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Topic Home  Related:  
Longer Life Spans = More Medicines
(New Jersey Business)
Updated: Nov 22nd 2004

The good news is that the medical and pharmaceutical breakthroughs of the past century have resulted in people living longer than ever. The "bad" news is that they require more and more expensive medications to sustain seniors through their golden years.

In the 2000 national census, 13.2 percent of New Jersey's population (1.1 million) was over 65 - beating out 32 other states with its percentage of seniors. Over the next 25 years, the number of seniors is expected to double to more than 70 million nationwide.

As life expectancy increases, older Americans face new challenges: they tend to have more diseases and disabilities than younger adults, many of the diseases are chronic, and they often have multiple medical conditions.

Concurrently, many are unable to afford the ever-increasing expense of their health care. The 2002 median income for this population was $19,436 for men and $11,406 for women. Supplemental Medicare insurance and prescription drug copayments can eat up a good part of that.

"In the U.S., about 70 percent of all deaths occur after age 65," according to Merck & Co.'s recently published Merck Manual of Health & Aging. Seniors are dying from diseases and disorders that include heart disease, cancer, stroke (the primary causes) as well as chronic obstructive pulmonary disorder, influenza, diabetes, Alzheimer's, kidney failure and blood infections.

Seniors are suffering from chronic conditions, some debilitating, but others fatal, that include arthritis (50 percent), high blood pressure (36 percent), heart disease (32 percent) hearing loss (29 percent), problems with bones, ligaments and tendons (17 percent), cataracts (17 percent), chronic sinusitis (15 percent), diabetes (10 percent), tinnitus (ringing in the ears) (9 percent) and vision loss (8 percent).

Seniors Lead Healthier Lives

The U.S. Department of Health and Human Services (HHS) reports that despite the prevalence of such chronic conditions, the 65-and- over age group is healthier than ever before. The govemment agency has developed an everincreasing number of benefits, services and programs, approved by Congress, to improve the lives of older Americans. Medicare is the best known among them.

In recent decades, the pharmaceutical and medical devices industries have provided new methods of treatment - some remarkable scientific breakthroughs - to combat the diseases and disorders of the elderly.

"The American pharmaceutical industry is working to help Americans live longer, healthier and more productive lives," says Alan F. Holmer, president of the Pharmaccutical Research & Manufacturers of America (PhRMA), in announcing the results of the latest survey of its member companies' drug development pipelines.

The new PhRMA survey showed that 800 of the more than 1,100 medicines currently in development treat diseases of the aging. The medicines include 123 for heart disease and stroke, 395 for cancer and 329 for such debilitating diseases as Alzheimer's, diabetes and osteoporosis.

Of the 800 medicines being tested in clinical trials or awaiting FDA approval, 22 are for Alzheimer's, which could without a cure - affect 16 million people by mid-century; 11 for depression, which affects an estimated 6.5 million seniors; 53 for diabetes, of which half the cases occur in people over age 55; 18 for osteoporosis, a health threat for 44 million Americans over age 50; and 14 for Parkinson's disease, with 60,000 new cases diagnosed each year.

Some cutting-edge medicines in development include one that blocks the new blood vessel growth that causes one form of macular degeneration, the leading causes of blindness in Americans over 65. Another is a treatment for Alzheimer's that both inhibits plaque formation and blocks the degradation of the neurotransmitter acetylcholine.

PhRMA said that its members invested an estimated $33.2 billion in 2003 in discovering and developing new medicines. Pfizer reported R&D; spending of $7.1 billion; Johnson & Johnson, $4.6 billion; Roche, $4 billion; Novartis, $3.8 billion; Merck & Co., $3.2 billion; Bristol-Myers Squibb $2.3 billion; Wyeth, $2.1 billion; and Schering-Plough, $1.47 billion.

Most of the companies' corporate missions address areas of unmet medical need and try to develop safer and more effective therapies in several targeted therapeutic areas. In many cases, the therapeutic areas disproportionately affected the older population, although that was not an objective as such.

A sampling conducted for New Jersey Business Magazine shows that promising future products for the aging include: Merck & Co.'s late stage DPP IV inhibitor for diabetes type 2-1 Wyeth's bazedoxifene for osteoporosis and temsirolimus for renal cell carcinoma and other cancers-, and Schering-Plough's adenosine 2a receptor antagonist for Parkinson's disease. This summer, the FDA approved cholesterol- lowering Vytorin (ezetimbe/simvastatin) developed in a joint venture between Merck and Schering-Plough.

Other potential products include Pfizer's torcetrapib for cholesterol imbalance, edotecarin for cancer, and macugen for macular degeneration; Novartis' darifenacin (Enablex - pending FDA review) for overactive bladder, LAF 237 for diabetes type 2 and Cox 189 for arthritis; and Roche GPCR modulator for depression, integrin antagonist for asthma, and nuclear receptor agonist for emphysema.

