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Wednesday Aug 24, 2016

Right Thing to Do: Making the Case for Drug Pricing Transparency

Americans spent $419 billion on prescription drugs in 2015, up nearly 12 percent from the previous year. Estimates for 2016 project an increase of as much as 13 percent.

Although spending on new drugs and increased use of existing drugs explain some of last year's spending spike (2.7 percent and 0.5 percent, respectively), more than 8 percent represents price increases for existing drugs. As manufacturers continue to raise prices, spending will continue to soar.

The combination hepatitis C drug ledipasvir-sofosbuvir (Harvoni) led the industry in 2015 with $14.3 billion in sales. Small wonder, when the typical 12-week, once-a-day course of treatment for patients with hepatitis C infection costs a whopping $94,500 overall.

Similarly, the treatment regimen for another hep C drug made by the same manufacturer -- Gilead Sciences Inc. -- consists of the same 84 pills taken over a 12-week course. At $1,000 a pill, sales for sofosbuvir (Sovaldi) also add up quickly. (That same pill, by the way, costs less than $5 in some other countries). Many find the discrepancy outrageous, but the drug's manufacturer was determined to weather any backlash when it set the price.

Of course, one manufacturer alone isn't responsible for a problem this big. Last year, Turing Pharmaceuticals and its (then) CEO Martin Shkreli generated headlines for making a similar egregious and unconscionable price increase. Turing, which holds sole rights to market pyrimethamine in the United States -- where it is sold only as the brand-name medication Daraprim -- boosted the price of the drug, which is used to treat toxoplasmosis and prevent malaria, from $13.50 per pill to $750.

Needless to say, the rising costs of prescription medications -- both brand-name and generic versions -- continues to create affordability challenges for patients and payers alike.

Many of the medications routinely prescribed by family physicians for conditions such as asthma have been priced out of the reach of many patients, including those with health insurance. Lifesaving medications such as epinephrine for anaphylaxis and naloxone for opioid overdose reversal have also been subject to unjustified price increases.

Pharmaceutical company practices, such as "pay for delay" tactics that protect existing drug patents and delay the entry of generic medications to the market, stymie access to these less costly therapeutic alternatives and violate AAFP policy meant to ensure the availability of formulary medications that demonstrate "a proper balance of cost, efficacy, quality and ease of use to optimize individual outcomes in the context of resource conservation."

I recently attempted to prescribe antiretroviral medications for a young man I had screened and diagnosed with HIV. He was devastated by the news but willing to start treatment right away. Imagine how disheartened he felt when the pharmacist told him he needed to pay $1,129.35 toward his deductible before he could buy the lifesaving medications for $45 per month. My patient asked me if he should quit his job to qualify for a public assistance program. Instead, I'm helping him acquire supplemental assistance through the Maryland AIDS Drug Assistance Program.

How can family physicians advocate for making medications more affordable? Supporting legislation at the state and federal level could help.

State Legislation
Although more than two-thirds of states have adopted some type of anti-price-gouging statute, the laws do not specifically extend to pharmaceutical costs. Most address unjustified price increases for certain commodities during emergencies, such as raising the price of snow shovels during a snowstorm.

In June, Vermont became the first state to require drug manufacturers to justify large price increases. However, this was only a first step because many critical actionable elements were removed from the bill before passage. Moreover, the Vermont legislation did not include specific price-gouging provisions to address unjustified increases in drug prices.

In California, state Sen. Ed Hernandez recently withdrew his drug bill from consideration after it was weakened by several amendments. That bill would have required payers to report data on pharmaceutical drug costs to state regulators, and it also would have required drug manufacturers to notify payers, pharmacy managers and state agencies of impending price increases.

However, a November ballot initiative in California, Proposition 61, would prevent state agencies from paying more for a medication than the amount paid by the Department of Veterans Affairs (VA), which receives a discount off average manufacturer prices.

Federal Legislation
In addition to state-based efforts to promote drug pricing transparency, several national proposals intended to foster transparency have emerged, including measures to allow the federal government greater negotiating power and to limit manufacturers' ability to engage in anticompetitive practices that keep prices high.

