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The monster taking over US medicine cabinets

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Recently the National Business Group on Health reported on a growing phenomenon that should be a concern for employer groups: 510(k) devices rapidly fueling cost increases under the prescription drug program without necessarily adding value by fostering better health outcomes.

Section 510(k) of the Food, Drug and Cosmetic Act requires device manufacturers to notify the FDA of their intent to market a medical device at least 90 days in advance. This is intended to allow the FDA to determine whether the device is equivalent to a device already placed into one of the three classification categories. Once cleared by the FDA, the device is given a National Drug Code number, allowing it to be commercially marketed.

Some companies, however, have taken liberties with this approval pathway, for example by bringing certain drug products to market by including them in a dispensing “device” via this process and avoiding proper FDA drug approvals. It is important to note that these 510(k) cleared “drug” products are not FDA approved and the manufacturer can’t refer to them as “FDA approved” in labeling or marketing materials.

By exploiting this pathway, manufacturers are creating two concerns for employers:

  • Safety fears, given these products have not gone through the extensive FDA drug approval process
  • Rapidly increasing costs

Sneaking into coverage

Here’s an egregious example, courtesy of the National Business Group on Health (NBGH): EpiCeram, a topical agent for atopic dermatitis or eczema but described as a moisturizer, is sneaking into coverage under the pharmacy benefit. EpiCeram jumped from around $200 to over $5,000 per script overnight!

Another product, Synerderm, increased nearly 1500% between January 2017 and May 2018! In our consulting work, we have discovered similar price hikes for other 510(k) products, such as Kamdoy, Beau Rx and Sil-K Pads where 30-day scripts range from $2,400 to over $5,000—more than the cost of some specialty medications. Important to note is that these products all fall under topical application or oral mouth rinses and that there are multiple FDA approved products that could be used in their place.

Intervention

We recommend employers address this particularly troublesome cost driver by diligently monitoring pharmacy claims—rapidly identifying utilization of older and new-to-market products and working with the Pharmacy Benefit Manages (PBM) to quickly exclude them from coverage. Clients of Buck who have adopted our recommendations have saved thousands of dollars, as summarized here in the case of one employer with 90,000 plan participants:

501(k) Claims

No Intervention*

With Intervention

409 claims

5 claims

$174,609.00

$1,350

* Over a recent 6-month period

 

Gail Levenson, RPh, CDE, CGP, is a Principal and Asha Chikani, PharmD, is a Director in the Pharmacy Practice for Buck in the U.S.

To find out more contact us at 1 866 355 6647 or talktous@buck.com.

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