A panel of health care pharmaceutical experts May 3 offered a range of approaches to help rein in what all agreed is an unsustainable increase in prescription drug prices during an executive briefing at the AHA’s annual meeting.
They noted that the growth in the price of prescription drugs outpaces that of every other health care sector. Since 2008, prices for brand name prescription drugs have increased 127%, compared with an 11% rise in the consumer price index.
For example, the price of Nitropress and Isuprel, injectable heart medications that are a staple at many hospitals, last year rose more than 200% and 500%, respectively, after both were acquired by Canadian-based Valeant Pharmaceuticals.
“Drug prices are out of control,” said panel moderator and AHA board member Bruce Lawrence, president and CEO of INTEGRIS in Oklahoma City, Okla. “They are truly rising at an alarming rate, putting an incredible financial strain on hospitals and health systems and threatening our ability to provide high quality care each and every day.”
Allowing the federal government to negotiate Medicare Part D prices – a power already wielded by the Veterans Health Administration; making it easier for generic pharmaceutical manufacturers to enter the market; and applying value-based payment approaches to expensive drug therapies could help, panelists suggested.
Other ideas included preventing a company from paying generic drug makers to withhold cheaper versions from the market; closing other loopholes in the patent system that allow companies to extend monopolies on brand name drugs; banning direct-to-consumer advertising; and putting an end to limited distribution systems – smaller markets tend to attract fewer competitors and increase the likelihood of extreme price hikes.
Co-pay cards also contribute to rising costs, panelists said. Drug companies offer consumers co-payment cards to bring the price of the brand name drug’s co-pay below that of the generic version. The pharmaceutical company picks up the difference in the co-payment between the brand name and generic drug. But the insurer is stuck picking up a larger share of the total cost, which contributes to higher insurance rates.
Scott Knoer, the Cleveland Clinic’s head pharmacist, and Matt Elyes, AHIP’s executive vice president in Washington, D.C., both cited the Campaign for Sustainable Rx Pricing’s (CSRxP) recent proposals to rein in soaring prescription drug prices. The AHA and AHIP (formerly known as America’s Health Insurance Plans) are members of the coalition, which on April 25 called for greater transparency, competition and value in the pharmaceutical industry.
Among other solutions, CSRxP proposed requiring drug makers to release a drug’s unit price, cost of treatment and projection on federal spending before Food and Drug Administration (FDA) approval; speeding FDA approval of generic drug applications – especially for lifesaving drugs; reducing drug monopolies by incentivizing competition for additional market entrants; increasing funding for research on drug pricing and value; and requiring drug makers to compare cost and outcomes of new versus existing drugs.
Pharmaceutical companies defend their pricing as helping to finance development of innovative medicines, an expensive and risky enterprise they say wouldn’t attract investment without the potential for large returns when a new drug succeeds.
“There are a lot of reasons to be skeptical about this narrative,” said Aaron Kesselheim, M.D., an associate professor of medicine at Harvard Medical School and Brigham and Women’s Hospital in Boston. He said the bulk of the “most transformative drugs are developed by publicly funded science and academic research centers and in other universities across the nation. Pharmaceutical companies get involved quite late” in the clinical-testing process.
He also said the pharmaceutical industry contributes less than 3% of its revenues to research and development, while spending up to 25% on marketing and administrative costs.
AHIP’s Elyes questioned whether the nation could continue to afford the cost of innovation. He noted a recent analysis by Washington, D.C.-based Avalere of 10 breakthrough drugs. The study said the drugs would cost taxpayers $50 billion over 10 years.
“That’s just the tip of the pharmaceutical iceberg," said Elyes, observing that there are about 5,400 drugs in the pipeline. “It’s amazing that we have all this innovation and no one wants to stop it, but look at the potential impact on affordability.”
Cleveland Clinic’s Knoer encouraged hospital leaders to get involved with the AHA’s and CSRxP’s efforts to stem rising drug prices. “Hospitals have a tremendous voice,” he said. “It is absolutely essential that we make this a top priority for our organizations.”