Tag Archives: prescription drug prices

07/13/18

Pharma Problems Defy Solutions

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In January 2017, President-elect Donald Trump said the pharmaceutical industry’s practices were disastrous and suggested the federal government should negotiate drug prices. He characterized the industry with getting away with murder. He said: “Pharma has a lot of lobbies, a lot of lobbyists, a lot of power. And there’s very little bidding on drugs.” The response from the industry’s top trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), was to increase its lobbying expenditures from $20 million in 2016 to $25.4 million in 2017. The biggest jump occurred in the first quarter of 2017. Only the U.S. Chamber of Commerce and the National Association of Realtors outspent PhRMA lobbying in 2017.

Writing for The Hill in January of 2018, Jessie Hellmann commented that despite the president’s tough talk, “his administration has yet to take action toward lowering drug prices, and some of his policies have even been viewed as being favorable to the industry.” Danit Felber noted the same thing in the first article of her two part series for Vision Magazine. She added how President Trump selected a former Eli Lilly executive as his Secretary of Health and Human Services. “There’s no doubt that the pharmaceutical industry is growing rapidly, as are its donations to political campaigns.”

Between the years 1997 to 2016, the U.S. population grew by 21% but the number of prescriptions (to both adults and children) grew by 85%. One in every six Americans takes a psychiatric drug (antidepressants, anxiety relievers, antipsychotics, etc.) – many of the conditions treated with these drugs can be treated in whole or in part by lifestyle changes and/or therapy. And in 2014, close to 1.3 million people went to the emergency room for adverse drug effects and about 124,000 of those died (U.S. government data cited by Consumer Reports).

An infographic linked by Vision Magazine reported in 2012, 46% of American adults took prescription drugs. 11.5% of American adults take 3 or more prescription drugs; 6.5% take 4 or more. There were 4.2 billion prescriptions written in 2011—an average of 13 per average American. The amount of money spent on prescription drugs increased from $208 billion in 2001, to $234 billion in 2008, to %325 billion in 2012. Among older adults, 46% above 55 are on a prescription drug; 12.6% above 65 take 4 or more prescription drugs.

Danit Felber noted how the U.S.  is only one of two countries globally that permits direct-to-consumer advertising for prescription drugs. She also pointed out that Congress passed a bill restricting the DEA from addressing the black market prescription drug trade the same way they go after the illicit drug trade. See “Head of a Snake” for more information on this. Tom Marino withdrew his name from consideration as the “drug czar” for the Trump administration when it was revealed he had spearheaded efforts to get that legislation through Congress.

The drug companies may be full of brilliant medical researchers and lawyers but it doesn’t take much brilliance to see that the American public is being exploited so pharmaceutical executives and politicians can get rich. It’s no exaggeration to say that human lives are at stake and it’s time the people understand our own place in this billion-dollar industry.

In part 2 of her series for Vision Magazine, Danit Felber reported that nine out of ten members of the U.S. House of Representatives received campaign contributions from pharmaceutical companies; as did all but three of U.S. senators. She referenced an October 2017 article in The Guardian that called out lobbying efforts of Pharma in 2016, which spent $152 million attempting to influence legislation that year; $20 million went directly to political campaigns. Reportedly, about 60% went to Republicans. Paul Ryan received $228,670. Pfizer gave $1 million towards President Trump’s inauguration.

Scores of attempts by some members of Congress to introduce legislation to bring down the price of prescription medicines or to let people buy them from Canada, where they are often cheaper, have failed to make it out of committee.

Bloomberg reported the industry’s lobbying trend continued into 2018. PhRMA spent $9.96 million on federal lobbying in the first quarter of 2018, an increase of almost $2 million from the same quarter in 2017. Several pharmaceutical companies, including Bayer Corp., AbbVie Inc, Sanofi US and Novo Nordisk all had new highs for their lobbying expenditures. PhRMA successfully stopped legislation that would have permitted generic-drug companies to study patented pharmaceutical products in order to bring low cost alternatives to market.

Bayer spent $3.45 million, AbbVie $2.89 million, Sanofi $2.03 million, Celgene $1.22 million and Novo Nordisk $1.46 million. In addition to the records, Pfizer Inc. spent $4.65 million, up from $3.79 a year earlier. Merck & Co. spent $3.31 million, nearly double its spending in the first quarter of 2017. Eli Lilly & Co. spent $1.34 million, down from $1.39 million a year earlier. Abbott Laboratories spent $790,000 in the first quarter, the same as it had in the same period in 2017.

Polls indicate high drug prices are one of Americans top health care concerns. During the 2016 presidential campaign both Hillary Clinton and Donald Trump attacked drug makers, so pharmaceutical companies stepped up their lobbying and nervously waited to see what action the President would take. One lobbyist said: “Anyone who thought the industry is fine because Hillary Clinton lost is naïve.” Companies, he thought, will want to talk with him, “particularly since his words have such an immediate impact on stock prices.”

