're in a position to bargain," she said. Wilkins explained in her testimony that among the elements of Partners' clinical program are positive and negative formularies and generic and therapeutic substitution. Partners manages pharmacy benefits for 2 mil. HMO and PPO members in 33 states. The organization is a joint venture between Aetna Life and VHA Enterprises. Somerset Pharmaceuticals President Donald Buyske explained during the roundtable discussion the development of Eldepryl and the financial pressures that led the small start-up firm to set the drug's price. For example, while the National Institutes of Health did the clinical work on the drug, Somerset had to spend $ 9 mil. on toxicity testing and other evaluations, he maintained. Buyske also said the company recently began a assistance program for indigent patients and suggested the firm may be prepared to reconsider its price for Eldepryl as long as the company is able to recoup enough profit to fund other R&D projects. Eldepryl and two other orphan drugs were singled out at the hearing by a panel of witnesses characterized as "victims" of high drug prices. Two elderly consumers outlined difficulties faced due to rising prices of Eldepryl and ICN/Roche's Mestinon (pyridostigmine bromide). The third panelist, People with AIDS Health Group Director Derek Hodel, discussed the high price of Lyphomed's NebuPent (aerosolized pentamidine) in the U.S. relative to its cost in Europe. Mestinon was developed in the 1950s and marketed by Roche for myasthenia gravis. The drug was distributed in bottles of 500 60 mg tabs through hospital pharmacies under contracts with drug banks at $ 26-$ 40, and through retail pharmacies at $ 66 in 1987. Roche licensed the product to ICN in 1988. The Costa Mesa, California firm did not renew the drug bank contracts and Mestinon now retails in the $ 130-$ 170 range. Furthermore, ICN recently announced another 8% price increase effective Dec. 1. In a statement issued Nov. 16 in response to the hearing, ICN Chairman Milan Panic said: "Any patient who is not able to afford their medication, who does not have the health insurance, or who has had Mestinon purchases rejected by their health insurance free of charge." The firm added that currently 285 patients, "representing 5% of Mestinon-treated patients," receive the drug at no charge through the company's indigent program. NebuPent was approved in June for Pneumocystis carinii pneumonia. Lyphomed is establishing a program for indigent patients; however, the program may have been prompted by a New York City-based buyers' organization that announced in September it would import the product from the U.S. and sell it at a 60% discount ($ 40) domestically ("The Pink Sheet" Oct. 2, T&G-5). Lyphomed's wholesale price for NebuPent is $ 99.45 per 300 mg vial.

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