Tuesday, July 25, 2006

A Bonanza By Any Other Name

Boston Globe (07.25.06):
"Medicare's new prescription drug plan has brought a sales windfall to the pharmaceutical industry. Drugs such as Pfizer Inc.'s Lipitor have been the biggest winners, according to IMS Health , a healthcare information company that ranked the anti cholesterol medication as the top-selling drug paid for by the new prescription plan, known as Part D, through June 23." Medicare Plan D proving to be sales windfall for drug companies
We're starting to get hard data on what's been happening with Plan D. Like we couldn't have guessed, eh? "The IMS Health figures come as Pfizer and other drug makers report second-quarter earnings that clarify Part D's effect on prescription sales. In the first six months of 2006, US sales of Lipitor rose 7 percent, to $3.83 billion, from a year earlier, the company reported last week. Pfizer said Part D contributed to nearly half of that sales gain. This is pretty funny. BigPharm's lobbyists think it's just peachy. "While some fault Part D for slashing the rebates that drug manufacturers had paid, the industry's lobbyists call the program a success." "'Medicare drug coverage has improved the lives of millions of seniors with 90 percent of today's Medicare beneficiaries now receiving drug coverage,' said Ken Johnson , senior vice president of the Pharmaceutical Research and Manufacturers of America. 'That's the windfall we should be talking about.'" Though the windfall in profits is pretty damned nice too. The other guys are doing very nicely, thank you. "Other big drug companies, such as Novartis AG and Roche Holding Ltd., also reported Part D sales increases in the second quarter, said health strategist Les Funtleyder of Miller Tabak + Co." What happened is that "6.1 million low-income Americans whose prescription drugs had been covered by Medicaid were automatically shifted to Medicare's Part D. As part of a law passed in 1990, drug manufacturers pay the government rebates. The rebates ensure that Medicaid pays no more than the best price paid by any commercial purchaser and is shielded from price increases exceeding the rate of inflation." "Under the prescription drug law, however, Medicare can't negotiate similar discounts from drug companies". This means that for 2006, Pfizer is anticipating "an 85 percent reduction in the $133 million the company would have rebated this year had Medicaid beneficiaries who use Lipitor not transitioned to Part D coverage, according to Prudential Equity Group analyst Dr. Tim Anderson." Nice deal, eh?


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