Reimbursement News, In Brief

Sen. Wyden questions Xeljanz pricing at Senate hearing and Sen. Nelson wants new OIG review of Medicaid versus Medicare drug rebates. GAO compares VA, DoD drug purchasing in report.

Xeljanz Pricing Challenged By Sen. Wyden At Hearing

Sen. Ron Wyden, D-Ore. is citing Pfizer Inc.’s oral rheumatoid arthritis drug, Xeljanz (tofacitinib) to illustrate his concern about high-cost drugs, particularly those developed in part with government funding.

During a May 22 Senate Special Committee on Aging hearing to mark the 10-year anniversary of the Medicare Part D program’s enactment, Wyden said that as the program has evolved, “one of the major concerns today is how seniors are going to afford these specialty drugs….I’ve been very concerned for example about Xeljanz, a drug where the government played a very large role in its development.” He cited Xeljanz’s cost as about $25,000 per year, adding, “that’s a big lift for seniors.” Xeljanz was introduced in late 2012 (Also see "Oral Dosing May Not Be Enough To Win Speedy Adoption Of Pfizer’s RA Pill Xeljanz" - Pink Sheet, 12 Nov, 2012.).

Wyden earlier voiced his concerns with the cost of Xeljanz in a March 15 letter to National Institutes of Health Director Francis Collins. Noting the early development work for the drug was funded by NIH, Wyden said: “When taxpayer-funded research is commercialized, the public deserve a real return on investment. With the price of Xeljanz estimated at about $25,000 a year and annual sales projected by some industry experts as high as $2.5 billion, it is important to consider whether the public investment has assured accessibility and affordability.”

He requested information on the licensing arrangement between NIH and Pfizer for the drug and also suggested NIH “convene an outside panel to reexamine the pricing of medicines and treatments developed with public funds.” Wyden has a history of engaging with NIH on such issues, particularly involving Bristol-Myers Squibb Co.’s Taxol (paclitaxel) (Also see "Closing The Books On Taxol: GAO Report Fuels Sen. Wyden’s Pricing Push" - Pink Sheet, 9 Jun, 2003.).

OIG Report To Update Comparison Of Medicaid, Medicare Drug Rebates

Sen. Bill Nelson, D-Fla., will request that the HHS Office of Inspector General conduct a new comparison of the drug rebates manufacturers provide to Medicaid versus those given in the Medicare Part D program, he said at a May 22 hearing by the Aging Committee, which he chairs. Nelson noted an August 2011 OIG study found Medicaid collected nearly two-thirds as much in rebates for a selection of drugs as Part D in 2009, despite having only about one-fourth of the expenditures.

He suggested the disparity in rebates collected by the two programs may be even greater now, because the data collected in the analysis predated the increase in the Medicaid rebate minimum, from 15.1% to 23.1%, mandated by the Affordable Care Act. The increase was effective in 2011. As a result, Nelson announced, “I’m going to call for the IG to do another study to get the latest information on these numbers and then we can discuss them at a future hearing.”

Nelson is a long-time proponent of instituting mandatory, Medicaid-level rebates in the Part D program, an idea that continues to make the rounds in budget deficit-reduction talks among policymakers, despite strong opposition from the biopharmaceutical industry. OIG is also scheduled to report in 2013 on potential savings to Medicare from manufacturer rebates for Part B drugs (Also see "HHS OIG To Investigate Drug Shortages, Rebates, Other Pharma Issues In 2013" - Pink Sheet, 8 Oct, 2012.).

VA, DoD Drug Purchasing

The General Accountability Office found in a new report that differences in prices paid for a sample of 83 widely used prescription drugs purchased by the Department of Veterans Affairs compared with the Department of Defense generally reflect the fact that each agency is able to obtain better prices on the type of drugs that make up the majority of its utilization. Generic drugs represented 83% of the VA’s utilization of drugs in the sample for the first quarter of 2012 and the VA paid less for generics, while branded drugs accounted for 54% of DoD’s utilization of the sample drugs, which led the department to procure lower pricing for brands.

In a cover letter to Sen. Tom Coburn, R-Okla., who requested the study, GAO suggests the findings show the agencies each have opportunities to further reduce drug spending. GAO also notes that Coburn requested a comparison of VA and DoD drug purchasing with Medicare and Medicaid as well, and promised that analysis will be conducted “in future work.”