ASP drug pricing increases--for now

Sunday, April 9, 2006

WASHINGTON - Second quarter ASP pricing revealed favorable increases for most drugs, but a recent proposal to reimburse brand name drugs at lower generic rates kept providers from celebrating.

"Everyone was breathing a sigh of relief," said Mickey Letson, president of Decatur, Ala.-based Letco Companies. "Now all of a sudden we're hammered by (the proposal)."

With the exception of ipratropium, which fell half a cent to 21 cents, reimbursement was up across the board. Xopenex increased 18 cents to $3.53 per dose.

Surprisingly, DuoNeb reversed a yearlong downward trend, rising 7 cents to $1.09 per dose.

"Why it would have bounced back, I don't know," said Bill Bonello, an analyst with Wachovia in Minneapolis. "I don't know if companies are charging more or if it's just a mix of who they're selling it to in that time period."

The million-dollar question is what will happen if a proposal to reimburse brand name drugs at lower generic rates passes. DuoNeb is particularly vulnerable, say industry watchers. With small providers unable to afford the drug and large pharmacies losing their incentive to distribute it, many predict DuoNeb's days could be numbered.

Don White, president of Associated Healthcare in Amherst, N.Y, said he already loses money on DuoNeb.

"There's no money left on the drug," said White. "I'm not going to go to bat for DuoNeb."

Apria and Lincare, who still enjoy a small profit margin on DuoNeb, could see their earnings per share hurt by as much as 16 cents per share, said Bonello.