Rising Pharmaceutical Costs Hit the Generic Market

In 1984, the 98th Congress passed the Drug Competition and Patent Term Restoration Act, better known as the Hatch-Waxman Amendment, creating a statutory scheme wherein generic drug manufacturers will be able to put their products into the market using the pioneer (or branded) drug’s scientific safety and efficacy data. In return, the pioneer manufacturer is awarded five-years of market exclusivity before the generic may enter the market. Congress intended to allow the pioneers to recoup their capital spent on research and development as well as turn a profit, but then have prices decrease dramatically as generics enter the market. It worked as intended! The generic drug industry has been booming since its inception.

However, in recent years, drug prices have been increasing and increasing quickly. In 2013, Tetracycline, an extremely common generic antibiotic that most all of us have likely taken throughout our lives, cost only five cents per pill. In 2014, the very same antibiotic cost $8.59 per pill. This increase constitutes a 17,714 percent jump in just one year! The drastic jump in prices stands in the face of Congress’s intention with the Hatch-Waxman Amendment, but can the increase be explained by the market?

In the cases of Tetracycline, the price jump resulted from a drug shortage. Generic companies lacked the necessary raw materials to produce the drug in significant quantities. The shortage of Tetracycline continued for nearly two years. However, the Food and Drug Administration (FDA) announced that the producers now have adequate materials to produce the drug. There were also manufacturing issues associated with the shortage that have also been fixed.

The larger issue may be the market itself. When an all-star branded drug is on the market, the generic manufacturers line up to enter the market. When four or five generics enter the market, the prices drop significantly. However, without several generics of a single drug on the market, prices do not drop as dramatically. Supplies can drop for any number of reasons. Companies may simply leave the market. An FDA-inspection may lead to a temporary shutdown of a plant. Regardless, less competition means higher prices and, for the consumer, tough choices when it comes to medical care. For example, only three companies currently produce digoxin, a cheap and easy to make cardiac drug that has been around since at least 1785. At the beginning of the year, a month of digoxin cost approximately $50 (one consumer reported $1.15 for a three-month supply), but now customers are seeing prices nearing $1000 per month. Notably, the World Health Organization lists digoxin as an “essential medicine.”

Some voices, however, have expressed concerns about nefarious business practices. In 2013, the Supreme Court ruled that the Government and private parties may sue pioneer companies who pay competitors to stay off the market. The practice has caught the attention of the Federal Trade Commission (FTC) and state officials. An antitrust investigation of Lannett by the state of Connecticut found that the manufacturer had not violated any law or regulation. However, many of these price adjustments happen naturally, leaving the FTC without any options to combat the problem.

The problem has caught the attention of Congress, who requested explanation for drug price increases fourteen drug manufacturers (constituting ten of the nearly 12,000 generic drugs on the market). However, without any legal mechanism to act against the companies, Congress may have few options to deal with the issue. Sen. Bernie Sanders and Rep. Elijah Cummings have proposed a bill to require generic manufacturers to rebate Medicaid if drug costs increase faster than inflation. The CEO of Generic Pharmaceutical Association believes the legislation to be “misguided.” Whether the bill passes or not, it appears to do little to help consumers attain better access to their needed medication. Until action is taken or anticompetitive practices can be definitely proven, more and more patients will have to decide whether they can afford their medication this month.


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Virginia’s Controversial Certificate of Public Need (COPN) Law Withstands Legal Challenge

If you are a healthcare provider who wants to establish a new healthcare facility in a state like Virginia, you must first convince the state and your existing business competitors in the state that your healthcare facility is necessary. This is called obtaining a Certificate of Public Need (COPN), also known as Certificate of Need (CON). It is a process required by the state law of many states, including Virginia.

Virginia COPN Law

In Virginia, this process involves the State Health Commissioner approving the new venture based on: 1) the relationship of the project to the long term health care state plan; (2) the need for enhanced facilities to serve the population of an area; and, (3) the extent to which the project is accessible to all residents in the proposed area and the immediate economic impact and financial feasibility of the project on the immediate area.

