Is Increased Government Regulation the Answer for High Drug Cost?

Is Increased Government Regulation the Answer for High Drug Cost?

Is Increased Government Regulation the Answer for High Drug Cost?

The Pharmaceutical industry is a highly regulated submarket in terms of what drugs get approved for national, safe, and legal consumption, however, drug pricing still remains mostly a free market. There have been some proposals to drug cost regulation, such as Clinton’s 1993, Health Security Act. Its purpose was keep pharmaceutical price increases below or steady at the average consumer price inflation. This resulted in pharmaceutical companies pledging to do so. The House Bills 2951 and 3486, discussed in an earlier post are two other proposals that focus on lowering drug prices through capitation and cost transparency. Some even propose we adopt the highly stringent regulations of the European Union (E.U.) that has increased control over drug prices since the 1980’s.

Would E.U. Price Regulations Work In The U.S.?

A 19-year sample period study was done that compared the pharmaceutical drug price regulations of the E.U. and the U.S. It’s easy to see why price control would benefit the patient in the short term, due to them saving money and being able to afford their medications. What about the long term benefits? Are there any potential risks to patients in the long term? Something to consider regarding drug price regulation is, “price constraints affect the profitability, stock returns, and R&D [research and development] of E.U. and U.S. firms. Had the U.S. used controls similar to those used in the E.U., a study estimates it would have led to 117 fewer new medicines and 4,368 fewer research jobs in the U.S.” (Golec & Vernon, 2010) during the 19 year study.

This proposes an interesting viewpoint for patients, U.S. economy, and the U.S. being a leader in R&D. Should the Government increase their regulation over the Pharma industry? A study published this week by shows that over 50% of Americans say there’s not enough government regulation when it comes to prescription drugs, 39% about right, 8% say too much, and 3% had no opinion. also reported this week “so far in the U.S., we have not been willing to run the risk of government regulation of drug pricing, just because there are so many conflicting interests and no bright line to lead government officials to choose a better price.”

Office of Pharmacy Affairs’ 340B Drug Pricing Program:

Programs like the Office of Pharmacy Affairs’ 340B Drug Pricing Program where drug manufacturers are required to provide outpatient drugs to eligible non-profit entities at significantly reduced prices to stretch scarce Federal resources as far as possible could be implemented at many levels of the Pharma supply chain, including specific programs focused solely on independent pharmacies. This allows them to reach more eligible patients and provide more comprehensive services.

The Federal government is not the only one trying to balance a checkbook and make the best of each dollar spent, if they can create programs for themselves, they can do the same for us! They have the power to create change. Will they take action? Who will lead the way? We are waiting! Stay tuned! The next few years with price transparency and big data being on the forefront change is inevitable.


Golec, J., & Vernon, J. (2010). Financial effects of pharmaceutical price regulation on R&D spending by EU versus U.S. firms. PharmacoEconomics, 28 (8). 615-628.

Is the Concept of Biosimilars Feasible

Is the Concept of Biosimilars Feasible?

Is the Concept of Biosimilars Feasible?

With the introduction of the Biologics Price Competition and Innovation Act that was included in the Patient Protection and Affordable Care Act, drug prices have been changing. This legislation allows companies to produce medications that are similar to brand drugs and use these medications interchangeably. There must be clinical evidence that the biosimilar product produces the same medical result as the brand medication.

In March of 2015, Zarxio, a biosimilar for Neupogen, was the first biosimilar medication approved by the FDA. These medications are granulocyte colony stimulating factors (G-CSF) that treat Neutropenia. A PBM estimates that the introduction of this biosimilar could reduce US Drug costs by $5-7 billion over the next ten years. The release of Zarxio has now been put on hold due to the U.S. Court of Appeals approving an injunction to block the launch of this medication due to a possible patent infringement.

In the short-term drug prices may go down, but as seen with the wave of generics, this could result in drug prices spiking in the long term. The price of biosimilars could increase as the generic drug prices have increased. Is this really an effective way to control drug costs? Short term it is a great solution! It makes sense… Immediate gain for all! Long term, the old saying “learn from your mistakes” (aka generic pricing all over the place) comes to mind. Will this just be another round of smoke and mirrors of steps taken to help lower drug costs?

Will Manufacturers play the same games to control the cost of biosimilars as they have with generics? Only time will tell although combined with new proposed legislations and a big push for industry transparency, we are hopeful that these positive changes will take place!

Burki, T., (2015). First biosimilar drug approved in the USA. Lancet Oncology, 16 (4), 161. Retrieved from:
Maas, A. (2015). Biosimilars update: appeal date is set; FDA finalizes guidance. Speciality Pharmacy News, 12 (5). Retrieved from: |

You Have a Friend in Trxade

Did you know that Trxade is a pharmacist-led team of business and technology professionals working together to help independent pharmacies save money and improve cash flow by taking back control of their profit margins? We understand first-hand the issues independent pharmacies experience and work together with our members and industry partners to do our part to ensure independent pharmacies thrive by saving thousands at no cost.

If there is anything that we can do to help, as a member of the Trxade family we will do our part to go above and beyond to help. Just let us know how we can help. We care about your pains, and most importantly we genuinely care about your success. That is what motivates us! Share with us what Trxade has done for your Pharmacy. We love to make a difference and hear success stories.

