Starting January 1, a drug that thousands of patients depend on to help them breathe will disappear from pharmacy shelves, and doctors are concerned patients may have delays switching to alternatives and getting them covered by insurance.

Manufacturer GSK has said it’s discontinuing the branded asthma inhaler Flovent, and instead is making an “authorized generic” version, which is identical but without the same branding.

Physicians who treat patients with asthma say the authorized generic will work just as well as the branded drug, but it doesn’t appear to be covered as widely by insurers. That may mean patients will have to obtain new prescriptions and sort out coverage hurdles at the height of respiratory virus season.

“This medication has been the most commonly used inhaled medication for the past 25 or 30 years,” said Dr. Robyn Cohen, a pediatric pulmonologist at Boston Medical Center. “It’s the one that, overwhelmingly, pediatricians reach for when they decide that their patient needs a daily preventive medication. … The fact that it’s being discontinued is going to be a huge shock to the system for patients, for families and for doctors.”

Doctors are urging patients to take action now to ensure they’ve got their medicine heading into the new year and advocacy groups have been trying to get the word out.

But the story of why Flovent is disappearing, and the lack of insurance coverage for its ostensibly identical replacement, touches on some of the most complex facets of American health care and drug pricing.

Flovent will no longer be manufactured starting January 1 and an identical generic version will be available.

Flovent will no longer be manufactured starting January 1 and an identical generic version will be available.

Martin Shields/Alamy

Major change to Medicaid’s drug program

A spokeswoman for GSK said the company is making the change “as part of our commitment to be ambitious for patients.”

She noted the company introduced the authorized generics of Flovent HFA, an inhalation aerosol, and Flovent Diskus, an inhalation powder, in May 2022 and October 2023, and that, subsequently, it would discontinue manufacturing the branded versions in the United States on January 1, 2024.

The authorized generics, she said, “will provide patients in the US with potentially lower cost alternatives of these medically important products.”

Experts who follow the industry both on Wall Street and in academia, though, point out GSK is making the switch at precisely the time a change in Medicaid rebates could cause the company to have to pay large penalties because of price increases on Flovent over a number of years.

The legal change coming into effect on the first of the year removes a cap on Medicaid rebates that companies are required to pay if they raise the price of medicines more than inflation.

“Flovent Diskus has been on the market since 2000 and Flovent HFA since 2004, and GSK has hiked the price on both products numerous times since their launch,” Dr. William Feldman, an associate physician in the Division of Pulmonary and Critical Care Medicine at Brigham and Women’s Hospital who studies asthma drugs, told CNN. “These are precisely the sort of drugs that will be affected by the new policy eliminating the Medicaid rebate cap.”

Until now, the rebates were capped at the total price of a drug, so manufacturers would never pay more than a drug costs back to Medicaid.

But under a provision in the 2021 American Rescue Plan Act, that limit was removed, and starting January 1, 2024, drugs that have been subject to large price increases over time could end up incurring rebates to Medicaid that are greater than their price – meaning pharmaceutical companies would sell those drugs to Medicaid at a loss.

“Obviously pharma doesn’t want to be selling at a loss on anything in its portfolio,” said Andrew Baum, an analyst who covers the stock of GSK and other pharmaceutical companies for the financial firm Citi. “So it seeks to evade impact by, one: discontinuation; two: authorized generic.”

An authorized generic, Baum told CNN, is viewed as a separate product, “but still enables pharma to collect some of the economics.”

Or, put another way, it’s the same product without the branding and also without the history of price increases that would leave the medicine vulnerable to such large rebates to Medicaid.

According to data from GoodRx, the price of branded Flovent has gone up about 47% since 2014.

Other drugmakers have made changes ahead of the January 1 rebate cap removal as well; makers of insulin this year announced major price cuts – of 70% or more – on their products, a move analysts estimate will save them hundreds of millions of dollars a year.

The authorized generic strategy GSK is employing “is a way, broadly speaking, to maximize the profitability of the product in question,” said David Amsellem, a financial analyst who covers the industry at investment firm Piper Sandler.

He noted there are currently no other generic versions of Flovent approved by the FDA.

GSK did price the authorized generic lower than branded Flovent; one package of Flovent HFA in the 110 microgram dose, for example, costs $273.83, about 50% more than the $177.99 wholesale acquisition cost of its authorized generic counterpart, according to prices the company shared with CNN. The wholesale acquisition cost is the price before insurance and rebates.

But CVS Caremark, a major pharmacy benefit manager that determines which medicines are covered by insurance for its members, is giving preferential placement to another branded inhaler, Pulmicort, on its formulary, instead of the authorized generic versions of Flovent.

“In this case, the authorized generics were more expensive than the brand name medications,” a CVS spokesman told CNN. He noted that’s based on net prices, rather than the wholesale acquisition cost, meaning Pulmicort could be less expensive because of rebates its manufacturer, AstraZeneca, pays to obtain better insurance coverage.

‘The worst possible time of year’

The fact that insurance plans aren’t broadly covering the authorized generic of Flovent, said BMC’s Cohen, “means that patients are going to need to get a brand new prescription for a completely different medication in the middle of the worst possible time of year, which is the winter respiratory virus season.”

For patients with persistent asthma, Cohen said, Flovent has been the most commonly used daily preventive anti-inflammatory medication for decades. It shrinks swelling in the airways and reduces the body’s exaggerated response to triggers that make it hard to breathe.

During cold and flu season, she said, it becomes even more crucial to have that daily medicine.

“Flu, Covid, RSV – all these circulating viruses that are going around right now – are one of the biggest, if not the biggest, triggers for asthma attacks in kids,” Cohen said. “This is what leads to kids being in the emergency room.”

Cohen said she’s concerned that patients, as well as physicians and pharmacists, don’t know this change with Flovent is coming, and they need to act now to work out alternatives and determine insurance coverage.

For some groups, the alternatives are more limited. For patients with a more rare inflammatory condition, called eosinophilic esophagitis, Flovent HFA is one of the most commonly prescribed topical steroids, and other medicines don’t have as much data supporting their use in the condition, said Dr. Erin Syverson, an attending physician in the Division of Gastroenterology, Hepatology and Nutrition at Boston Children’s Hospital.

As EoE affects the esophagus, patients swallow the medicine instead of breathing it in, and it can tame the inflammation that can cause pain with swallowing or food getting stuck, requiring procedures to remove it. In kids, Syverson said, EoE can lead to recurrent vomiting, heartburn, belly aches, and trouble making progress starting solid foods, and Flovent can help keep the condition under control.

“With the discontinuation coming up, I worry it’s going to just be one more hurdle for this patient population that already has very limited medications available to them,” Syverson told CNN. “I don’t know what January is going to be like, but I’m worried.”

CNN’s Tami Luhby contributed to this report.

The-CNN-Wire & 2023 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

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