'Branded Generics' Are Part of Confusion

Susan Hayes, president of consulting and auditing firm Pharmacy Outcomes Specialists, says she sees the alleged tactic centering on "branded generics." These products are branded drugs that are so cheap they are considered the generic of themselves, she says in an interview with DBN. This category of drug can account for up to 10% of overall drug utilization, she adds.

Branded generic products include the antibiotic Amoxil (amoxicillin), a drug that has been available for decades, Hayes explains. "There is really very little cost difference between Amoxil and amoxicillin," she says. "People just buy the brand, and there is very little generic utilization. They call the brand a generic."

A PBM trying to achieve an overall generic fill-rate guarantee might call Amoxil a generic, she says. "But if you want to price it and make the most profit, you'd want to call it a brand, because you get AWP minus 15% off of a brand." The same-priced amoxicillin, however, may appear on a PBM's MAC list, which could be sold to the payer at a discount of AWP minus 65%, she says.

By calling the product both a generic and a brand, the PBM is able to report that it dispensed a generic while charging a brand drug's 15% discount, Hayes says. "Although what [the PBM] should have done is give you the MAC price off of the generic equivalent. So [it's] running up your costs," she says as an example.

Such a tactic can boost a PBM's generic fill rate to 60% and more, which is a strong selling point for a PBM, Hayes says. "What they don't tell you is that all of these branded generics - that are a lot cheaper — are going to the fill rate, and they're really brand drugs. And [the PBM] is really charging you AWP minus 15%, and not the generic MAC price."

Helen Sherman, Pharm.D., director of pharmacy services at The Regence Group, which operates Blue Cross and Blue Shield plans in the Northwest, says that one of her biggest concerns is how miscategorizing drugs can be used by PBMs to inflate generic fill rates. "As PBMs compete, there is a multitude of ways that data can be manipulated to look favorable on a generic rate," she tells DBN.

"Our approach is that we report our generic fill rate according to how the medication was paid," Sherman says. "So if it was paid as a generic, it counts in the generic bucket, and if it was paid as brand, it was counted as a brand."

As a starting point, Regence uses drug pricing information supplied by First DataBank to categorize a product as a generic or a brand. First DataBank, however, does not specifically define a product as such, and some critics contend PBMs can easily manipulate and miscategorize drugs to suit their purposes.

Sherman says that Regence reviews drug products on a monthly basis, and will occasionally override First DataBank. This can happen when Regence doesn't feel that First DataBank's categorization aligns with how a pharmacy views the product, she adds. As such, Regence's policy on generic/brand categorization is designed to reflect the FDA's definitions. The insurer says it will classify a drug as "generic" when any one of the following are met:

The product's label name is the same as the generic name;

The product IS NOT designated as an "innovator product" by a drug data source;

The FDA approved the product under an Abbreviated New Drug Application (ANDA), and no New Drug Application (NDA) is on file;

• The product is designated as a generic in the FDA's Orange Book, which lists patents on drugs;
• The product was approved by the FDA as a generic according to information obtained via the Freedom of Information Act; or
• Other information from the FDA indicates the product is a generic.

Practices Said to Be Common

But some pharmacy benefit auditors contend that practices described by Cahn are common in the PBM industry.

Hal Holzman, president of auditing firm Pharmacy Data Management, Inc., says the alleged tactic benefits multiple stakeholders in different ways.

"The [drug] manufacturers want them to be classified as generics, because they know the patients are going to get [low] generic copays," Holzman tells DBN. "The pharmacies — depending on what their contracts are with the PBMs — may feel either way. Generally, they like generics because they have wider [profit margin] spreads. But if they're reimbursed as a brand, that is a really good deal [for the pharmacy]."

In fact, Holzman says, drugstores want the best of both worlds. "The gold standard, as far as the pharmacies are concerned, is to get brand reimbursement and generic copays for their patients," he says. But someone still has to pick up the tab, he adds. "The ones that are paying the big dollars — these things get paid for by someone — are the payers: the employers and insurance companies."

How much money this tactic actually costs payers depends on how aggressively the PBM manipulates the definition, Holzman says. "It can easily be a couple of percentage points [of total drug spend]," he says. Drug spending of large employers can total many millions of dollars per year.