How PBM’s Control Formularies and Affect Market Pricing

How PBM’s Control Formularies and Affect Market Pricing

How PBM’s Control Formularies and Affect Market Pricing

Independent Pharmacies at a Disadvantage

As you all know, Formularies are lists of drugs that are preferred by a health plan or employer. ‘Closed’ formularies are lists of drugs that are available for coverage by the organization. Coverage for medications not on the list may be available only if the physician believes that the drug is clearly preferable and obtains a waiver” (Huskamp, Epstein, & Bluementhal, 2003).

Financial incentives can be offered to physicians and patients for prescribing and taking medications, respectively, that are on the formulary (Huskamp, Epstein, & Bluementhal, 2003). Is this ethical? How does this affect independent pharmacies that have no say in what medications are offered? It puts independent pharmacies at a disadvantage and unfairly dictates what medications they sell and the high prices they have to pay to stock those medications.

Negative Reimbursements

We won’t even get started on the topic of negative reimbursements and a PBM’s role in that process. Or lack of… But since we know you are thinking about it we have to at the very least mention it. We have posted blogs about the frustrations of PBMs and negative reimbursements. Keep in mind that is one way Trxade can save you a lot of money. Review the drugs you are getting negative reimbursements on now and comparison shop on Trxade.

If you could buy the drugs you get negative reimbursements on cheaper, you would right? We all would… That is one major way Trxade helps Independent Pharmacies thrive. If you have a minute watch this quick testimonial from Shellman Pharmacy in Georgia addressing this very issue where they are now seeing PROFITS on drugs they were getting negative reimbursements on by using Trxade.

What Do You Think?

How sufficient is this process? Can we trust big PBM’s to do what is best for us, our patients, and our businesses? What do you think is their main driver in including a medication on the formulary… Money, or the health of the patient? I don’t know about you, but I’d be curious to see what incentives they receive.

How Do PBM’s Determine What Medications Are Listed on the Formulary?

Formularies are just one way that Pharmacy Benefit Managers (PBM’s) control and manage drug benefits for insurance companies. After a drug has been approved by the U.S Food and Drug Administration (FDA) PBM’s then follow a multi-step process to determine what medications are listed on the formulary.

One large PBM follows a 3-step process:

  1. The first step is to evaluate the safety, dosage, and effectiveness of a medication, taking into account the negative side effects.
  2. The second step is to review the findings in the first step and compare cost with other clinically comparable drugs.
  3. The last step is to review the findings from the first two steps, decide whether the drug will be listed on the formulary, and if so, determine what tier the drug will be placed in. (


Huskamp, H., Epstein, A., & Bluementhal, D. (2003). The impact of a national drug formulary on prices, market share, and spending: lessons for Medicare? Health Affairs, 22 (3), 149-158. Retrieved from:

Primary Medication Compliance

Stay Ahead of the Game of Primary Medication Non-Adherence Measurements

Quality Metric of Measurement for Non-Compliance Rates

Non-compliance is a known issue in the pharmacy world. For example in a study done by Schousboe, Dowd, Davison, & Kane (2010) about non-compliance among patients taking a fracture-prevention medication, only 30%-60% of patients taking this medication were still taking it a year later. This non-compliance can land patients in the hospital with fractures and other injuries. What can we do to prevent these hospitalizations and non-compliance?

The Pharmacy Quality Alliance (PQA) developed a quality metric of measurement for non-compliance rates. This non-compliance is referred to as Primary Medication Non-Adherence (PMN). The Proportion-of-Days Covered (PDC) metric stats are based on claims data that looks at the number of pills a patient has from one fill to the next refill and compares this to the days the patient should actually be on the medication. This has created a rapidly growing force that is creating IT tools to track patient-by-patient non-compliance.

Independent Pharmacies at the Forefront

This metric will be used in our community-based, independent pharmacies first, and is expected to grow to PBM’s. The drawback to this metric is that it can only be calculated after two fills. The patient must fill the RX once, and then come back for a refill. This excludes the “first fill factor”. An example of this is when a patient is prescribed an antibiotic for a bacterial infection, but they do not take the entire amount prescribed. This can result in a relapse for the patient and more treatment.


The PMN metrics are now focusing on certain target medications that treat chronic conditions and they are tracking this information via e-prescriptions. This could result in an increase in incentives of e-prescriptions and other preventive measures that could be taken to avoid non-compliance. There are several proposed interventions and research shows that non-compliance can be reduced by patient education done by pharmacists. “These interventions include an array of medication management services that providers, pharmacies, and payers are increasingly offering to targeted patients.” (Adams, Hubbard, Stolpe, & Cranston, 2015).

Patient education can improve relationships between patients and pharmacy staff, and also reduce hurdles that patient’s face that can cause non-compliance.

References: Primary Medication Non-Adherence Measurements
Adams, A., Hubbard, T., Stolpe, S., & Cranston, L. (2015). The first fill factor: a threat to outcomes, quality, and payment goals. Project HOPE. Retrieved from Schousboe, J., Dowd, B., Davison, M., & Kane, R. (2010). Association of medication attitudes with non-persistence and non-compliance with medication to prevent fractures. Osteoporosis International, 21 (11), 1899-1909. DOI: 10.1007/s00198-009-1141-5.

New Member Video Testimonial

Courtney with Shellman Drug Co Pharmacy | Shellman, GA 39886