AARP Drug Price Survey Overlooks Critical Factors, Says BIO

Business Wire, Sept 26, 2008

Report Ignores Impact of Discounts, Rebates, Negotiated Prices and Patient Assistance Programs That Help Lower Drug Costs

WASHINGTON -- The following statement was issued today by the Biotechnology Industry Organization (BIO) regarding a new survey from the AARP on price trends for biotechnology drugs:

"The report issued yesterday by the AARP on price trends for specialty drugs ignores the many factors that counter and mitigate the price trends mentioned in this analysis. The report focuses on data that is only a proxy for drug pricing in Medicare's Part D program.

"The AARP survey centers on a subset of drugs available to Medicare beneficiaries and does not take into account the discounts, rebates and other negotiated prices that evidence suggests are passed on to Medicare beneficiaries in the form of lower premiums, copayments and deductibles in the Medicare Part D program, resulting in a decrease in the overall cost of that program. These discounts, as a result of vigorous negotiation between manufacturers and Part D plans, have resulted in lower costs throughout the Part D benefit. Kerry Weems, Acting Administrator of the Centers for Medicare & Medicaid Services (CMS), recently noted that the average monthly premiums for stand-alone drug plans in 2009 are lower than originally estimated and that it is a competitive market. He added that 97% of beneficiaries in 2009 will have access to drug coverage for the same amount or less than they paid this year.

"In addition, studies show that approximately one-third of Medicare Part D beneficiaries receive some form of assistance or subsidy that helps lower copayments, deductibles and premiums for their specialty drugs.

"The AARP survey is based on the wholesale acquisition cost (WAC) of these drugs, which does not reflect negotiated discounts and rebates between manufacturers and Part D plan sponsors, nor is it the price used by the federal government for the reimbursement of the majority of drugs and biologics used by Medicare beneficiaries in Medicare Parts B and D. The plans that contract with the government have the discretion to pass rebates through to beneficiaries at the point of sale, and plans may wish to consider doing so for specialty products. The majority of manufacturers - particularly those with specialty products - provide funding for programs that assist patients with accessing needed therapies.

"Biotechnology medicines and therapies are achieving major advances against some of the most debilitating diseases facing the world today such as cancer, multiple sclerosis and orphan diseases. Biotechnology innovators share a goal of increasing access to these life-saving and life-enhancing drugs. We look forward to participating in public health discussions that help us move toward this goal."

About BIO

BIO represents more than 1,200 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. BIO members are involved in the research and development of innovative healthcare, agricultural, industrial and environmental biotechnology products. BIO also produces the annual BIO International Convention, the world's largest gathering of the biotechnology industry, along with industry-leading investor and partnering meetings held around the world. www.bio.org

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