Was Tom Scully Right About Nexium?

You probably remember when Tom Scully was the head of the Centers for Medicare and Medicaid Services.

If you do, you may also remember his rants about successor products companies create to offset generic competition for one of their brands. He was particularly concerned about the amount of taxpayer money being spent to cover AstraZeneca’s Nexium. The company’s original proton pump inhibitor omeprazole (Prilosec) works just as well, he maintained – and extremely cheap omeprazole generics are available, as are over-the-counter versions.

Here’s a sample of what Scully said about Nexium back in 2003 and 2004:

• "The fact is, Nexium is Prilosec. It is the same drug. It is a mirror compound. It is exactly the same."
• "You should be embarrassed if you prescribe Nexium because you're screwing the patients and you're screwing taxpayers.”
• “Nexium is a game that is being played on the people who are paying for drugs, and it's not right."

Get the picture? Mr. Scully isn’t a fan of Nexium, at least when it comes to the government paying for it.

Well, now CMS has released some of its findings from an examination of Part D drug claims data from 2006 and 2007, and guess what? It looks like Tom had a good reason to be concerned. Nexium is the fourth largest drug in the program by cost. Only Lipitor, Plavix and Zyprexa have a larger claim to Part D dollars.

CMS says gastrointestinal drugs accounted for 8.7% of overall drug costs, and presumably Nexium is a big chunk of that, given its fourth-place ranking. TAP’s PPI Prevacid also contributed significantly to spending in the category, coming in seventh overall.

Interestingly, proton pump inhibitors seem to be the drugs Part D beneficiaries think they can do without when they reach the donut hole and have to cover the full cost of the drugs themselves.

A recent study by the Kaiser Family Foundation found that, on average across eight drug categories, 15 percent of Part D enrollees stopped taking their medicines when they fell into the donut hole, but the highest rate of discontinuation was for PPIs, at 20 percent.The study said, “Because there is some concern that PPIs are overused for more routine gastrointestinal conditions, terminating medication use might not pose serious health risks in some cases.”

There’s been a lot of pushing by the plans to use low-cost drugs by having lower copays for generics than brands. One problem with differential copays in Part D is that many of those enrolled in the program are eligible for a low-income subsidy from the government, and they are protected from the higher copays for brands. As a result, they don’t respond to the financial incentives provided by differential copays to take the cheaper drug.

Plans are starting to respond to that by putting stricter drug utilization management rules, like prior authorization and step therapy, in place for those beneficiaries. The biggest Part D plan sponsor, UnitedHealth, is taking that route, as detailed in a recent article in “The Pink Sheet.”

So what would Tom say about this data? I asked him, and he was nice enough to provide a few thoughts by e-mail. First, he wished to say that he has no grudge with Nexium per se, and if someone wants to pay for it in a private plan, that’s just fine with him, but “no government insurer should pay for Nexium as an added cost to Prilosec. … My last year at CMS I think Medicaid spent $350 M on Nexium – absolutely insane.”

And, not to rub it in or anything, but he did have this final reaction to all the money being spent on Nexium in Part D: “I told you so.”--Scott Steinke

image by flickr user shoothead used under a creative commons license