So it was with some trepidation that Pharma faced the President’s announced plan to put “American Patients First” on May 11, 2018. In a speech given in the Rose Garden, he said:  “Everyone involved in the broken system — the drug makers, insurance companies, distributors, pharmacy benefit managers and many others — contribute to the problem.”  The President added that government—under previous leaders—was part of the problem by turning a blind eye to the abuse. “But under this administration we are putting American patients first.”

However, The New York Times quoted a securities analyst who said the president’s speech was “very, very positive to pharma. . . . We have not seen anything about that speech which should concern investors.” As a matter of fact,

Shares of several major drug and biotech companies rose immediately after the speech. Drugmakers’ stocks jumped immediately after the speech, as did the stocks of pharmacy benefit managers, the “middlemen” who Mr. Trump said had gotten “very, very rich.”Rather than take aim at the pharmaceutical makers, Mr. Trump said his administration would cut out the middleman, provide new tools to private benefits managers in Medicare’s prescription drug program to negotiate lower prices, stop limiting pharmacists from helping patients save money and speed up approval of over-the-counter medicines so that fewer will require prescriptions.

The Washington Post pointed out “American Patients First” suggested a number of policy ideas without a specific timeline for implementations. It excluded an idea Trump had previously proposed: “allowing the government to negotiate drug prices on behalf of the Medicare program.” It was silent about allowing Americans to import low-cost prescriptions from other countries like Canada. There was also evidence that some of the ideas spread by the pharmaceutical lobby took root. “Over the past year, drug companies have sought to deflect criticisms of their prices by blaming a secretive tier of middleman industries, such as pharmacy benefit managers that negotiate drug prices, for the role they play in prices.”

In addition to turning away from drug companies to condemn the “middleman” of PBMs—pharmacy-benefit managers—President Trump said he would make it a priority to stop foreign countries from getting drastically lower prices than in the U.S. Yet there isn’t a clear path to see that an increase in foreign prices would offset U.S. drug prices. Allan Coukell from the Pew Charitable Trusts commented: “I haven’t seen so far any manufacturers stepping forward to say how much they would lower prices in the U.S. if the U.K. and Germany paid more.” Rachel Sachs, an associate professor of law at Washington University School of Law, said: “With all the buildup the administration has given it, the president’s speech was deeply underwhelming. There is very little new in the administration’s plan, and little if anything that will make a difference in the near future, as the president has promised.” Gerard Anderson, a professor at John Hopkins Bloomberg School of Public Health, said: “He diagnosed the problems very well, and just didn’t have a solution.”

11/14/17

Pharma’s Not Getting the Message

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In response to rapidly increasing prescription drug prices and congressional inability or unwillingness to intervene, individual states are attempting to address the issue. While Californians approved a ballot initiative for recreational marijuana in November of 2016, state voters also turned down one aimed at curbing the high cost of prescription drugs. The California Drug Price Relief Act, or Proposition 61, sought to limit the state’s health programs from paying more than the U.S. Department of Veterans Affairs (VA), which receives the steepest discounts in the country, according to Reuters. Pharma companies lobbying against Proposition 61 spent $100 million to defeat it.

Proposition 61’s opponents, led by global drugmakers such as Pfizer Inc and Amgen Inc, spent around $106 million. They argued that it would benefit only 12 percent of Californians, while putting the other 88 percent, and veterans across the country, at risk of higher drug costs.

The defeat of the measure: “reaffirms the power of the biomedical lobby,” according to Brian Abrahams, a Senior Biotechnology Analyst at CIBC World Markets. Stuart Schweitzer, a professor of health policy and management at the University of California, said the measure would have only had a modest impact on state drug costs. Nevertheless, “They wanted to draw a line in the sand.”  A similar proposition will be on Ohio’s 2017 November ballot.

U.S. New and World Report said New York State approved rules in April of 2017 that will put pressure on pharmaceutical companies if they want to continue doing business in the state. If Pharma companies don’t agree to voluntarily rebate or return money to the state if prescription medication spending is projected to exceed the sum of medical inflation plus 5 percent, New York State could initiate a series of reviews using scientific studies and other information to evaluate whether specific medications are overpriced. “Drug makers generally object to such reviews and often dispute their results.” The NY State Medicaid Director said the law created an incentive for pharmaceutical companies to collaborate and give the state rebates.

New York is not the only state taking action. Vermont lawmakers passed legislation requiring justification for price increases that are driving up spending in state programs like Medicaid. In March of 2017 Maryland lawmakers passed legislation, still not signed by the governor, directing Medicaid to notify the state attorney general when off-patent or generic drugs have “an excessive price increase.” The new law also sets financial penalties if the pharmaceutical company can’t justify the price hike. Louisiana officials are looking into whether a rarely used federal law could be used to “sidestep patents and allow government programs to get lower-cost generic versions of pricey hepatitis C treatments.”

