Sanofi vows to limit price hikes— but will it make much dif­fer­ence?

Modern Healthcare - - NEWS - By Alex Kacik

Drug­maker Sanofi’s pledge last week to hold price hikes to the rate of health­care in­fla­tion did lit­tle to allay con­cerns about the soar­ing costs of pre­scrip­tion med­i­ca­tions.

Af­ter a rash of pub­lic out­cry about drug prices, sev­eral phar­ma­ceu­ti­cal com­pa­nies have vowed to cur­tail in­creases that have squeezed the bot­tom lines of providers, pay­ers and con­sumers alike. Sanofi’s prom­ise to link in­creases to the rise in the Na­tional Health Ex­pen­di­ture Data Ac­counts as tracked by the CMS—es­ti­mated to be 5.6% an­nu­ally from 2016 to 2025—is a firmer com­mit­ment than has been made by other com­pa­nies.

Nonethe­less, ex­perts worry that prices will con­tinue to be a drag on the en­tire health­care sys­tem.

“Drug price in­creases still far out­pace med­i­cal in­fla­tion,” said Dr. Scott Knoer, chief phar­macy of­fi­cer of Cleve­land Clinic. “The cur­rent model is un­sus­tain­able. We just can’t have (drug price) in­fla­tion in dou­ble dig­its like we have had and pro­vide health­care med­i­ca­tions to pa­tients. It’s a bud­get-buster.”

A bet­ter bench­mark would be cap­ping price in­creases at the Con­sumer Price In­dex, which has av­er­aged around 1.4% since the Great Re­ces­sion, ex­perts said.

Drug com­pa­nies have been pres­sured to change their pric­ing poli­cies af­ter high-pro­file dis­putes like the one in­volv­ing EpiPen. The emer­gency al­lergy drug’s price grew 500% from 2007 to 2016.

Big Pharma lob­by­ists claim that med­i­cal treat­ment is ex­pen­sive and high prices are needed to fund re­search and devel­op­ment. Yet, re­search shows prof­its often greatly out­pace R&D costs. Phar­ma­ceu­ti­cal com­pa­nies con­tend that other play­ers in the sup­ply chain, such as phar­macy ben­e­fit man­agers, ab­sorb much of the price in­creases.

Dr. Roy Guharoy—As­cen­sion Health’s vice pres­i­dent of clin­i­cal in­te­gra­tion and chief phar­macy of­fi­cer for the Re­source Group, an As­cen­sion group pur­chas­ing or­ga­ni­za­tion—agreed that price hikes should be lim­ited to the CPI. “High drug prices are a huge chal­lenge to de­liver care to pa­tients in need,” he said. “Sanofi’s com­mit­ment is good, but we’re still far from where we need to be.”

Sys­tems, in­clud­ing As­cen­sion, have had to shift treat­ment strate­gies to avoid overuse of high-cost drugs—some of which have no vi­able al­ter­na­tives.

Na­tional health­care spend­ing grew 5.8% to $3.2 tril­lion in 2015, in part due to a 9% in­crease in pre­scrip­tion spend­ing to $324.6 bil­lion.

Branded drugs with no generic al­ter­na­tives, or sin­gle-source drugs, are the main cul­prit, ac­cord­ing to a re­cent Blue Cross and Blue Shield As­so­ci­a­tion study. They are ris­ing at an av­er­age an­nual rate of 25%, a to­tal of 285% since 2010. These patent-pro­tected drugs now make up 63% of to­tal drug spend­ing, up from 29% of to­tal spend­ing in 2010, de­spite the fact that they make up less than 10% of to­tal pre­scrip­tions filled.

In a col­umn on the com­pany’s web­site, Sanofi CEO Olivier Brandi­court said that its av­er­age list price in­creases were 4%. In the fu­ture, the com­pany will ex­plain hikes if they out­pace med­i­cal in­fla­tion and will dis­close its ag­gre­gate gross and net price in­creases.

Many branded drugs have in­creased at a much faster clip, in­clud­ing Sanofi’s in­sulin drug Lan­tus, which in­creased 13% an­nu­ally from 2010 to 2016.

Bo­tox maker Al­ler­gan said last fall that it would stick to sin­gle-digit price in­creases. Novo Nordisk, Ab­bVie, Glax­o­SmithK­line and Takeda Phar­ma­ceu­ti­cals fol­lowed suit. Eli Lilly and Co. said it would lower prices for most of its in­sulins by up to 40%.

“Com­pe­ti­tion is the an­swer to a lot of these huge price spikes,” said Wil­liam Wood­ward, se­nior direc­tor of sourc­ing op­er­a­tions for phar­macy at the GPO Vizient. “New drugs are priced at what­ever the mar­ket will bear—it has lit­tle or no re­la­tion to costs for pro­duc­tion or re­search and devel­op­ment.”

There are sev­eral mea­sures mov­ing through Congress that aim to re­duce drug costs. Two bills, with the short­hand names CRE­ATES Act and FAST Gener­ics Act, tar­get al­leged an­ti­com­pet­i­tive be­hav­ior that sti­fles generic drug devel­op­ment. That al­leged be­hav­ior in­cludes pre­vent­ing generic de­vel­op­ers from ac­cess­ing sam­ples of branded prod­ucts to demon­strate that a generic is equiv­a­lent and par­tic­i­pat­ing in block­ing ac­cess to safety pro­to­cols needed to gain fed­eral ap­proval. It’s es­ti­mated the bi­par­ti­san FAST Gener­ics Act would re­duce drug costs by $5.4 bil­lion a year .

Ex­perts also sup­ported re­duc­ing or even elim­i­nat­ing di­rect-to-con­sumer and di­rect-to-physi­cian mar­ket­ing. The phar­ma­ceu­ti­cal in­dus­try spent more than $24 bil­lion to mar­ket di­rectly to physi­cians in 2012 com­pared with $3 bil­lion that year to con­sumers, ac­cord­ing to a study pub­lished that year by Pew Char­i­ta­ble Trusts.

“We just can’t have (drug price) in­fla­tion in dou­ble dig­its like we have had and pro­vide health­care med­i­ca­tions to pa­tients. It’s a bud­get-buster.” Dr. Scott Knoer Chief phar­macy of­fi­cer Cleve­land Clinic

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