There are many threads to pull when it comes to determining why prescription drugs cost as much as they do – and how they can be made more affordable for the governments and billions of people who depend on them, at least in part, for their health and wellness.
I looked to hit the high points with the main story in this week's Refresh coverage, but found several other stories and sources worth noting for readers who want more context and the opportunity to dig deeper.
Below are a few other questions I asked David Mitchell, founder and president of Patients for Affordable Drugs, and Ben Wakana, executive director of the new nonprofit, and links to some of the stories that give a greater sense about where high drug costs figure in to a U.S. health care system many believe needs an overhaul.
I'll start with a statistic I have used in previous stories, with information from a three-year-old Commonwealth Fund study on 11 of the world's top industrialized nations:
The U.S. spends far more per capita ($8,508) on health care than the country with the second-most expensive system, Norway, at $5,669. It also ranked last in effectiveness, according to the study led by Karen Davis, a professor in the Bloomberg School of Public Health at Johns Hopkins University.
FEDERAL RESEARCH FUNDING ON INNOVATIVE DRUGS
Mitchell said a story worth following in coming months involves Novartis CAR-T cell immunotherapy.
This looks to be a large advancement in the treatment of childhood leukemia and holds promise for treatment of other blood cancers including the multiple myeloma Mitchell has battled for seven years.
"I'm very excited about CAR-T," Mitchell said. "This also will be a very interesting real-time story unfolding about how does Novartis price its drug and does Novartis take into account the fact that we as taxpayers paid half of the money to do the basic science of this drug at the National Institutes of Health. ... We're going to be following this closely."
Read a related New York Times story here.
COST TO BRING A NEW DRUG TO MARKET
Drug companies often point to a Tufts University study to say that it costs $2.6 billion to bring a new drug to market and that investors demand high returns when it comes to the risks involved in so many drug trials.
One need only look at Western New Congressman Chris Collins and recent losses he has appeared to suffer with a potential multiple sclerosis drug, MIS416. The last phase of drug trials showed the drug was ineffective. Read two related stories by Buffalo News Washington Bureau Chief Jerry Zremski here and here.
Mitchell said drug corporations helped pay for the Tufts report. "It is like the tobacco companies paying for research that says smoking doesn’t cause cancer," he said. "The Tufts researchers won’t even disclose their source data."
"Here are the facts from an independent analysis offered by a physician/PhD team at Baylor and Rice universities: The cost of research and development is only 10 percent of the $1-2.6 billion figure that is claimed in industry-supported studies. More than 50 percent of important discoveries are made in independent academic centers, funded by taxpayers, and 85 percent of basic research is conducted in academic centers. The drug industry spends 1.3 percent of its budget on basic research, but 20-40 percent on advertisements and related activities.”
WHAT ABOUT DISCOUNTS?
"Robust negotiations between biopharmaceutical companies and insurers often result in significant rebates and discounts," the pharmaceutical-related trade group PhRMA says on its website, phrma.org.
"According to a recent study from the Berkeley Research Group, more than a third of the list price for brand medicines is rebated back to payers and the supply chain."
It would be better to fix the prescription drug system, Mitchell said.
"They're scams," Mitchell said of rebates. "The discounts are what one patient who has multiple sclerosis called 'a Band-Aid, and a dirty, infected Band-Aid at that.' Why? Because the drug companies set the price sky high, then they say, 'We're going to make available copay support for the poorest people.' That leaves a lot of people in the middle out automatically. This also allows them to keep the price of the drug higher by reducing the number of people who have to pay high out-of-pocket costs but when they make the donation to so-called charities (who provide the discounts), they get a tax break..."
"If I control 80 percent of the market for that drug, then 80 percent of that (donation) is going to come right back to me. Frequently, for expensive brand drugs, they'll use copay support to continue to steer the patient, the consumer, to the most expensive brand drug instead of a less expensive generic."
The New York Times and ProPublica this month published a story about another cost-cutting measure, money back guarantees, proposed by pharmaceutical company leaders and some of the early results. Read the story here.
SOME BELIEVE WE SUBSIDIZE DRUGS THAT ARE MUCH CHEAPER IN OTHER COUNTRIES
Mitchell chooses to see things differently.
"I think other countries are smarter than us and they're negotiating a better deal with the drug companies … on behalf of their citizens."
McClatchy Newspapers reported three years ago that a 12-week course of the oral drug Sovaldi can approach $100,000. Drug-maker Gilead Sciences explained the cost after it was introduced in late 2013 as a reflection of its 90-plus percent cure rate of life-threatening hepatitis C. Health insurers, including Medicaid, complained it would hike premiums, limit access to poor and underinsured patients, and further squeeze taxpayer-funded public health programs. You can read the story here.