Complexity May Help Mask Practices

But Cahn asserts the definition manipulation takes place in the highly complex world of PBM contracting, which includes terms such as "branded generics" and "multi-sourced brands" - both of which provide wiggle room in categorizing products.

Categorizing a drug as a brand or a generic is integral to how a PBM determines its payment formulas and guarantees. Payments, in turn, are generally based on a drug's average wholesale price (AWP). PBMs use AWP listings from data warehouse companies — such as First DataBank Inc. and Medi-Span — to establish the pricing discounts and rebate levels that they provide to Rx payers. For example, a PBM may charge an Rx payer AWP minus 15% to 18% for a brand drug, and roughly AWP minus 60% for a generic drug that has been placed on a maximum allowable cost (MAC) list.

Using these formulas, Cahn contends, PBMs will switch definition of brands and generics for the purposes of:

Invoicing the client. The PBM may call the dispensed drug a brand because the contract allows far higher charges on brands than generics, typically around AWP minus 18% for brands and around AWP minus 58% for generics, she says;

Deciding whether to pass through rebates to the client. The PBM may label the drug as a generic, which would enable the PBM not to pass through any rebates since PBM contracts almost always state that rebates will be passed through only on brand drugs, Cahn adds; and

Demonstrating a high generic fill rate. The PBM may count a brand drug as having been generic to demonstrate a generic fill percentage rate, she says.

When asked by DBN to respond to these allegations, the country's three largest PBMs touted their transparency of pricing, and said they follow uniform industry standards in defining brands and generics.

Medco Health Solutions, Inc. "has one of the most transparent business models in the industry in which pricing is clearly laid out for our clients," said spokeswoman Jennifer Leone Luddy. "As such, we are not aware of any of these issues," she says.

CVS Caremark Corp. uses indicators contained in the regularly updated Medi-Span Master Drug Database (Medi-Span) and its associated files, or another nationally available reporting service of Rx drug information, to determine the classifications of drugs as either branded or generic, the company said, adding that this is in line with industry standards. "We work directly with our [PBM] clients as necessary to address any specific requirements they may have with respect to how brand and generic drug classifications are determined," CVS Caremark says.

Express Scripts, Inc. uses a consistent, uniform approach to defining brands and generics for all clients, says Michael Fondell, vice president of sales and marketing operations. "These definitions are an important part of our contracts with clients," he adds. "This is another example of our business model and commitment to ensuring clients and their plan members maximize the benefits of increased generic fill rates by using proven programs such as step therapy and zero-dollar copay."

PBMs Allegedly Manipulate Definition of 'Brand' and 'Generic' Rx at Payers' Expense

What is a generic drug? What is a brand drug? These questions would appear to have obvious answers, but that's not necessarily true in the Byzantine world of PBM contracting. Some industry insiders contend that many PBMs intentionally blur the definitions of "brand drugs" and "generic drugs" to suit their financial interests. Health plans and employer groups, meanwhile, are largely unaware that this purported scheme could be costing them millions of extra dollars per year on their drug spend, Rx consultants and auditors tell DBN.

"This issue is not on the radar screen of payers, consulting firms or anyone but the PBMs that are taking advantage of contract ambiguities to make a lot of money," says Linda Cahn, president of Pharmacy Benefit Consultants and an attorney who has reviewed hundreds of PBM contracts and litigated against PBMs.

PBMs frequently write contracts that lack any definition of "brand drug" and "generic drug," Cahn tells DBN. Or the contracts may contain such ambiguous definitions that PBMs can manipulate the terms to achieve financial gains that should flow to the Rx payer, she asserts. Cahn acknowledges that it's difficult to put an exact dollar figure on the practices, which may not be illegal. But other PBM auditors say it could be costing payers several percentage points on their total annual drug costs.

By miscategorizing drugs, Cahn asserts, PBMs achieve a number of financial aims. These include charging brand prices for generic products, retaining rebates for brand drugs by calling them generics, and misstating a health plan's generic drug utilization rate. When vague definitions are written into the contract, "PBMs can basically do whatever they want in connection with all matters related to brand and generic drugs," she says.