A Lightening Rod for Criticism

The drug industry has become the target for heated criticism in the media and is faulted for the rising cost of health care in general and drug therapies in particular. PhRMA has argued all along that substantial profits are needed to fund the necessary R&D; to make continued scientific advances.

Some government officials have blamed countries outside the U.S. for America's high drug prices because of their use of government price controls. The limited profits that result make the drug manufacturers dependent upon profits from the U.S. market to finance their R&D.; In a sense, the U.S. is subsidizing drug development for the rest of the world.

PhRMA also emphasizes the value of its breakthrough medicines in helping to reduce overall Medicare spending growth. "With medicine, a patient is often stabilized, thus eliminating the need for surgery or emergency services," notes PhRMA spokesperson Jeff Trewhitt. "This helps drive down hospitalization costs and is less debilitating for patients."

For a heart disease patient, the average coronary artery bypass operation costs about $42,500 as compared to the average drug for heart disease, which costs about $1,200 a year or less.

Access is Key

New medicines are meaningful, however, only if people can afford them, or if they qualify for private or government access programs. Drug companies have done their part over the years in providing prescription medications free of charge through Patient Assistance Programs.

Last year, PhRMA's member companies helped more than 6.2 million patients fill more than 17.8 million prescriptions, with an estimated wholesale value of $3.3 billion. These programs are directed to the indigent but in some cases benefit middle class patients who lack insurance coverage and have a long-term chronic illness.

One PhRMA member, Bristol-Myers Squibb (New York Cityheadquartered but with its largest concentration of employees and facilities in New Jersey), helped one million indigent patients in the U.S. last year, providing them with more than 2.9 million prescriptions.

At least 10 of PhRMA's larger major member companies have separate discount programs that help many other patients each year. Drug discount cards for seniors were created two years ago while a debate raged in Washington over rising drug prices. The drive for a Medicare drug benefit was gaining momentum. A key concern was how such a benefit would be shaped and whether government price controls on drugs would be part of the solution.

In 2002, Pfizer pioneered an access program for uninsured, lower- income seniors by offering its Pfizer for Living Share Card. The company estimates that its discount card has enabled hundreds of thousands of Americans to obtain a 30-day prescription of Pfizer medicines for a flat $15 fee. Other drug manufacturers soon followed suit and announced similar discount card programs. Some are now in the process of modifying their programs to conform to the new Medicare drug discount card.

Several firms joined to form the Together Rx program that offers 155 brand name prescription drugs to income-eligible seniors. "Together Rx complements the Medicare-approved drug discount card that is being used until Medicare's voluntary full drug benefit becomes available in January 2006," a BristolMyers Squibb spokesperson commented.

PhRMA recently streamlined its consumer-friendly Web site to help patients obtain information on how to obtain free or discounted medicines.

Medicare to the Rescue

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 adds prescription drug coverage to Medicare's benefits for seniors and will be called Medicare Part D. It is voluntary and requires seniors to pay a premium each month.

PhRMA president Alan Holmer made the observation that "the devil is [was] in the details" while earlier applauding Congress' passage of related Medicare bills. The same concern over "details" prevails \today, a year after the bill became law, among all of the interested parties.

President Bush reportedly promised Congress that his Medicare prescription drug benefit would cost no more than $400 billion over 10 years. Once the legislation was enacted, federal actuaries raised the estimate to $534 billion. There is now speculation that the cost will go even higher.

The full drug benefit will not become available until January 1, 2006. Specific regulations for implementing it are being worked on by the Centers for Medicare and Medicaid (CMS). CMS has set January 1, 2005 as its goal for their issuance. It is currently reviewing comments from interested parties on its draft regulations. Meanwhile, trade groups and businesses continue to lobby in support of their own vested interests.

The new law has sparked a heated conflict between insurance companies and drug manufacturers over how many medicines will be available to seniors. Medicare will rely on private health plans under the law to deliver drug benefits. While the US Pharmacopeia (USP) - a not-for-profit that sets standards - has drafted model guidelines, each plan will create its own formularies of covered drugs.

Importation Bills are Pending

Many thousands of U.S. seniors have been looking north to Canada to buy medicines at significant savings. Three bills addressing this fact are pending in the Congress, including one passed by the House last year after a major Committee hearing, and two others awaiting debate on the Senate floor.

While it's unlikely that any of them will pass this year, "PhRMA is leaving nothing to chance and will continue to argue against it," says Trewhitt.

The drug industry has taken a unified stand in opposing importation on grounds that it has potential safety risks for patients- has product liability risks; and is a threat to the R&D; capability of the world's most innovative pharmaceutical and biotechnology industry.

"What they're talking about is bringing somebody else's failed price controls into this country. The R&D; ability of companies in countries that have price controls has been hurt," says Trewhitt.

PhRMA contends that there are many other alternatives to importation to help make affordable prescription drugs available to patients - the Medicare discount card being one of them, Trewhitt says. As an interim measure until the new benefit begins, Medicare is offering Medicare-eligible seniors, regardless of income, a choice of 68 discount drug cards nationwide - 26 of which are available in New Jersey.

