Wednesday, May 05, 2010

“Authorized” Generics Will Owe Brand Discounts in Donut Hole, CMS Says

The Centers for Medicare & Medicaid Services is facing a bit of pressure to close a potential “loophole” in its implementation of the donut hole discount program. CMS’ draft policy for the program in 2011 basically says there is no penalty if manufacturers fail to offer the “mandatory” 50% discount.

As we explain here, we suspect this will end up being a tempest in a teapot, and those discounts will be mandatory after all.

But was also noticed another loophole that CMS acted to cut off before it began: the implementation policy treats “authorized” generics as brand name drugs for purposes of the discount program. The agency’s definition of covered drugs includes “authorized generics,” defined as a drug that “is marketed, sold, or distributed directly or indirectly to retail class of trade under a different labeling, packaging (other than repackaging as the listed drug in blister packs, unit doses, or similar packaging for use in institutions), product code, labeler code, trade name, or trade mark than the listed drug.”

How big a deal is that? Well, consider the list of “authorized generic” launches likely for 2011: Seroquel, Zyprexa, Plavix, Lipitor…

That’s a lot of dough in the donut hole.

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