Wednesday, March 07, 2007

Generic Insulin Could Save $797+ Million According to Express Scripts Study

According to a recent study (see HERE) undertaken by pharmacy benefits manager Express Scripts Inc., some estimates of the potential savings generated by the pending bill now in Congress (S. 623/H.R. 1038, the "Access to Life-Saving Medicine Act of 2007") on prescription expenditures have been forecast. As part of that study, the potential savings on insulin has also been computed. Although the savings for generic insulin is factored into the savings calculation, out of an estimated total of $71 billion in savings over 10 years that the Express Scripts report found, the study assumes that biggest savings will come from anemia treatments, followed by human growth hormones, then treatments for MS, with insulin generating the least savings of the drug classes examined. When the other treatment categories are subtracted from the total estimated savings, the relative savings for insulin is comparatively small, but still noteworthy at $797 million in the first year, and totaling in excess of $16 billion over 10 years! Another study was done for the Pharmaceutical Care Management Association (PCMA), which represents pharmaceutical benefit managers, reached a similar conclusion on the potential for savings that this legislation might create, although their study did not disclose savings by drug class.

As might be expected, the Biotechnology Industry Organization (BIO), which represents such companies as Novo Nordisk, Eli Lilly and Company and Sanofi Aventis immediately disputed the Express Scripts estimates, adding that they doubted the validity of both the Express Scripts study and the PCMA study.

"As a result of numerous flawed assumptions, and the lack of any credible evidence to support these alleged savings, we believe these studies should be rejected as unscientific and unreliable," stated BIO President and CEO Jim Greenwood.

A closer look at the "flaws" cited indicates that the claims BIO is making are no more convincing than the the Express Scripts study, suggesting that the debate is really little more than arguments being made by a trade group who is trying hard to prevent any competitors from entering the market.

In a similarly predictable response, Kathleen Jaeger, the president and chief executive of the Generic Pharmaceutical Association, said that even if generic biologics were only 25% less than their brand-name counterparts, it would be a huge savings for consumers.

The underlying assumptions of the Express Scripts study are as follows:

Express Scripts conducted the study by taking a 25% discount off brand-name medicines in four classes of drugs that would already have generic competition because of patent expirations if copycat biologics were allowed. Express Scripts decided on that discount because it said that the generic version of human growth hormone sells at a 25% discount to its brand name counterparts in Europe.

They also assume that 25% of patients on insulin would ultimately switch to generics, which seems to be a conservative yet realistic estimate, and is significantly smaller than the estimates that generics will capture for the other major drug classes evaluated. As I previously wrote, the reason is because although human insulin (basically, everything but analogs) still has a large share of total insulin sales, growth for human insulin formulations has essentially ground to a halt since the introduction of analogs, and their share is expected to show little if any growth for the foreseeable future. Of course, much of this is attributed to aggressive sales and the effort to migrate patients to more expensive, patented insulin analogs rather than any scientifically-proven clinical benefit. However, there is no denying that patients and physicians have adopted widespread use of insulin analogs and this study's conservative estimates appear to reflect this, as they show insulin analogs losing little if any market share to generics and most of the loss will come from Regular, NPH and 70/30 formulations. More details on the Express Scripts study can be reviewed here or here.

I think its clear that some savings will undoubtedly result from the introduction of generic insulin, the main question is how much? I believe that the Express Scripts study provides a conservative estimate for the potential cost savings we can expect to see on insulin assuming that this legislation is passed into law. Express Scripts substantiated their assumptions with the logic behind them. One of the "flawed" assumptions that BIO is citing is the presumption that a pathway under one law would generate savings for products approved under another makes the assumption invalid. But in the absence of having an approved pathway, Express Scripts had few other options other than to base their assumptions on the current pathway. Is it completely precise? No, but thats what make it an estimate! But the claims of flawed assumptions in the Express Scripts study made by Biotechnology Industry Organization (BIO) are really quite weak. Instead of trying to poke holes in sound studies and estimates, BIO would do far better to address some of its own industry's weaknesses, such as having its members develop a more precise methodolgy of actually dosing insulin. Every patient with type 1 diabetes knows that dosing insulin is as much an art as it is a science -- a complex and seemingly random theory of chaos guided by a handful of known variables. If BIO is really as concerned about patient safety as they claim, perhaps they would consider examining the safety record of existing insulins made by its own members, which are responsible for some 56,000 "adverse effects" requiring patient emergency room treatment each year, making it the medicine with the highest levels of adverse effects according to a recent Journal of the American Medical Association (JAMA) study.

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