In this process, healthcare facilities are required to prove that their business is necessary for that geographic area. But what is most difficult is that you must do so over the objections of your already established competitors in the area. Effectively, competitors who want to keep their share of the market have veto power over the new business venture.

Under Virginia Code § 32.1-102.3, a  COPN is required to establish any medical care facility, add beds or operating rooms to existing medical facilities, convert medical beds from one type to another, relocate medical beds from an existing facility, introduced a new nursing home service, introduce a specialty clinical service, add medical equipment to an existing medical facility, or make large capital expenditures for a existing medical facility, as determined by the State Health Commissioner.

Similar Laws in Other States

Virginia is not the only state in the nation to require this. There are 36 states that currently have similar CON laws. Most CON laws came about as a result of the federal Health Planning Resources Development Act of 1974. But the federal mandate was repealed in 1987. Some states discontinued CON procedures and repealed the CON laws. But many still enforce the CON process. CON laws were originally designed as a health planning tool to control access to care across a state but have become a battleground for providers to gain and keep market share.

Pros and Cons

Due to their restrictive nature, CON programs have been a subject of wide debate across the country. Supporters of CON programs believe that these programs allow states to distribute medical facilities across different areas in their state and help avoid the establishment of unnecessary medical facilities. The opponents of CON programs believe that these programs are monopolistic and contribute to higher prices because of reduced competition. Opponents also believe that these laws place unfair restrictions on new businesses and, as such, are against the free flow of interstate commerce.

Challenge to Virginia COPN Law

The Virginia COPN law recently withstood a federal challenge in the case of Colon Health Centers of America LLC et al. v. Hazel et al. in the U.S. District Court for the Eastern District of Virginia. A federal judge granted summary judgment in favor of Virginia and ruled that Virginia’s COPN law requiring new medical facilities to get a COPN before being allowed to open a medical facility in the state does not discriminate against interstate commerce. The Plaintiffs wanted to open a colonoscopy center and an MRI office in Virginia but were not allowed to do so because they were not able to get a COPN. The judge essentially deferred to the state.

It appears to be seen whether Virginia will ever repeal this law. It seems that this law is currently popular with the existing healthcare facilities in the state because it allows existing healthcare facilities to keep control of market share in a given geographic area.

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Iodine Tablets as Protection Against Thyroid Cancer – Good Idea or Not?

From October 27, 2014 to December 5, Switzerland is distributing iodine tablets to more than half the country’s population for use in the event of a nuclear disaster. (Bloomberg). People living with a 31-mile radius of a nuclear power plant will receive packages of 12 pills that will keep for 10 years. Officials note that most often, a single dose of iodine is enough. (National Post). Tablets will also be distributed to companies located less than 50 kilometers from a nuclear power plant.

There are two types of iodine: radioactive iodine, and non-radioactive iodine. (National Post). In the event of a major nuclear accident, radioactive iodine can be released into the air and inhaled. (National Post). It can also contaminate local food and the water supply. (National Post).The thyroid gland absorbs both stable and radioactive iodine and cannot determine the difference between the two. (National Post). Iodine tablets can protect the thyroid because when a person takes the iodine tablets, the thyroid becomes “full.” (National Post). Once the thyroid is full, it will be unable to absorb any more iodine for the next 24 hours. People will then be protected from absorbing radioactive iodine and the potential of thyroid cancer.

Why is the Swiss government doing this?

After the nuclear disaster in Fukushima, Japan in March 2011, the Japanese government distributed iodine to people living near nuclear power plants. In fact, pharmacies around the world faced a rush on iodine pills and many pharmacies ran out of stock. (National Post). This is reminiscent of the increase in thyroid cancer after the Chernobyl disaster. In 2006, on the anniversary of Chernobyl, UNICEF stated that iodine could have saved many children from thyroid cancer. (UNICEF).

The fear of a nuclear disaster has caused the Swiss government to become skeptical of nuclear energy. (Bloomberg). According to the Swiss Federal Office for Energy, nuclear power plants produced 36 percent of Switzerland’s electricity last year. (Bloomberg). In May 2011, Switzerland announced plans to phase out atomic power by 2034 and the iodine pills are a protective measure until they are able to do so.


