Pre­scrip­tion-price sticker shock: Will fed­eral law­mak­ers in­ter­vene?

Modern Healthcare - - NEWS - By Steven Ross John­son

As more de­tails emerge chron­i­cling the lengths some phar­ma­ceu­ti­cal firms have gone to to set a pre­mi­umprice on their prod­ucts, stake­hold­ers are split on whether the gov­ern­ment will act on the cri­sis.

Drug com­pa­nies have re­mained in the spot­light since Tur­ing Pharmaceuticals and its CEO, Martin Shkreli, first an­nounced and then backed away from plans to raise the price of Dara­prim. The generic drug, which treats tox­o­plas­mo­sis, rock­eted from $13.50 to $750 a pill shortly af­ter Tur­ing ac­quired the rights to mar­ket the med­i­ca­tion in Au­gust.

Then last week came re­ports that fed­eral prose­cu­tors were in­ves­ti­gat­ing Cana­dian drug­maker Valeant Pharmaceuticals In­ter­na­tional over its drug pric­ing and dis­tri­bu­tion poli­cies. In Fe­bru­ary, Valeant raised the price of two heart drugs, Nitro­press and Isuprel, by 525% and 212%, re­spec­tively, shortly af­ter ac­quir­ing the rights to sell them.

Most re­cently, Valeant’s stock took a 30% hit af­ter short­seller An­drew Left’s web­site Citron Re­search pub­lished a re­port ac­cus­ing the com­pany of col­lud­ing with spe­cialty phar­ma­cies Phili­dor Rx Ser­vices and R&O Phar­macy in a plan to gen­er­ate phony sales.

But those re­ports re­vealed what many stake­hold­ers have ex­pe­ri­enced for some time: a painful spike in drug costs, whether they’re in­no­va­tive and break­through or older and generic.

Though drug prices have been ris­ing for roughly the past decade, the pub­lic re­ally took no­tice only af­ter the in­tro­duc­tion of Gilead Sciences’ $84,000 hep­ati­tis C treat­ment So­valdi, said John Rother, CEO of the Na­tional Coali­tion on Health Care. In re­cent years, he’s headed a cam­paign to lower drug prices.

He said the sticker shock felt over So­valdi and the dozen or so med­i­ca­tions that fol­lowed has helped to bring pub­lic at­ten­tion to the is­sue of high drug costs, which has caused a num­ber of politi­cians to take no­tice.

“For law­mak­ers who are con­cerned about our fis­cal stand­ing, this is go­ing to be an ever-more cen­tral is­sue,” Rother said, re­fer­ring to the im­pact drug costs have on the fed­eral bud­get.

A Health Af­fairs ar­ti­cle pub­lished in Au­gust cited CMS fig­ures that pro­jected drug costs had in­creased 12.6% in 2014, far out­pac­ing other med­i­cal ex­penses.

Fed­er­a­tion of Amer­i­can Hos­pi­tals CEO Chip Kahn was not as con­fi­dent the cur­rent cli­mate would nec­es­sar­ily bring about ac­tion. He cau­tioned against gov­ern­ment in­ter­ven­tions such as price con­trols, which could give rise to un­fore­seen prob­lems.

“I’m very wor­ried that on the pric­ing side, pol­i­cy­mak­ers could be clumsy in try­ing to fix some­thing and maybe make other prob­lems,” Kahn said.

Sev­eral lead­ing pres­i­den­tial can­di­dates, in­clud­ing Demo­cratic con­tenders Hil­lary Rod­ham Clin­ton and Ver­mont Sen. Bernie San­ders as well as Repub­li­can can­di­date Sen. Marco Ru­bio of Florida, have blasted drug com­pa­nies. San­ders and Clin­ton have out­lined plans that would al­low Medi­care to ne­go­ti­ate prices for drugs and let pa­tients pur­chase cheaper drugs from for­eign mer­chants.

The stakes are high for the industry. Providers, in­sur­ers and pa­tients are mak­ing dif­fi­cult bud­getary de­ci­sions on care based partly on their abil­ity to af­ford treat­ments.

The over­all prices on pre­scrip­tion drugs have steadily risen over the past few years, ex­pe­ri­enc­ing an an­nu­al­ized per­cent­age in­crease of 4.7% in 2015, com­pared with a 1% rise in hos­pi­tal­care ex­penses and a 1% drop in physi­cian and clin­i­cal ser­vices, ac­cord­ing to an Oc­to­ber Al­tarum In­sti­tute Cen­ter for Sus­tain­able Health Spend­ing re­port.

“We’ve seen our generic drug costs in­crease from $21 per pre­scrip­tion to $32 per pre­scrip­tion in a year,” said Martin Burruano, vice pres­i­dent for phar­macy ser­vices at Buf­falo, N.Y.-based In­de­pen­dent Health, a not-for-profit in­surer with 400,000 mem­bers. “We’ve moved many high-cost generic drugs to a non-cov­ered sta­tus over the past year be­cause their prices have in­creased, in some cases, over 1,000%.”

Burruano said that one such drug was the an­tibi­otic tetra­cy­cline, which he said jumped from 5 cents a cap­sule to about $8 a cap­sule. In­de­pen­dent Health re­moved it from its for­mu­lary in re­cent years be­cause of its price. Burruano said drug costs con­sti­tuted the fastest-grow­ing seg­ment of In­de­pen­dent’s health costs, with phar­macy ex­penses grow­ing from 20% to 24% of all med­i­cal costs over the past year.

Like Rother, In­de­pen­dent Health’s di­rec­tor of phar­macy ser­vices, Sheila Ar­quette, felt law­mak­ers more clearly un­der­stand the im­pact drug prices are hav­ing on health costs, and that the cur­rent path was un­sus­tain­able.

She ad­vo­cated for drug­mak­ers and in­sur­ers to col­lab­o­rate on so­lu­tions, and said phar­ma­ceu­ti­cal com­pa­nies should be­come more trans­par­ent about the costs of re­search needed to de­velop drugs—de­tails some drug­mak­ers have held close to their chests.

“We have to be trans­par­ent, be­cause I don’t think any of us re­ally un­der­stand the whole pic­ture,” Ar­quette said. “We need the man­u­fac­tur­ers to come to the ta­ble and just be hon­est with us.”

“We’ve moved many high-cost generic drugs to a non-cov­ered sta­tus over the past year be­cause their prices have in­creased, in some cases, over 1,000%.”

MARTIN BURRUANO, vice pres­i­dent for phar­macy ser­vices, In­de­pen­dent Health

Ac­tivists hold signs with the im­age of Tur­ing Pharmaceuticals CEO Martin Shkreli in front of the build­ing that houses his of­fices in New York.

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