  • The MAC Transparency Act (H.R. 244) would reform how maximum allowable costs (MAC) lists are determined and how frequently pharmacy benefits managers update them. It also would establish an appeals process for pharmacies to dispute reimbursements and would extend reforms to Medicare Part D, TRICARE and the Federal Employees Health Benefits Program.
  • The Medicare Prescription Drug Price Negotiation Act (H.R. 3061/S. 31) would give Medicare the same negotiating power that exists within the VA, which pays roughly 40 percent less for medications than Medicare Part D plans.
  • The Preserve Access to Affordable Generics Act (S. 2019) would prevent drug companies from buying competitors and/or paying incentives to delay generic drug companies from producing new products. 
  • The Medicaid Generic Drug Price Fairness Act (H.R. 2391/S. 1394) would require generic drug companies to provide a rebate to Medicaid if price increases exceed the rate of inflation.
  • Under the Medicare Prescription Drug Savings and Choice Act (H.R. 3261), the Agency for Healthcare Research and Quality would assess a drug's clinical effectiveness, comparative effectiveness, safety and prescription adherence as part of the drug formulary review process.
  • The Safe and Affordable Drugs from Canada Act (S. 122) would permit patients to import a 90-day supply of medication from Canada. It also would require the federal government to develop a list of approved Canadian pharmacies to ensure consumer safety.
  • The Price Relief, Innovation and Competition for Essential Drugs Act (H.R. 5573/S. 3094) would shorten the exclusivity period before brand-name biological products could be offered as generics from 12 years to seven.

Unfortunately, movement on these bills is unlikely before the November election, and they would have to be reintroduced during the next Congress. But following these proposals through to enactment is vitally important to ensure the health and financial well-being of Americans.

Also of concern is the fact that there is little insight into the background and financial interests of the experts that the nation's largest pharmacy benefits management companies rely on to decide which drugs will be covered and which won't. AAFP guidelines on patient-centered formularies state, "Formulary changes must be made known to physicians and pharmacies prior to implementation."

As family physicians, we have the opportunity to advocate for our patients' expanded access to affordable medicines, and as an organization, we can amplify that sentiment throughout the house of medicine and to state and federal governments, as well as to corporations that control much of what impacts the patients we serve.

Richard Bruno, M.D., M.P.H., is the resident member of the AAFP Board of Directors.

Comments:

Unfortunately, much of the proposed new legislation by this author would do little to improve access to good drugs and a lot to restrict their market. Sure, making a federal or state agency decide which drugs are efficacious and economical may sound like a good idea to some, but this would lengthen and restrict the actual marketing of such drugs and ultimately add to the cost of healthcare. The author seems oblivious to the shortages of cheap generic lifesaving drugs and vaccines that are already severely restricted by regulatory bodies, including by price controls under Medicaid similar to his proposals. Indeed the rules must change but only when they lift restrictions and liabilities the current system seems to continually foster. Only then will monopolies and crony-led ventures give way to a truly level economic playing field. In the meantime, one can dial 1-800-BAD-DRUG and take advantage of the toxic legal climate that lack of action on tort reform has helped continue.

Posted by Peter Rives MD on August 25, 2016 at 07:39 AM CDT #

The high cost of prescription drugs is alarming to patients and physicians. This is caused by multiple factors. Some of the factors include too much government and with our present patent laws. The approval process is not efficient and economical. Making a slight change in a medication with no change in outcome gives the medication a new patent. Research is not as big a factor as previously thought.Some companies have a monopoly--Mylan with the Epi-Pen. There is an excellent review entitled The High Cost of Prescription Drugs in the United States by Aaron Kesselheim in JAMA 2016 315:858-871. This article is a must read for all practicing physicians.

Posted by Dale C. Moquist on August 29, 2016 at 05:03 PM CDT #

The concluding line of the Findings in the above referenced article states "prescription drugs are priced in the United States primarily on the basis of what the market will bear"

That is why the more insurance is involved (in anything) the more the cost will go up. Viagra costs what it does is because most people who benefit from it are willing to pay that much for it out of pocket. If it was covered by most insurance the cash price would skyrocket.

Similarly if insurance companies were to pay a fixed percentage of drug costs for ALL medications, the prices would drop, the patients and their doctors would have more meaningful conversations of cost vs. benefit of medication options, and most importantly the soul (and bottom line) killing PA process would be unnecessary.

Posted by Keith Dinklage on August 31, 2016 at 07:32 AM CDT #

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The opinions and views expressed here are those of the authors and do not necessarily represent or reflect the opinions and views of the American Academy of Family Physicians. This blog is not intended to provide medical, financial, or legal advice. All comments are moderated and will be removed if they violate our Terms of Use.