Supporters of this move state that the tablets will protect infants and children under the age of 18, as they are the most vulnerable to harmful effects of radioactive iodine. In 2006, on the 20th anniversary of Chernobyl, a Regional Director of UNICEF, Maria Calivis stated that for about 4,000 children, iodized salt could have made all the difference in sparing children from thyroid cancer. (UNICEF).

With more research, it has been found that while iodized salt contains enough iodine to maintain a healthy thyroid, it does not contain enough to block radioactive iodine from being absorbed. (National Post). Therefore, iodine tablets will be most protective if there is a nuclear disaster. (National Post).

The Swiss are not alone in pre-distributing iodine tablets. According to a 2010 report by the European Commission, Finland, France, Germany, Lithuania, the Netherlands, Romania, Sweden, and the United Kingdom are all pursuing similar actions to distribute iodine tablets. (European Report).


David Brenner, professor of radiation biophysics at Columbia University stated “There’s a concern that this will be seen as a universal panacea to protect you from all types of radiation exposure.” (Bloomberg). He did note however, that the tablets would best serve children, rather than adults.

The operators of Switzerland’s five nuclear power plants, who are paying for these tablets to be distributed, believe the move could be counter-productive. (Bloomberg). They say that people receiving these pills are becoming unsettled, and that the older system of keeping pills in central storage sites was more effective. (Bloomberg).

The nuclear expert at Greenpeace, Florian Kasser, states that iodine tablets do not do anything to help other risks, like cesium. (Bloomberg). He states that the best protection for the population is to shut down the reactors altogether. (Bloomberg).


The Swiss government has learned from Chernobyl and Fukushima and has taken a protective measure while they work to phase out atomic power. This is a commendable and proactive undertaking. However, there are both benefits and risks to iodine tablets, and people who take them should do their research and listen to the advice of public health or emergency management officials.

(The Center for Disease Control offers more information on stable iodine: http://www.bt.cdc.gov/radiation/ki.asp.)

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Expanded Health Law Provisions Are Influencing the Rate of Premature Births

Preterm birth is the leading cause of death in newborns. In 2013, there were more than 450,000 premature births, which are live births at less than 37 full weeks. An annual March of Dimes report card released this November, indicating that the percentage of premature births decreased to 11.4 percent in 2013, which is the lowest level in 17 years. Officials state that the health law’s expansion of Medicaid for adults earning up to 138 percent of the federal poverty level has been a major influence on the decline. Women’s health advocates speculate that other health law provisions are likely to cause further reductions in preterm births. Until now, 27 states and the District of Columbia have expanded their state Medicaid programs to adults as allowed under the health law.

The report measures states’ preterm birth rates with the March of Dimes’ goal of 9.6 percent and assigns letter grades. The United States’ earned a “C” grade with an 11.4 percent rate, improving from the previous year. The report also follows states’ progress in executing tactics to reduce risks of preterm birth. For example, the report noted that 30 states and the District of Columbia decreased the percentage of women of childbearing age who were uninsured in 2013. Further, the percentage of women who smoke, including “women ages 18-44 who currently smoke either every day or some days and have smoked at least 100 cigarettes in her lifetime,” fell in 34 states, the District of Colombia, and Puerto Rico. The late preterm birth rate, which constitutes babies born between thirty 34 and 36 weeks, also decreased in 30 states and Puerto Rico.

In terms of Medicaid’s expansion in this area, pregnant women who qualify under their state’s income eligibility standards can receive Medicaid services until 60 days after they deliver their baby. States’ income eligibility standards are generally around 200 percent of the federal poverty level, or $23,340. Medicaid also offers more reliable coverage to help guarantee that women are healthy prior to becoming pregnant and that they receive early prenatal care. Further, newborn and maternity care is now required under coverage in plans sold in the individual and small group markets. These plans require that a range of preventive services, including folic acid supplements, smoking cessation counseling, screening for gestational diabetes, and prenatal care, are provided free of charge to pregnant women.

