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Out-of-Control Prices, The Side Effect Big Pharma Never Mentioned

by AHIP

July 17, 2018

Methodology 

The source for all pricing data was RED BOOK™ (Truven Health Analytics, Inc.) by using Wholesale Acquisition Cost (WAC), which is the manufacturer-reported price at which the manufacturer sells the drug to the wholesalers and direct purchasers, before any discounts or rebates.

Our study was limited to the brand name drugs.

Whenever possible, we used the information from the FDA labels to determine conditions that the drugs were approved to treat and the drug utilization. Other sources included clinical trials and practice guidelines. In case of drugs with multiple FDA-approved indications we selected the one that was common and where the typical drug utilization was well-defined.

As a rule, for each study drug, only the data for the drug’s National Drug Codes (NDCs) available for the entire study period (January 1, 2012- June 2017) were included. When several NDC codes were available for a drug during the study period, we selected a single code most likely to be used for the treatment presented based on its formulation, strength, and package size.

  • In the case of Avonex no NDCs were active both as of January 1, 2012 and 2017. To make the comparison possible, one NDC active in 2012 (59627-0002-05, deactivated in 2016) and one NDCs active in 2017 (59627-0222-05) were selected based on their similarity in product description, metric size and strength. The number of price increases was calculated as the sum of the price increases for the NDC 59627-0002-05 (2012-15) and the NDC 59627-0222-05 (2016-2017).
  • Evzio entered the market following the FDA approval in 2014. Consequently, the original Evzio price upon entering the market, on 7/2/2014, was used in calculating the typical cost per year (2014), the price change, and the number of price increases.

The annual cost for a typical patient was estimated twice, as of January 1, 2012 (except for Evzio – see above) and as of June 30, 2017. The typical cost per year (TC2012, TC2017) was calculated as WAC Unit Price x Utilization (with the utilization calculated according to the drug’s dose and schedule for the specific treatment based on the drug’s FDA label). Price change was calculated as Price Change= (TC2017/TC2012)*100.  The number of price increases was counted as the number of WAC price changes for a specific NDC after January 1, 2012 and before July 1, 2017.