# Presentation: 246320

## Delisting albuterol CFCs:Economic Considerations

**Delisting albuterol CFCs:****Economic Considerations**

**Randall Lutter, Ph.D.**
**Chief Economist**
**Office of Policy & Planning**
**OPPl/OPl**

## Overview

**Delisting albuterol CFCs  will deter use of a number of prescribed MDIs that is large in absolute terms but small relative to the market**
**Ignores GSK giveaway of 2 m MDIs per year**
**Effects on public health are too uncertain to quantify**

## Institutional Background

**E.O. 12866, Circular A-4**
**Decision IV/25: “essential” turns on whether there are “available technically and economically feasible alternatives or substitutes that are acceptable from the standpoint of environment and health” **
**§ 2.125: “adequately served”**

## Economic Fundamentals 	 

**Delisting removes albuterol MDIs with CFCs,**
**only generic albuterol MDIs available are CFC**
**Benefits of earlier delisting include **
**Controlled transition**
**Reduced ODS emissions: unquantified reductions in  skin cancers, cataracts & UV-B related ecologic benefits**
**International cooperation  **
**Encouraging Innovation****  **
**Costs of earlier phase-out dates **
**Not increased spending per se**
**Increased prices may deter appropriate usage**

## To Assess Effects of Delisting

**Baseline:  continued availability of generic CFC albuterol  **
**Estimated Quantity Response = **
**Price increase (%) times **
**Consumer response (elasticity)**
**MDIs sold in baseline to price sensitive consumers**
**   **

## Price Increase

**Prices, of course, are variable  **
**Take current price differences as measure of price increases from delisting **
**Simple **
**Transparent**
**Consistent with GSK wholesale price freeze through December 2007**
**    **

## Internet Prices

**Pharmacychecker.com**
**Generics: **
**Drugstore.com, 3/24/04: $14**
**HFA: **
**Drugstore.com**
**PROVENTIL HFA, 6/3/04, $39.61**
**VENTOLIN HFA, 6/3/04, $38.99 **
**Unchanged since 3/24**

## Internet Prices

**Increase = 180% = ($39-$14)/$14**
**But web-based prices are unrepresentative because they neglect**
**Brick and mortar outlets **
**Shipping costs**** **
**Avg.  retail market prices for cash-paying customers would be best.**

## MEPS AHRQ Prices 

**Among non-institutionalized people 0-64 in the non-Medicare population, the estimated average retail prices among all payer types for CFC albuterol inhaler prescriptions in 2000-2001 are:**
**Generic: $24.77, SE = 0.64**
**Brand: $39.41, SE = 1.85**
**Increase = 56% = ($39-$25)/$25, but**
**Data on HFA prices are too rare to report.  **

## MEPS AHRQ Prices 

**Among people with income less than 400% of federal poverty level, who pay cash because they have no insurance or only private non-group insurance,  estimated average retail prices were  **
**$22.02 for generic inhalers, SE = 0.74 **
**Data on branded inhaler prices were too rare to be reportable  **

## IMS Health Price Data

**National Prescription Audit **_**Plus**_**TM****; 1st Quarter 2004 (extracted April 2004) **
**Prices are measured using the average pharmacies’ revenues from uninsured customers, insured customers, and Medicaid beneficiaries alike **
**Includes chain, independent and food store pharmacies, excluding internet, mail-order and long-term care pharmacies **

## IMS Health Price Data National Prescription Audit PlusTM; 1st Quarter ‘04 

**Median price for generic albuterol MDIs =$19.70**
**Price for albuterol HFA MDIS = $43**
**Difference of ~ $23 **
**suggests increase of 120% = ($43-$19.7)/$19.7**
**should be seen as approximate because of recent trends  **
**HFA albuterol prices rose by ~ 8% over earlier year**
**reflects full price for insured and uninsured alike**** **

## Response to Price Increase

**Extensive economics literature finds small effects but rarely distinguishes among drugs.**
**Goldman et al. (JAMA, 2004): **
**530,000 people in 52 health plans over 4 years **
**As the average co-payment for antiasthmatics doubles, the average number of days of treatment supplied fell by more than 0.30  **
**Albuterol (including albuterol sulfate) was most common  antiasthmatic  **

## Response to Price Increase

**Goldman et al. (JAMA, 2004): **
**For drugs with no OTC substitutes—a set that presumably includes albuterol MDIs--the effect is 0.15**** **
**For diabetes, asthma and gastric acid disorder, ER visits grew by 17% & hospital days by 10% when co-pays doubled.**
**But results “not definitive”. **

## Response to Price Increase: Summary

| MDIs sold to price sensitive population. | 2.8 million (MEPS) to 6 million (NHIS)  |
| --- | --- |
| Price increase  | 120%  (IMS’ National Prescription Audit) 
to 180% (Internet)  |
| Estimated elasticity  | 0.15 (JAMA) |
| Possible quantity response  | 0.4 million to 1 million   |

## DiscussionEmpirical Caveats

**Ignores responses of insured patients to any increases in co-pays.**
**Co-pays for branded products are much higher than co-pays for generics.**
**Price sensitive population, price increase, and consumer response (elasticity) are all quite uncertain. **

## Policy Caveats

**GSK letter of 5/3/04 **
**GSK will make 2 million complimentary samples of Ventolin available each year to physicians, “who may choose to reserve these inhalers for their lower-income patients” **
**“****freeze” wholesale acquisition cost**
**This giveaway may significantly offset lost canisters, provided it is well targeted to the most price sensitive patients**