Abuse of REMS drives up healthcare costs

The generic drug industry — and by extension, patients across the United States — is being adversely impacted by what some are calling branded drug makers’ abuse of risk evaluation and mitigation strategies, or REMS.

(For the full chain pharmacy section of DSN's Aug. 25 issue, click here.)

“When brand manufacturers use these programs to withhold access to drug samples for generic manufacturers’ bioequivalence testing and development, they can delay generic market entry and competition, thereby preserving high drug prices and preventing the cost savings generic drugs are known to deliver,” Matrix Global Advisors CEO Alex Brill noted in “Prescription Drug Savings from Use of REMS Programs to Delay Generic Market Entry,” a study his firm recently did for the Generic Pharmaceutical Association.

The impact that the growing use of REMS is having on healthcare spending is substantial, the report said. Through a detailed analysis of pricing and utilization data for just 40 drugs, Brill concluded that the delays caused by overusing REMS adds $5.4 billion a year in healthcare costs, with the federal government picking up a third of these costs and private insurers covering $2.4 billion. In addition, consumers pay $960 million in extra out-of-pocket costs, Brill said, and state and local governments foot the bill for $240 million of added healthcare costs.

“These estimates should not be construed as the entirety of the lost savings from REMS misuse,” Brill said. “Not all currently restricted products are included in our analysis, and as the problem of brand drug companies’ misuse of REMS and other restricted access programs grows, this lost savings will increase.”

REMS were created in 2007 to improve drug safety for certain products by ensuring that the benefits for patients outweigh the risks. However, Brill said that in recent years, branded drug makers have stepped up their use of “elements to assure safe use” — the component of REMS programs that mandates restricted distribution. The report noted that in 2009 only about a quarter of REMS programs included these provisions. Today, more than half of the 70 approved REMS programs — 64 individual REMS and six shared system REMS — include elements to assure safe use.

In addition, the report noted that some branded drug manufacturers also have begun applying restricted access programs to drugs for which the FDA has not required a REMS program.

While both houses of Congress and lawmakers in a handful of states across the country have tried to enact legislation forcing branded drug companies to share their bioequivalency data with generic manufacturers, these efforts have so far failed to become law.