Sepracor big winner following ASP

Thursday, March 31, 2005

YARMOUTH, Maine -- The rise of the average sales price reimbursement could mean the fall of respiratory kingpins, albuterol and ipratropium bromide. When brand name drugs from Dey and Sepracor saw a spike in their reimbursements under the new fee structure, many providers decided to ditch compounding, and the drug manufacturers are looking to capitalize.
"Xopenex right now appears to be the big winner," said Mickey Letson, president of the Letco Companies. "It appears to be the drug of choice."
Transitions to Xopenex are outpacing those to DuoNeb by a 3 to 1 margin, according to a recent Respiratory Update from Letco.
"Believe it or not, albuterol and ipratropium are holding up to some degree," said Letson. "It has not been the total sell out that I expected, but there is speed picking up now in moving away from those drugs. Most of January and February people were just looking to see how things were going to shake out, but I expect to see those numbers really drop off in March and April."
That drop off is no surprise when you look at the ASP fee schedule for respiratory medications. Sepracor's Xopenex, under the ASP, is reimbursed at $1.28 per half milligram, and DuoNeb gets $2.60 per unit. These higher prices, when compared to 7 cents and 29 cents per milligram for albuterol and ipratropium , could mean providers will be receiving bigger checks from Medicare.
"When you are working in a cost-plus environment, obviously the higher-the-cost, the higher-the-plus," said Bob Leonard, a broker with the Braff Group.
Now that their drugs are a more attractive option for providers to dispense, some of the drug manufacturers are looking to protect their new cash cows. Sepracor in February sent out letters warning some providers against compounding using Levo-albuterol powder. In the letter, the company pointed out that they own existing patents on the drug and that the FDA could rule that providers are compounding a commercially available drug.
Sepracor also hosted two web casts in March to give providers clinical information and education materials on Xopenex.
Dey is giving volume discounts on its drug, DuoNeb, in hopes of attracting some big buyers. (See story on page 1).
The downfall of all this drug transitioning, however, could be increased scrutiny by CMS.
"It seems to me that if CMS sees a huge shift in usage of drugs that ends up costing the system more money, then they are going to react," said Leonard. "They are going to look for ways to ratchet down where they have been, in their view, to generous."