The Register Citizen (Torrington, CT)
State should require disclosure and review when drug prices soar
Imagine a world where we depend on peas and corn for survival.
You buy the peas for $2.69 and the corn for $3.59 and — voila — you have what you need at a fair price to sustain yourself while the pea and corn sellers make their profits in a free market.
Along comes an innovator who combines the peas and corn into one bag — eliminating the need to scavenge for peas and corn individually.
The charge for this twoin-one-veggie bag: $468.
In no rational functioning free-market would a consumer pay a 7,347-percent markup for the sake of that “convenience.” Except that we do. After learning about a federal investigation into a similar scheme — this one involving pharmaceuticals produced by Horizon Pharma — I urged an immediate review of the state health plan.
Sure enough, this pharmaceutical corporation was costing the state approximately $2,000 for pills that are virtually combinations of drugs such as ibuprofen and Pepcid AC, or Aleve and Nexium (otherwise available over the counter for $40-$60 per month).
As state comptroller, and administrator of the state health plan, I immediately worked with the state’s Health Care Cost Containment Committee to stop any medically unnecessary use of these drugs.
This case shows that some pharmaceutical corporations, among the most financially powerful businesses in the world, do not operate among the “peas and corn” in a free market. Their costs and transactions are often negotiated in the shadows.
The journey between drug manufacturer and consumer — dotted with many rebates and wealth exchanges along the way — is a long one.
As if the consumer’s cost at the counter wasn’t enough, most of us are paying these massively marked-up prices without even realizing it — directly through our insurance premiums and taxes and even in the cost of doing business with any employer who provides health care to its employees.
There is one way to extend free-market fairness to this realm: Shine a bright light onto a sometimes shadowy market.
The people of Connecticut demand economic fairness. This legislative session, I am working with legislators to deliver financial relief through transparency — by requiring disclosure and review when drug prices soar beyond an established threshold for no apparent reason. Pharmaceutical corporations would have an opportunity to justify those spikes and consumers would be armed with information, for the first time, allowing them to make more informed health care choices.
This state review will raise questions: Is there a rationalization for sending drug costs skyward — by more than 7,000 percent — after so many years on the market? Are these profits fueling research and development (in addition to the federal subsidies provided for research and development investment)?
I commend those in the state Legislature who have shown their leadership on this important issue, particularly state Rep. Sean Scanlon, co-chairman of the General Assembly’s Insurance and Real Estate Committee.
This state action is essential, but Connecticut demands federal action. Just as Connecticut has successfully managed overall medical costs through the state plan, prescription costs undermine those efforts. Over the last year alone, the state has faced double-digit increases in list prices for certain drugs — many that have been on the market for years (19 percent each for Humira and Enbrel and 20 percent for Epipen). Many of these double-digit increases coincide with the proliferation of direct-to-consumer marketing campaigns that bombard us each evening from the television screen.
Pharmaceutical corporations and other corporate entities are merely exploiting perverse incentives in a broken marketplace — where outrageous list prices allow drug manufacturers to offer huge rebates to pharmacy benefits managers (PBMs). These deals ensure placement on formularies.
There are fair-minded pharmaceutical companies in this world, some of them in Connecticut, who are running a business — but committed to the important work of developing new treatments that save lives or vastly improve quality of life.
There are others, however, who neglect their profound responsibility, threating life-dependent drugs like any other commodity to be sold for the highest price the market will bear, and at whatever cost to life and the greater economy.
Financial transparency in pharmaceuticals will face great opposition from the latter, but I hope there will be some who support it. I encourage consumers and the media to take note this year of who stands where.