August 20, 2007

Volume 1, Number 27
Brought to you by Thomas Jefferson University’s Department of Health Policy

Health Plan Initiative Reduced Costs by $6.6M Over Two Years

Applying four cost-reduction strategies to its MedCost health plan from 2003 to 2005 saved Wake Forest
University Baptist Medical Center more than $6.6 million in prescription drug costs, according to a study
published this week in the American Journal of Managed Care. The health plan covers 11,000 employees
and a similar number of dependents. The cost-reduction strategies included encouraging use of generic
drugs over brand-name drugs, use of non-drowsy antihistamines available over the counter and purchase
of higher-dosage pills to be split, as well as limiting the amount available of certain medications not used
daily. The increased use of generic drugs, which rose from 40% in 2003 to 57% in 2005, was the biggest
cost-saving measure. More at: http://www.ajmc.com/Article.cfm?Menu=1&ID=3347
(Winston-Salem Journal, 8/10; AmericanHealthLine, 8/10).

REIMPORTATION: NFIB Endorses Legislation Allowing Practice

The National Federation of Independent Business has announced its endorsement of legislation (S 242
and HR 380) that would allow the purchase of lower-cost, FDA-approved drugs from other nations (CQ
HealthBeat, 8/10). The legislation would allow consumers, pharmacies and wholesalers to purchase FDA-
approved prescription drugs that are manufactured at FDA-inspected facilities in 19 industrialized
nations. Under the legislation, which would establish a regulatory framework for reimportation, FDA
would regulate shipments of prescription drugs reimported into the U.S. for commercial or personal use.
The bill also would require FDA to inspect Canadian prescription drug exporters 12 times annually
(American Health Line, 5/8).

FDA: Avandia, Actos Labels To Include Black Box Warnings

The labels of the type 2 diabetes medications Avandia, manufactured by GlaxoSmithKline, and Actos,
manufactured by Takeda Pharmaceuticals, will include black box warnings to indicate that the treatments
can increase risk for heart failure, FDA announced on Tuesday (Wall Street Journal, 8/15).

AMGEN: To Cut 12% to 14% of Its Work Force

Biotechnology company Amgen on Wednesday announced that it will cut 2,200 to 2,600 jobs -- 12% to
14% of its work force -- among other cost-reduction plans to save more than $1 billion in 2008.
According to the Wall Street Journal, the reduction will bring Amgen to its 2006 employment level (Wall
Street Journal, 8/16). The move is being made largely as a result of declining sales of Amgen's top-selling
anemia drugs, Aranesp and Epogen, which account for nearly half of the company's revenue, according to
Bloomberg/Globe (Bloomberg/Boston Globe, 8/16) (American Health Line, 16/8).

FDA: Warns Against Use of OTC Cold Medications in Children

FDA on Wednesday issued a public health advisory that warns parents not to administer over-the-counter
cold and cough medications to children younger than age two without consultation with a physician (New
York Times, 8/15). The advisory states, "Questions have been raised about the safety of these products
and whether the benefits justify any potential risks from the use of these products in children, especially
in children under two years of age" (Washington Post, 8/16). The current labels for such medications
include a similar advisory, but many parents do not adhere to the warning, FDA said. (American Health
Line, 17/8)

Any questions regarding this newsletter can be directed

to Vittorio Maio at vittorio.maio@jefferson.edu.