Kohl Welcomes Results Of Hhs Oig Report On Generic Drug Usage Under Medicare Part D

Main Category: Medicare / Medicaid / SCHIP
Article Date: 15 Nov 2007 - 4:00 PDT

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U.S. Senate Special Committee on Aging Chairman Herb Kohl (D-WI) welcomed the release of a report he had requested last January from the Department of Health and Human Services' (HHS) Office of the Inspector General (OIG) on the utilization of generic drugs under the government's Medicare Part D program. The report found that Medicare Part D achieved a high level of generic drug use during the first two quarters of 2006 and that under Part D generic drugs were dispensed 88 percent of the time when generic substitutes were available. Unfortunately, the report also found that 37 percent of prescriptions were for drugs that have no generic substitutes, limiting opportunities to dispense generics. Overall, 56 percent of all drugs dispensed under Medicare Part D were generic drugs. The report concluded that high rates of generic drug utilization do keep Medicare Part D affordable for beneficiaries over the long term, and that Part D plans could realize gains by encouraging the prescribing of drugs with generic equivalents whenever possible.

"Generics, which cost a fraction of their brand-name counterparts, are a big part of the solution to health care costs that are spiraling out of control. When generic drugs are dispensed under Medicare Part D, it's a win-win for America's seniors and for the federal budget," said Chairman Kohl. "This report is promising, but there is more to be done to make sure affordable generic drugs are made available whenever possible to our seniors."

Prescription drugs make up 11 percent of national health care spending, but are one of the largest and fastest growing health care expenditures. The U.S. spent over $250 billion dollars on prescription drugs in 2005 with generics accounting for 56 percent of the prescriptions, yet less than 13 percent of the costs. Generics, on average, cost 63 percent less than their brand-name counterparts.

In 2006, Senator Kohl, then Ranking Member of the Special Committee on Aging, held a hearing to assess efforts by the Centers for Medicare and Medicaid Services (CMS) to encourage use of generic drugs in the Medicare Part D prescription drug program in order to lower health care costs for seniors and the federal government. Earlier this year, Kohl introduced the Generics First Act, which would require the use of available generic drugs under the Medicare Part D prescription drug program, unless the brand name drug is determined to be medically necessary by a physician. Modeled after similar provisions in many state-administered Medicaid programs, this measure would help reduce the high costs of the new prescription drug program and keep seniors from reaching the current "donut hole" in coverage by guiding beneficiaries toward cost-saving generic drug alternatives.

Kohl's On-Going Efforts To Promote Utilization Of Generic Drugs Include:

Boosting the FDA's Office of Generic Drugs Budget - Last year, Kohl increased the budget of the FDA's Office of Generic Drugs by $7 million to provide for the hiring of additional staff in order to expedite the review of generic applications. As a result, the agency added 16 additional reviewers and increased the number of generic drug approvals to 682 in 2007, from 510 approvals in 2006. This year, Kohl boosted funding for the Office of Generic Drugs in the Fiscal Year 2008 Agriculture Appropriations bill, which now must go before the full Senate for approval. The increase of $7,561,000 will allow the FDA to hire approximately 18 additional reviewers next year. Kohl serves as Chairman of the Agriculture Appropriations Subcommittee, which has jurisdiction over the FDA's budget.

Preserve Access to Affordable Generics Act - Kohl's bill would explicitly prohibit brand-name drug manufacturers from using pay-off agreements to keep cheaper generic equivalents off the market. Payoff settlements occur when a brand name drug company pays a generic drug maker to delay the sale of their competing generic drug. Top Senate Judiciary Committee members Patrick Leahy (D-VT), Chuck Grassley (R-IA), Charles Schumer (D-NY) and Russ Feingold (D-WI) joined Senator Kohl in introducing this bill last January. The bill was approved by the Judiciary Committee earlier this year and now awaits floor consideration.

Citizen Petition Fairness and Accuracy Act - In an effort to increase generic drug availability, Kohl's legislation would prohibit brand name drug companies from abusing the Food and Drug Administration's (FDA) "citizen petition" review process. The bill gives the Department of Health and Human Services (HHS) - the FDA's parent agency - the power to sanction those who abuse the citizen petition process, or who file citizen petitions simply to keep competition off the market. The bill also instructs HHS that all citizen petitions be reviewed within six months of filing, putting an end to excessive delays which have stalled new generic drug approval by months or years.

http://www.aging.senate.gov