CMS cuts DuoNeb reimbursement

Sunday, June 19, 2005

BALTIMORE -- CMS in June unveiled its third quarter reimbursements for respiratory medications with prices indicating a downward trend for one popular drug that industry insiders predict will continue over the coming year.
Dey's DuoNeb, which has gained a mass following since the ASP prompted pharmacies to step back from compounding, saw its price fall drastically for the third quarter, which starts July 1. According to CMS, DuoNeb's reimbursement is down to $1.178 per dose or $2.36 per unit. Last quarter, its reimbursement was $1.31 per dose and $2.62 per unit.
"That's down 14 cents per dose," said Mickey Letson, president of the Letco Companies. "The small providers are going to have to decide what to do now. The ASP has already eliminated some small players, and with these numbers there will likely be another group that gets out."
The downward slope for DuoNeb can be attributed to the disparity in acquisition costs paid by the big players, like Lincare and Rotech, and smaller regional or independent pharmacies. With the big players dominating 60 to 65% of the market, the weighted average is going to bring the price down.
"As these pharmacies fully implement their utilization of commercially available drugs, it will continue to drive prices down because of the market share of the large providers, their volume discounts and different classes of trade all of which result in favorable pricing for them," said RDI Global Solution President Keith Trowbridge. "The small guys will continue to see their margins on commercially available drop as ASP is fully implemented."
Trowbridge said, however, that the margins can still be good and now is the time to look inward and evaluate cost structures.
"You are not going to get these kinds of margins in retail pharmacy," he said. "This is an opportunity. They need to look inward and evaluate their overhead and services. They need to keep what they can keep in house, and they need to outsource some of the services that can be done more efficiently by someone else."
Among the other changes in third quarter drug pricing was a 6-cent decrease for albuterol to 17 cents per dose and an 8-cent decrease for Xopenex to $3.45. Budesonide/Pulmicort saw a price increase of 7.8 cents to $4.178 per dose.