Large PBMs contacted for comment by DBN say they follow accepted industry standards in defining drugs as brand or generic, and work with clients on addressing any concerns about the classification.

Is the Pharmacy Near You Selling Counterfeit Drugs?

(NaturalNews) The FDA has just issued a press release warning consumers who had prescriptions filled at two different "The Medicine Shoppe" pharmacies located in Baltimore (8035A Liberty Road and 5900 Reisterstown Road) that they could’ve received either counterfeit or expired drugs. Since some of the drugs in question are used to treat very serious conditions, the FDA is extremely concerned. There is currently no evidence that there are any problems with prescriptions filled at any other "The Medicine Shoppe" pharmacy locations.

Are any of These in Your Medicine Chest?

The following medications, if obtained from either of the above pharmacies, should be discarded:

* Lisinopril (20 milligrams)

* Guaifenesin/Dextromethorphan (600 mg and 1000 mg)

* Gabapentin (100 mg, 300 mg and 400 mg)

* Metoprolol (50 mg)

* Nifedipine (30 mg)

* Diclofenac Sodium (30 mg)

* Glucophage (500 mg Extended Release)

* Glucovance (125 mg and 500 mg)

* Glipizide/Metformin (2.50 mg/250 mg)

* Furosemide (20 mg)

* Tamoxifen Citrate (10 mg)

* Metformin HCl ER (500 mg)

* Calcitrol (0.25 micrograms)

Contact the FDA for Disposal Instructions

Anyone who is in possession of any of these drugs is requested to call the FDA at 800-521-5783 for further information on how to dispose of the drugs. These consumers should also contact their physicians to see what to do about replacement medications.

Report Adverse Events

Consumers and doctors should report any adverse events to the FDA's MedWatch program at 800-FDA-1088. Adverse events may also be reported by mail to MedWatch, HF-2, FDA, 5600 Fishers Lane, Rockville, Md 20852-9787. There is also a convenient place to report adverse events online: http://www.fda.gov/medwatch/report.htm.

Could This be Just the Tip of the Iceberg?

Obviously, while the FDA is currently issuing warnings concerning just two particular pharmacies, these kinds of problems are often like cockroaches. There usually are more hiding in the walls for every one in plain sight. Stories like this are a painful reminder that it often isn’t any safer to use prescription medicines obtained from a pharmacy than drugs bought on the street.

Taking medicine should not be like playing a game of Russian roulette. Unfortunately, incidents like this only serve to clarify the fact that people who are medication-free don’t have to spend sleepless nights worrying about whether or not their prescription medications are expired or counterfeit. Better still, they don’t have to worry about whether or not counterfeit drugs will kill them.

Types of pharmacy practice areas

Community pharmacy

Hospital pharmacy

Clinical pharmacy

Compounding pharmacy

Consultant pharmacy

Internet pharmacy

Veterinary pharmacy

Nuclear pharmacy

Military pharmacy

Nuclear pharmacy

Nuclear Pharmacy involves the preparation of radioactive materials that will be used to diagnose and treat specific diseases. It was the first pharmacy specialty established in 1978 by the Board of Pharmaceutical Specialties. Nuclear pharmacy seeks to improve and promote health through the safe and effective use of radioactive drugs for not only diagnosis but also therapy.

• HISTORY

The concept of nuclear pharmacy was first described in 1960 by Captain William H. Briner while at the National Institutes of Health (NIH) in Bethesda, Maryland. Along with Mr. Briner, John E. Christian, who was a professor in the School of Pharmacy at Purdue University, had written articles and contributed in other ways to set the stage of nuclear pharmacy. William Briner started the NIH Radiopharmacy in 1958. He also brought about principles and procedures important to the assurance of quality radiopharmaceuticals. Christian developed the first formal lecture and laboratory courses in the United States for teaching the basic principles of radioisotope applications. John Christian and William Briner were both active on key national committees responsible for the development, regulation and utilization of radiopharmaceuticals.

In the mid 1970s a petition was formed requesting the formation of a Section on Nuclear Pharmacy in the Academy of General Practice, currently called the Academy of Pharmacy Practice and Management. On April 23, 1975, the petition was finally approved by the American Pharmacists Association (APhA) Board of Trustees. Nuclear pharmacy thus became a new area in pharmacy.