The transitional program also provides a $600 credit each year to lower income seniors on their discount cards to help pay for medications. PBMs, health insurers, pharmacy trade groups and coalitions of different organizations, e.g., the American Association of Retired Persons (AARP), are the primary issuers of the discount cards.

A survey by CMS has found that for brand name drugs, the discounts off retail prices in rural and urban areas are running between 11 percent to 17 percent on average with these Medicare cards. Some discounts are running as high as 25 percent and, by changing to generics, savings of 46 percent to 92 percent can result, CMS says.


Alzheimer's Disease/Dementias -- 22

Bladder/Kidney Disorders -- 11

Depression -- 11

Diabetes -- 53

Epilepsy -- 5

Eye Disorders -- 19

Gastrointestinal Disorders -- 19

Lung/Respiratory Disorders -- 44

Musculoskeletal -- 6

Osteoarthritis -- 8

Osteoporosis -- 18

Pain -- 42

Parkinson's Disease -- 14

Prostrate Disease -- 4

Rheumatoid Arthritis -- 29

Sepsis -- 2

Sexual Dysfunction -- 15

Skin Conditions -- 12

Sleep Disorders -- 8

Other -- 15

Source: PhRMA

*Some medicines are listed in more than one category

Merging State and Federal Prescription Benefit Programs

The New Jersey Department of Health and Senior Services has been working with the Centers for Medicare and Medicaid (CMS) in wrapping New Jersey's PAAD (Pharmaceutical Assistance to the Aged and Disabled) benefit around the new Medicare drug discount card program for qualified lower income seniors.

The Medicare drug discount card and transitional assistance programs began in June and will run until January 1, 2006, when the full Medicare benefit takes effect. All seniors in the state age 65 or over, regardless of income, are eligible for the drug benefits of the Medicare Modernization Act of 2003. "Some 190,000 seniors in the state are eligible for PAAD and about 81,000 of them also qualify forthe $600 per year federal subsidy," says Dr. Susan Reinhard, deputy commissioner of senior services at the N.J. Department of Health and Senior Services.

Franklin Lakes-based Medco Health Solutions, a leading pharmacy benefit manager won its bid to become "preferred vendor" for the cards, although it is only one of 26 different CMS-approved discount cards available to New Jersey seniors. The state auto-enrolled the 81,000 subsidy-eligible seniors, and they received cards with both names, Medicare and PAAD.

The drug store automatically charges Medco first and gets the first $600 from Medicare and a co-payment of no more than $5 per prescription for eligible seniors. After that, the system reverts to PAAD with the beneficiary never paying more than a $5 co-payment, except with generic drugs, which are usually less.

"Our beneficiaries find that they like this drug discount program because in many cases they're paying less," says Reinhard. The state likes it because it is able to "cost-avoid" the $600 that Medicare will pay this year and next. New Jersey has already saved about $24 million since June and expects to save $90 million overall through 2005, she notes.

Preparing for 2006

With the full drug benefit set to begin in 2006, the CMS is currently working on reviewing the comments it has received from interested parties on its draft regulations for implementing the new law. Dr. Reinhard and her department helped prepare the state's comments, which emphasized automatic enrollment as a No. 1 priority.

"This time, it'll be even more complicated," says Reinhard, who was selected to sit on a commission created by the new law the State Pharmaceutical Assistance Transition Commission (SPATC). Dr. Reinhard wants to once again auto-enroll PAAD beneficiaries into the plans being approved for the full benefit wrap-around.

It's somewhat "tricky" because the state will pay for the Medicare drug benefit premiums for the PAAD beneficiaries (about $35 per month), she commented. Then there's the copayment for each prescription and then a gap before reimbursement begins again - the so-called "doughnut hole." On top of that, each of the pharmacy drug plans (PDPs) will have its own drug formulary, a list of covered drugs, she notes.

The state's challenge is to figure how to wrap around the formularies. This is why Dr Reinhard advocates the use of a preferred PDP so the two can work "closely and seamiessly."

Oldest and Most Generous

New Jersey's PAAD is the oldest and most generous pharmacy program for lower income seniors. It provides any FDAapproved drug without charge to seniors and disabled residents with annual incomes of less than $20,437 or $25,058 for a couple. The state's Senior Gold benefit, passed in 2001, included another 30,000 seniors with incomes up to $10,000 above the FAAD limits, although their co- payments are higher than under PAAD.

Historically, the PAAD program dates back to 1975. It was enhanced in 1982 when casino gambling was approved through a statewide referendum earmarking casino tax dollars for seniors' programs. Today, it is funded out of the casino revenue fund as well as general state revenues. Other large states including New York, Pennsylvania and Connecticut have somewhat similar programs.

Copyright New Jersey Business & Industry Association Nov 01, 2004



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