Although there is no direct, causal link between Medicaid expansion and the decrease of preterm births, it is reasonable to believe that the expansion has had an influential impact on the rate of preterm births. As noted above, the percentage of uninsured women decreased along with the percentage of preterm births. By including more categories of beneficiaries under the eligibility provision of Medicaid, more pregnant women are receiving the opportunity for coverage, which in turn is improving the quality of their health and their babies’ health. Better access to health insurance helps a woman plan her pregnancies, and better access to preventive care aids her in ensuring that she is healthy. Health law advocates and experts recognize that expansion of private and public health insurance coverage for millions of women will probably be the largest contributing factor in reducing preterm births.

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To Translate or Not? A Look at Pharmacy Labels and Language

In California, there is a debate over the translation of medicine labels. Currently, 44 percent of Californians speak a language other than English at home. Most medicine labels in California are printed in English, which places patients who do not understand written English in danger of taking their medications incorrectly. (NPR) This can be very dangerous and can cause serious harm.

Currently, California’s Board of Pharmacy’s website includes translations of basic instructions (such as “take one pill at bedtime”) in Chinese, Korean, Russian, Spanish, and Vietnamese. (Board) According to members of the California Board of Pharmacy and the California Pharmacist’s Association, however, these translations are not regularly used. (NPR) Perhaps this is a contributing factor to the California Board of Pharmacy’s reluctance to spend time and money translating medicine labels.

In August, California’s Board of Pharmacy discussed new regulations that would require all pharmacies to provide translated labels on prescription drug bottles. New York approved a similar rule last year. (NY) Though it would seem that such a rule would have only positive effects, some stakeholders have serious concerns. (Pharmacy)

One concern is that pharmacists who don’t speak multiple languages could face liability. If there is a mistake in a translation that pharmacists are unable to catch, pharmacists may be dis-incentivized from using translated labels. (AARP) Another concern is that the potential for translation errors could also lead to a need for higher malpractice insurance, which would eventually lead to higher costs for consumers. NPR.

California’s Board of Pharmacy raised a concern over the size of prescription drug bottles. (NPR) Translated labels would require larger bottles of pills, which patients do not like. This would lead to patients pouring their medication in a bag or putting their pills in a pocket and dumping the bottle. (NPR) Dumping a prescription medication bottle in the trash can have a whole host of problems. For example, patients may realize they actually do want the instructions on their bottle and can’t get it back, or someone could fill the bottle with another pill and sell that for quick cash.

The risk to limited English-speakers of improperly taking medicine, translation supporters argue, is greater than any liability that could result from translating labels. (KevinMD) Sarah de Guia, director of Government Affairs for the California Pan Ethnic Health Network, argues that because of expanded insurance coverage through the Affordable Care Act, the government would want to have more rather than fewer instructions available to the public. (NPR)

Considering other perspectives, such as those of patients, doctors, and insurance companies, it seems that having translations of medicine labels is in the best interests of everyone. While pharmacists may be worried about liability, if their patients do not ever have directions that they understand, then they are just as likely, or even more so, to use their medications incorrectly as they would be with a problematic translation. Having translations of medicine labels could actually lower the risk of liability that pharmacists face, rather than raising it because the chances of a patient using their medication incorrectly is lessened.

What are possible solutions? (1) Labels could be folded around bottles, keeping bottles the same size. (2) Pharmacists could print out the translated labels and hand those to the patient separately or place the printouts in a bag or folder. (3) The California Board of Pharmacy could expand the translations available on their website to more than basic instructions and include more languages. This would need to be complemented with some sort of advertising strategy that encourages more use of their website. (4) The technology industry, researchers, physicians, pharmacists, and policymakers could collaborate to develop initiatives that best address the language barriers that contribute to disparities in healthcare. (Pediatrics)

While translating labels may cost more money and require more work for the California Board of Pharmacy, it is likely that these costs will be saved in the long run if patients are using their medications safely and properly. There will always be risks and potential for something to go wrong, and the fear of badly translated labels is a legitimate one. Nevertheless, the current concerns appear to outweigh the concerns of badly translated labels.



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