Dear Brass and Ivory readers,
I thought that you would enjoy (or cringe) reading the following by Ed Silverman of The Star-Ledger of New Jersey. To put things more into perspective - the current per pill rate allowed by my insurance company is about $11 whereas two years ago it was $9.
In 2006, I was taking 2 pills per day. Now I only use Provigil as needed and then only half a tablet. Since I have insurance with prescription coverage, Cephalon considers me ineligible for their assistance program. Arrgh.
Fighting Generics, One Price Hike At A Time
from Pharmalot by Ed Silverman
Twice this year, Cephalon has sharply raised the price of its Provigil narcolepsy drug, which is now 28 percent more expensive than in March and 74 percent more expensive than four years ago, and the drugmaker said recently it plans to continue raising the price, The Wall Street Journal writes.
The Provigil price increases - the average wholesale price is now $8.71 a tablet - are an extreme example of a common tactic drugmakers employ in the US to boost profits and steer patients away from cheaper generics, the paper continues.
Here’s how it works: Knowing that Provigil will face generic competition in 2012 as its patent nears expiration, Cephalon is planning to launch a longer-acting version of the drug called Nuvigil next year. To convert patients from Provigil to Nuvigil, Cephalon has suggested in investor presentations it will price Nuvigil lower than the sharply increased price of Provigil, the Journal writes.
By the time generic versions of Provigil arrive, Cephalon hopes that most Provigil users will have switched to the less-expensive Nuvigil, which has patent protection until 2023. Meanwhile, Cephalon will have maximized its Provigil revenue with the repeated price hikes, the paper explains.
“You should expect that we will likely raise Provigil prices to try to create an incentive for the reimbursers to preferentially move to Nuvigil,” Chip Merritt, Cephalon’s vp of investor relations, told a recent health care conference, according to a transcript. Cephalon acknowledges regularly increasing prices, although until this year, the drugmaker says Provigil prices were rarely raised and offers a patient assistance program, but that couldn’t accommodate everyone who sought help.
Interestingly, just last week, Cephalon ceo Frank Baldino told a biotech conference that drugmakers should lower prices to avoid being in the crosshairs of the federal government. “It’s time to reconsider the pricing model,” he said, according to Dow Jones. “Perhaps it’s time to move toward a volume model” in which higher sales volumes make up for lower prices.
Provigil’s price increase over the past four years has been almost four times steeper than the 4 percent compound annual growth rate of the average drug price during that period, according to a DestinationRx, the Journal writes. The paper adds some insurers say may find it too costly to keep patients on Provigil once Nuvigil is introduced because generic Provigil will still be two years off.
“It’s really hard to take a higher price now for a lower price in the future when the future is very far away,” Edmund Pezalla, national medical director for Aetna Pharmacy Management, tells the Journal.
Since some patients take Provigil to help stay awake for various reasons, such as work, a portion of sale are off-label In September, Cephalon agreed to plead guilty to one misdemeanor count of violating the US. Food, Drug and Cosmetic Act and to pay $444 million to settle federal and state allegations that Provigil and two other drugs were promoted for off-label usage (back story).