Federal and State Laws and Regulations Affecting Managed Care

Introduction

A bipartisan bill filed in the US Senate in May would make it harder for brand-name drugmakers to stave off the introduction of generic competition. The measure, the Greater Access of Affordable Pharmaceuticals Act (GAAP) was fashioned by Sen John McCain (R, Ariz) and Sen Charles Schumer (D, NY), who claim that it could save consumers $71 billion in drug costs over the next decade.

GAAP is meant to amend the 1984 Hatch-Waxman Act by removing some of the legal weapons that brand-name drugmakers use to delay introduction of generic drugs. Most importantly, it would end the 30-month stay that is now automatically issued by the FDA whenever such companies file a suit against a generic drugmaker's patent challenge. Instead, to get such a stay, the brand-name drugmaker would have to persuade a federal judge that such a stay is warranted. In addition, the legislation says that if the first generic applicant does not get its drug on the market quickly, its 180-day exclusivity would be revoked and moved to the applicant who had been the second to file initially. The bill makes the current FDA regulations on bioequivalency a matter of law, which would eliminate marketing delays caused by brand-name drugmakers' challenges to the testing of generic drugs.

In what is claimed to be the first consumer group lawsuit challenging maneuvers by manufacturers of brand-name drugs to delay introduction of competing generic versions, the seniors group Gray Panthers brought a treble-damage action against Bristol-Myers Squibb. The lawsuit was filed in the US District Court in Washington, DC, on April 13. The charges: Bristol-Myers Squibb engaged in a practice of using "frivolous" patent applications to block generic versions of its antianxiety drug BuSpar from coming to the market. Remedy sought: damages -- estimated at more than $100 million -- for those who had to pay higher prices for BuSpar while disgorging Bristol-Myers Squibb of profits stemming from the conduct being questioned.

Those handsome models smiling in ads for anti-AIDS drugs may be a bit too attractive. In a new position on direct-to-consumer advertising -- and one that may signal new restrictions on other drug ads -- the FDA wrote to 8 makers of antiretroviral agents to tell them to carefully look at their consumer advertising and bring it more in line with reality. The current promotions have to stop by July 31, 2001. Thomas Abrams, head of the FDA's division of drug marketing, told the drug companies that the images of "robust individuals engaged in strenuous physical activity" are not representative of the actual condition of most patients with HIV infection. Moreover, many of the ads "do not adequately convey that these drugs neither cure HIV infection nor reduce its transmission," and often do not make clear that the advertised drug should be taken in combination with others. The FDA was spurred to look at the ads by complaints from the city of San Francisco, where the Board of Supervisors had moved to ban the ads from city property -- an action spurred by a city Department of Public Health survey that found that 62% of the gay men interviewed thought that the ads encouraged unprotected sexual activity.

At a hearing in May designed to garner support for federal grants to hospitals for devices to reduce medication errors, a number of examples of such new technology were displayed. A hand-held device that translates a bar code on a drug label to audio instructions was designed to aid older patients whose sight is failing. Another was a hospital "robotic pharmacist" that reads bar codes and sorts medications into individual carts for each patient; it has, claims Neil Reed, head pharmacist at the Eastern Idaho Regional Medical Center where it is used, an accuracy rate of 100%. The legislation in Congress would hand out $97 million a year for 10 years to help facilities buy such equipment.

Deciding whether to cover drugs that are part of clinical trials is no longer up to insurers in Vermont. A new measure signed into law on April 26 by Gov Howard Dean mandates that insurers pick up the tab for such treatments. "This is one mandate that doesn't cost any money," said Dean, who is also a physician. "If patients don't get into the study, they might not get help and costs go up." However, the reach of the measure is limited; although many Vermont patients go to Boston for treatment, the new law applies only to clinical trials conducted at the 2 teaching hospitals in Vermont: Dartmouth-Hitchcock in Lebanon and Fletcher Allen in Burlington.

State programs designed for seniors who lack drug coverage may provide a lot less help in getting cheaper prescriptions than was advertised by the backers of these programs. Washington State has such a program whereby seniors receive an AWARDS card that gets them a state-negotiated bargain price on prescriptions at participating pharmacies, which includes most of those in the state. One problem: the bargain prices aren't really such a bargain. For 25 medications that are commonly prescribed for seniors, the New Tribune newspaper in Tacoma compared the prices available through the state plan with the prices available at warehouse outlets or at pharmacies that offer a senior discount. They found that the AWARDS prices were lower on only 7 medications -- and that's not figuring in the $25 annual cost of enrolling in the program. AWARDS prices ranged up to $13 more for a month's supply of maintenance medicine. However, for those who opted to get their drugs by mail, the AWARDS prices were substantially lower across the board.

A special study commissioned by the North Carolina legislature concluded that at least 8 drugs should be prescribed for those in the Medicaid program only after specific authorization. On the list: Aciphex, Axid, Celebrex, Pepcid, Prevacid, Prilosec, Vioxx, and the 150-mg dose of Ranitidine. Just by making that change, the state could save more than $16 million a year, the investigators from Lewin Group and the West Virginia Medical Institute determined. The study also suggested using differential dispensing fees or copayments to spur the use of generics and finding more rigorous ways to oversee overall prescription use than the current approach, which simply allows Medicaid recipients to fill no more than 6 prescriptions a month.

The Georgia Drugs and Narcotics Agency has kicked off a wide-ranging investigation of whether current rules on pharmacy compounding of drugs need to be changed. The concern: whether mistakes made in drugstores are leading to long hospitalizations and continued expensive treatments for the patients who were supposed to be helped by the drugs. The problem seems especially profound with sustained-release medications. While only about 1% of all prescriptions are filled with store-compounded drugs, those procedures are specifically exempted from FDA manufacturing regulations. Since 1997, the FDA has been working on a list of drugs that are too complex for store compounding. But the Georgia officials, who have been spurred by 3 Atlanta women placed in ICU after taking store-compounded thyroid medication, may decide not to wait and impose their own curbs.

July is the make-or-break month. That's when, according to the present schedule, the Senate Finance Committee is set to take up legislation adding a prescription drug benefit to Medicare. The plan developed by Committee Chairman Charles E. Grassley (R, Iowa) will allow the panel to deliberate a bipartisan measure that will have been carefully crafted to emphasize the aspects of expanding Medicare in ways that are agreeable to both centrist Republicans and Democrats. He wants the committee to vote on the measure by the end of July and then expects to spend the following 2 months fine-tuning whatever the committee has approved. This scenario has the bill coming up for a full Senate vote in October.

Developing middle-of-the-road legislation is a tough job, even though wide support exists for helping seniors pay rising medication costs. Although there has been a flurry of activity in state legislatures, such programs "are Band-Aids and should not be viewed as an alternative to a comprehensive Medicare benefit," Raymond C. Scheppach, executive director of the National Governors' Association, told those involved in what may have been the final hearing on the issue held by Senator Grassley. The sobering truth revealed at that session: fewer than 900,000 seniors are being helped by state direct benefit pharmacy programs, and half of them live in just 2 states: New Jersey and Pennsylvania.

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