Wednesday, March 28, 2007

Where the Rubber Meets The Road

CALPERS lobbied The US Congress this week to preserve access to biogeneric drugs and to allow the FDA the discretion to accelerate the approval process for biogeneric drugs and the details are here.

Two points are interesting to me and enlightening for employers considering whether they need a specialty drug strategy.

...CalPERS' spending for biotech products is distressingly substantial and rising at a rate that is significantly higher than traditional pharmaceuticals. On average, spending for biotech products was at least $55 per day -- compared to traditional drugs at only $2 per day.

...the high cost of bio pharmaceutical products presents an unsustainable challenge to CalPERS and our entire health care system," said Mathur. "CalPERS supports providing the FDA with full discretion to make the ultimate decision about whether and when any prescription drug product -- be it brand or generic -- comes to market."
CalPERS will spend $5B on Healthcare and presciption drugs expenses will top over $1B this year. CalPERS also estimates if they did not have a well oiled generic substitution plan in place prescription costs would be $1.6M in 2007. So while having biogenerics readily available and expediting their approval will save CalPERS significant dollars it is simply one component of a successful strategy that gets a greater ROI than generic infusion but lacks the dollar impact associated with a successful therapeutic infusion strategy that targets all those drugs advertised on TV. You know I bet the real answer to CalPERS might no vote on the CVS-Caremark merger may have more to do with the impact of a retail-mail merger on its holdings in pharma as well as PBMS. Anyone up for some research?

On the other hand what is your company doing to assure aggressive therapeutic generic substitution and a sound biotech strategies are in place to keep drug spend in check? Do tell.

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