Read here about insights other countries use to negotiate prices. The piece was put together by the Pew Charitable Trust.
“The key cause of high drug prices, restricted access to medicines and stifled innovation, we submit, is a social disease called ‘maximizing shareholder value,’” the study’s authors concluded.
WHAT ABOUT BUYING DRUGS FROM OTHER COUNTRIES?
Tim Wu, a Columbia Law School professor, recently wrote an op-ed column in the New York Times that maintains the U.S. government already has the power to import cheaper drugs from other countries.
Mitchell, during an Association of Health Care Journalists conference earlier this year in Orlando, addressed concerns this way from two other public health leaders about the safety of drugs that make their way from other countries to American patients: “I haven’t heard of a lot of people dying from drugs imported from Canada.”
During an interview with The Buffalo News, he talked about some of the thousands of people who already have shared personal stories about the high cost of their prescription drugs at patientsforaffordabledrugs.org: "Many of the people say, 'I couldn't afford my drugs so now I'm buying them from Canada,'" he said, even though the practice is prohibited. "'I'm buying them from India.' It's very common. People are already doing it. Why? Because folks who are struggling to stay alive will find a way."
The practice may be a short-term way of addressing the problem, Mitchell said, "but that's no substitute for Americans fixing a made-in-the-USA problem. We should fix our system in our country so people can get the drugs they need at prices they can afford."
A CLASS-ACTION LAWSUIT
Mitchell filed one earlier this year against Celgene. He stressed he did so personally, not in his nonprofit role.
He takes issue with drug companies using risk evaluation and mitigation strategies (REMS) to refuse to provide samples of patented drugs to generic manufacturers so they can develop a bioequivalent drug and bring it more cheaply to market.
"The drug I took, Revlamid, for 5½ years, is a very dangerous drug. It's a derivative of Thalidomide, produced in the 1950s...When the generic company asked for samples as the patent was about to expire, Celgene refused to give it to them and said, 'The drug is too expensive and you don't have a REMS, and even if you had a REMS, we're afraid we'd get sued because you wouldn't (manufacture) it right, so we're not going to give you samples.'"
In a practice Mitchell called "evergreening," he claims Celgene has made samples available to a generic company, "but the deal to make those samples available and bring that drug to market includes a provision that the generic will not come to market until 2022. That's five more years of monopoly pricing power with this pay-for-delay structure."
Two others have joined the lawsuit, Mitchell said: a city that bought drugs for its health plans and a union pension and welfare fund that runs health care program. A federal court judge in New Jersey is in the early phase of considering the case.
HEALTH CARE GROUPS AND DRUG COSTS
The Cleveland Clinic reported that in 2014, patient advocacy groups reported receiving $264 million from industry. A median of 45 percent of those funds came from the pharmaceutical, medical device or biotech industries. Read information about the report here.
To be sure, patient advocacy organizations use their money to devise overall strategies for research, education and access to care.
“From an overall perspective of the patient organizations, we’re concerned about the total cost,” said Marc Boutin, chief executive officer of the National Health Council, which represents more than 100 national patient advocacy organizations focused on people with chronic illnesses and disabilities. “If you don’t have access to a physician or an intervention or service, it doesn’t matter whether the medicine is affordable or not.”
Historically, Boutin said, high drug costs have not been a top-tier priority, "but over the last several years that has shifted.” Drug costs make up about 12 percent to 15 percent of total health expenses, he said, and have become “incredibly challenging for multiple complex reasons,” particularly among patients with the greatest needs.
You can read about what the National Health Council proposes to address the high cost of healthcare here.
ODDS AND ENDS
Several leading researchers think they have a solution to the global crisis of high drug prices, according to a very thorough Washington Post story you can read here.
Sky-high drug prices and federal healthcare spending priorities didn't start with the new administration. Read a 2015 story here from Morning Consult.
A popular cancer pill goes generic yet costs stay high, according to a Bloomberg News story you can read here.
The Washington Post reports here that Louisiana considers this "radical step" to lower drug prices.
"I think the news we're seeing in Washington this week tells us it's time to focus on drug pricing," Mitchell said. "Polling from Kaiser consistently says that drug prices are the number one health care issue that people across the country want Washington to focus on. I'm not saying anything about the merits of the Better Care Reconciliation Bill or Repeal and Delay. The thing that people want politicians to do is help lower their drug prices. I think there's a very real opening for drug prices to be the top agenda on the health care docket in Washington the rest of this year."
Twitter: @BNrefresh, @ScottBScanlon