In August of 2017, JAMA gave greater details about the New York legislation in: “Value-Based Pricing and State Reform of Prescription Drug Costs.” Hwang et al. said if the rate of drug spending growth exceeded the 10-year average inflation plus 5% in 2017-2018 or 4% in 2018-2019, the state department of health would be authorized to identify and refer high-cost drugs to a drug utilization review board to determine a target rebate amount. The provisions are likely to trigger a review this year. The board may consider the effectiveness of the drug, its therapeutic alternatives, and the seriousness and prevalence of the disease in formulating its recommendation for a value-based price.

If the state and manufacturer fail to agree on a rebate that is at least 75% of the difference between the drug’s current price and value-based price, the state may waive provisions that currently require managed care plans to cover medically necessary drugs in certain protected classes, including antidepressants, antiretrovirals, and hermatologic drugs. Furthermore, if total drug expenditures continue to increase faster than inflation despite these new rebates, the state may implement more aggressive actions to promote use of clinical alternatives, including directing managed care plans to remove drugs from their formularies that lack new rebate agreements.

The pharmaceutical industry is taking steps to prepare to do battle against these and other steps taken to rein in drug prices. The pharmaceutical lobby, PhRMA (Pharmaceutical Research and Manufacturers of America), is increasing membership dues by 50 percent to raise an additional $100 million PER YEAR to fund its ongoing fight over drug prices.  “PhRMA has consistently ranked among the biggest lobbying spenders in Washington over the past few years.” By August of 2016, it had already spent $11.8 million that year, making it the fourth-largest lobbying group in Washington DC. TV advertising in 2017 was to target how “new drugs could add years to patients’ lives, as well as the years of complex research needed to develop a drug.”

The Intercept reported that newspapers in the Washington D.C. area were getting swamped in April of 2017 with ads warning of the dire consequences of proposals to lower drug prices. The groups placing the ads had no obvious connections to pharmaceutical companies. The ads appeared in the Washington Post, Washington Times, Roll Call, The Hill and Politico just as legislators were taking up proposals to lower drug prices. As it turned out, the organizations had undisclosed financial ties to PhRMA.

A bill proposed by Senator Al Franken would reverse a 2003 law prohibiting Medicare from using its collective bargaining power to negotiate lower drug prices. Legislators who wrote the 2003 bill worked closely with PhRMA lobbyists while drafting the legislation. The bill’s sponsor later became the president of PhRMA.  Franken and others introduced the “Improving Access to Affordable Prescription Drugs Act” on March 29, 2017. Here is a five-page summary of the bill. A companion bill to “Improving Access to Affordable Prescription Drugs Act” was introduced in the House on the same day.

Some of its provisions would include several current problems with prescription drug costs. It would close the coverage gap in Medicare Part D coverage (known as the donut hole) in 2018, two years earlier than under current law. Tax credits given to pharmaceutical companies for their direct-to-consumer (DTC) advertisements would be eliminated. (WE WERE GIVING PHARMA COMPANIES TAX CREDITS WHEN THEY TRY TO GET US TO BUY THEIR DRUGS?) It would allow individuals, wholesalers and licensed U.S. pharmacies to import prescription drugs manufactured at FDA-inspected facilities from licensed Canadian sellers.

Significantly, Section 201 would allow the Secretary of Health and Human Services to negotiate with drug companies to lower prescription drug prices. It directs the Secretary to “prioritize negotiations on specialty and other high-priced drugs.” Under existing law, unlike Medicaid and the VA, Medicare is not allowed to leverage its purchasing power to negotiate lower drug prices.

STAT News reported that the Thursday before the November 2017 election, Andy Slavitt, the acting administrator for Medicare and Medicaid Services, said the rising costs for prescription drugs “will put unsustainable pressure on the Medicare program, and action is going to be necessary to address them.” He was addressing the BioPharma Congress, an industry conference. He said: “Drug costs have become the health policy issue Americans are most anxious to see us act on, and we have a responsibility to them to explore all the options available us to make their medications more affordable.” He told those at the conference that we could have both innovation and affordability. “These two goals shouldn’t be in opposition.”

In every-forward looking industry outside of health care, we see that competition actually fuels innovation, and affordability improves alongside the development of new technologies. . . . There are plenty of policy options and certainly a number of ways innovators like you can choose to respond – from disputing the math and fighting it, to looking for win-wins.

So far, it seems Pharma is ignoring the message. They are still trying to convince the American public and U.S. lawmakers that innovation in drug development will dry up if price caps are enacted.

The debate over the cost of drug development has been going on since the late 1950s, believe it or not. An often-quoted 2003 study, “The Price of Innovation,” which was published in the Journal of Health Economics, estimated it cost $802 million in 2000 dollars to bring a new drug to market. PhRMA’s 2014 profile found that estimate low and said it actually costs $1.2 billion to develop a new drug. However, “Demythologizing the High Costs of Pharmaceutical Research,” in the journal BioSocieties, suggested the true research and development costs were a median of about $43.4 million per new drug. That is about 5.4% of “The Price of Innovation’s” cost projection and 3.6% of the PhRMA estimate. See “Pharma and Its Golden Hoard” for a further discussion of what a new drug costs.