Pharmaguy's Insights Into Drug Industry News
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Pharmaguy's Insights Into Drug Industry News
Pharmaguy curates and provides insights into selected drug industry news and issues.
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HHS Says Namenda "Hard Switch" Will Cost Medicare a Minimum of $6 Billion

HHS Says Namenda "Hard Switch" Will Cost Medicare a Minimum of $6 Billion | Pharmaguy's Insights Into Drug Industry News |
Actavis said last month that it stood to lose $200 million in sales if an appeals court didn't let it force patients over to a new, patent-protected version of Alzheimer's treatment Namenda before generics hit. But if the court does allow the so-called hard switch? The federal government stands to lose much, much more.

The cost of that move to Medicare and its beneficiaries? A $6 billion spending increase between 2015 and 2024--at the least, the department said.

"We are concerned that the measures taken by Actavis undermine competition and result in excess payments by consumers and taxpayers," it wrote in the report. "… Actavis' planned conduct would exacerbate the problem of financing health care for the elderly."

Pharma Guy's insight:

HHS concludes its report saying:

"The planned withdrawal from the market of Namenda IR appears designed to force a highly- vulnerable population suffering from a severe chronic illness to shift to a reformulated version of the product for the purpose of limiting generic competition and preserving monopoly profits. Actions of this type undermine consumer choice and generic competition in prescription drug markets.

"If Actavis curtails production of Namenda IR, consumer welfare will suffer due to a combination of fewer choices and diminished price competition. The federal government in particular would overpay relative to what it would have paid had the generic product been permitted to freely compete with the newer reformulated product. Such practices stress public budgets and reduce the ability to promote value-based health care use. As a result, Actavis’ planned conduct would exacerbate the problem of financing health care for the elderly."

Way to go, "patient-centric" pharma! 

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Actavis Loses Ruling on Namenda "Hard Switch" Marketing Tactic

Actavis Plc was ordered to continue to provide the immediate-release version of its Namenda Alzheimer’s drug in a win for New York Attorney General Eric Schneiderman, who sued the company in September.

Via TwoFour Insight Group
Pharma Guy's insight:

The decision may be most troubling for fellow companies looking to pursue the hard switch as a market-share shield, he wrote, noting that the district and appeals courts' direction suggests it would be "increasingly difficult" to pull it off.

Companies will likely have to demonstrate no hardship for patients and business rationale which differs from attempting to force the market to their new product.

TwoFour Insight Group's curator insight, December 12, 2014 10:26 AM
Similar to DPCO 2013' s authority to not allow discontinuation of a product?
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No Namenda for You!, Says Actavis CEO to Patients

No Namenda for You!, Says Actavis CEO to Patients | Pharmaguy's Insights Into Drug Industry News |

Actavis is betting it can switch a large number of patients to a newer Alzheimer's pill from an older version.

While Actavis is busy fighting a court battle over marketing plans for a newer version of its big-selling Alzheimer’s pill, the drug maker is also working hard to convert many patients from its older version of the drug before generic rivals emerge later this year.

At the moment, the newer Namenda XR accounts for about 40% of all prescriptions written for both the old and new versions of the drug. But Actavis believes Namenda XR can capture as many as 70% of prescriptions by July, when generic copycat versions of the older Namenda IR become available.

But to what extent will it succeed in reaching that goal? This is unclear due to the ongoing legal fight. The drug maker, you may recall, is currently battling with the New York State Attorney General, who filed a lawsuit claiming the switching effort violates antitrust law. The original plan was to remove Namenda IR from the market and force patients to take the newer Namenda XR.

But a federal court judge last month issued a preliminary injunction that prevented Actavis from discontinuing sales of its older Namenda IR (see story here). Actavis appealed the ruling and a hearing is scheduled for next month in which the drug maker hopes to convince a federal appeals court to lift the preliminary injunction.

If that doesn’t happen, “Actavis will have to use marketing strategies – detailing, differential pricing, and direct-to-consumer advertising to convert as much of the market to Namenda XR as possible before generics enter,” writes Sanford Bernstein analyst Ronny Gal in an investor note. Actavis, in fact, has already begun a consumer advertising campaign to speed the switch.

Pharma Guy's insight:

Meanwhile, here's an example of how pharma CEOs are the antithesis of "patient-centricity":

During an investor conference last week, Actavis chief executive Brent Saunders maintained that “I think we have a very good shot at it. It is not a slam dunk. But it’s a lot of hard work and there are a lot of people that have to do what they need to do. But we are very focused on it.

That is, Actavis is very focused on keeping patients on a more expensive brand-name drug than on helping patients lower or eliminate their co-pays with a generic version.

The key here is getting physicians to switch their script writing to Namenda XR because many state laws prevent pharmacists from substituting a generic for the brand name drug prescribed by the physician. Thus many pharmacists will be forced to say: "No Namenda (IR) for you!"

In any case, is this product effective in treating Alzheimer's?

More from Pharmalot: Why the Actavis Product Switching Case may Transform Pharma

“This case is huge,” says Erik Gordon, a professor at the University of Michigan Ross School of Business. If a recent court ruling is upheld, “this could signal the eventual end of the innovative pharmaceutical industry as we know it. Drug makers will have to rethink how they invest and do business.”

At the heart of the matter is a debate over reformulating a medicine and obtaining a patent to extend the product life cycle. And the case has highlighted competing notions over whether this tactic can actually create an unfair monopoly or is the correct use of intellectual property to protect profits.

It all began last year, when Forest Laboratories, which his now owned by Actavis,disclosed plans to halt sales of its twice-a-day Namenda IR tablet for Alzheimer’s. The patent expires in October and generic rivals can appear by July. The patent on a newer, once-daily Namenda XR, however, runs until 2025.

Actavis argues that Namenda XR is a better deal for patients – not only is it more convenient, but the contents of the capsule can be sprinkled on applesauce for patients who have difficulty swallowing. The drug is also sold at a slight discount, on a wholesale basis, to the older Namenda IR.

But Eric Schneiderman, the New York Attorney General, doesn’t see it this way. He argues the maneuver is “unethical and illegal,” because patients would be forced to switch to Namenda XR well before lower-cost generics are available for the older version. And so, he filed an antitrust lawsuit.

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