Healthy Skepticism Library item: 15873

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Wang SS.
Pharma’s Doughnut Deal Could Slow Seniors’ Shift to Generics
The Wall Street Journal Blog 2009 Jun 23
http://blogs.wsj.com/health/2009/06/23/pharmas-doughnut-deal-could-slow-seniors-shift-to-generics/

Full text:

Seniors will be beneficiaries from the new $80 billion agreement of the drug industry to provide discounts for branded medicines to those in the Medicare doughnut hole, but there are a lot of unknowns about who will else will benefit from the deal. One question is how much will the government get from the deal to pay for covering the uninsured, the WSJ and the NY Times note this morning.

Further, pharmaceutical companies actually benefit from the agreement if more seniors decide to switch to or stay on brand-name drugs because of the discount coming from the industry. Scott Gottlieb, a former FDA official and adviser at the Centers for Medicaid and Medicare, told the WSJ that the proposal won’t affect the bottom line of drug companies because it “will ultimately discourage patients in the donut hole from switching to generics” because of decreased out-of-pocket costs for branded drugs.

Most consumers are price sensitive when it comes to medicine. A fraction will always choose to remain on branded medicines regardless of cost, but the vast majority eventually switch to cheaper generics once they are available. But as the deal announced yesterday will reduce seniors’ out-of-pocket costs for branded medicines closer to those of generics, many may stick with branded medicines rather than switch to generics.

And the deal could induce seniors to keep taking those branded meds. “Because of the discounts, Medicare beneficiaries are likely to continue filling prescriptions in the doughnut hole, whereas in the past many stopped taking their medications because the drugs were unaffordable to them,” Barclays analyst C. Anthony Butler told the Times.