Centocor Squeezes Single-Doc Practices
ACR Negotiates Concessions
As of October first, the price of Remicade (infliximab) was raised to $530.73 per vial, the first increase to the Wholesale Acquisition Price (WAP) since 2001. Meanwhile, Centocor instituted a new Contract Purchase Program as an effort "to provide cost stabilization to physician practices and clinics," Centocor stated.
As an incentive, everyone who signs up will pay a discounted price of $511.62 per vial for the next five months. Following the introductory period, the discounted price will be based on the number of vials purchased in the previous three-month period. The contract purchase program allows rheumatologists under a single tax identification number who use more than 2000 vials of Remicade every three months a more than 5.5 percent price break on the infusible biologic. This means while individual rheumatologists infusing less than 250 vials every three months pay $530.73, physicians in multiple-member offices pay $500.74 per vial. A physician who does not agree to participate in the program could be stuck paying an even higher price. For the majority of Oregon rheumatologists who practice on their own or in small groups, the tiered volume-based discount system leaves them at the bottom of a new and steeper ladder.
Within 21 days of receipt of the contract, rheumatologists were expected to sign or face a sudden price increase. When ORA contacted specialty pharmacies, representatives reported that they would not negotiate below the $530.73 per vial price.
The American College of Rheumatology's executive committee, led by ACR president Betsy Tindall, immediately went to bat for the single physician and small group practices and were able to influence some favorable modifications to the contract (see chart below). Centocor agreed to combine two of the lower tiers, decreasing the cost for low-volume users by at least $8 per vial. Centocor will honor the new lower price for those who signed the contract before the price reduction. Below is an excerpt from a letter sent to rheumatologists from Dr. Tindall:
"September 20, 2005
I am extremely pleased to report to you that the ACR has worked with Centocor to modify provisions of the Centocor Contract Purchase Program.
The ACR and Centocor received a number of negative comments about the proposed program. Using much of the incredibly valuable feedback we received from members about this issue, your ACR leadership was able to effectively influence changes to the program's purchasing tiers and pricing structure. Centocor listened to our concerns and worked with senior management to come up with a program that was acceptable to all. It is important to understand that the ACR will not take a position about whether practices should or should not enroll. However, it was clear that the membership wanted guidance and influence from ACR and we are providing it. It is the opinion of your ACR leadership that the changes implemented by Centocor effective today significantly:
- minimize disadvantages that would have affected our rheumatologist colleagues with smaller prescriptive patterns,
- minimize incentives that may have affected prescribing patterns, and
provide, at minimum, an $8 per vial decrease in price for any prescribers of infliximab.
All of these changes were implemented without any loss to larger practices with higher volume prescribing."
Advocacy can make a difference.
Table 1. Contract Pricing Scale Before ACR Negotiation with Centocor
Consecutive
3-Month Unit Volume |
Discount Applied to Contract Base Price at Time of Sale |
Price per Vial (example: when Contract Base Price = $530.73) |
| 2,000+ vials |
5.65% |
$500.74 |
| 1,000 to 1,999 vials |
3.60% |
$511.62 |
| 500 to 999 vials |
2.56% |
$517.14 |
| 250 to 499 vials |
1.55% |
$522.50 |
| <250 vials |
0% |
$530.73 |
Table 2. Contract Pricing Scale After ACR Negotiation with Centocor
Consecutive
3-Month Unit Volume |
Discount Applied to Contract Base Price at Time of Sale |
Price per Vial (example: when Contract Base Price = $530.73) |
| 2,000+ vials |
5.65% |
$500.74 |
| 1,000 to 1,999 vials |
3.60% |
$511.62 |
| 250 to 999 vials |
2.56% |
$517.14 |
| <250 vials |
1.55% |
$522.50 |
WellPoint Inc. Cries Uncle in Physician's Class-Action Suit
WellPoint Inc., the nation's largest insurer, agreed to pay $198 million to settle two class-action lawsuits filed by more than 700,000 physicians. The physicians charged that the company systematically underpaid them, putting its financial interests ahead of patient care, LA Times reported.
As part of the agreement, WellPoint would adopt a patient-friendly definition of "medical necessity" that mirrors the American Medical Association's policy. The insurer also agreed to allow cheaper treatment only when it was at least as effective as what a doctor recommended, physicians said. In addition, Wellpoint must update its claims-processing software each year to recognize new and reclassified codes for treatments. The settlement bars the insurer from using software programs that systematically downgrade treatments doctors perform or to routinely deny payments for multiple procedures performed on the same day.
The accord waits approval by U.S. District Judge Federico Moreno in Miami, the council responsible for approving similar settlements by companies charged with the same class action suit. Wellpoint follows insurers Aetna, CIGNA, Health Net Inc., and Prudential Financial Inc., the largest of companies that made similar settlements in 2003. The latest deal would bring the total value of reparation to about $650 million. UnitedHealth Group and PacifiCare Health Systems are two of a few insurers who have not yet settled and could face trial. UnitedHealth recently announced plans to buy PacifiCare in an $8.1 billion deal.
