Congress Ignores The Real Prescription Drug Problem

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  • 12/10/2015
Various congressional committees have 'investigated' what are deemed 'rising' drug prices.  These exericses have basically concluded that drug companies charge too much.   But sometimes you stub your toe on the truth en route to drawing a pre-ordained conclusion.  In two cases in particular, the WSJ 'investigation' of Pfizer's pricing and the Senate Finance Committee review of Gilead's Sovaldi pricing noted that the sticker price of a medicine is deeply discounted to about 86 percent of the marketplace, in the form of drug rebates and deals with PBMS, health plans, Medicaid, public hospitals, the Veterans Administration and the Defense Department.    

Nothing was said about how, after pocketing those discounts (a Credit Suisse report estimates that $90 billion is handed over to these entities each year) many of the drugs, let alone the discounts, are available to consumers.    And nothing was said about how drug companies are in fact negotiating and involving health plans with data about the long term value of products years before a drug is approved.  Or that, PBMs and AHIP launched a cynical campaign to blame drug companies for the high costs that they were in imposing on consumers that was paired by an concerted effort to hike the cost of more and more medicines to patients even as they were pocketing rebates

Scott Gottllieb wrote an excellent article in Forbes descrbing how this affects patients with MS: 

"I examined the plans marketed in the state’s most populace county, selecting the median-priced Silver plan offered by each carrier in that market. I examined how the plans covered the 12 leading oral and injectable drugs for treating multiple sclerosis. What I found was discouraging.

All of the plans were closed formularies. None of the plans provided even partial coverage for all of these drugs. That means that for each plan, certain patients would be forced to foot the entire bill for their medicine. What patients spent wouldn’t count against their deductible or out of pocket limits. One of the insurance plans covered 11 of the drugs; three of the plans covered 10 of the 12 drugs; and four of the plans covered only nine of the drugs. Aetna AET +0.96%, on the whole, was the best insurer.

Of the remaining 12 health plans; three covered just eight drugs; three covered only seven drugs; and another three covered just six of the drugs used to treat Multiple Sclerosis. Of the remaining two health plans, one of the plans only provided coverage for four drugs; and the final plan provided coverage for just three of them.

In almost all cases, when the plans did cover these drugs, they put these medicines on their fourth or fifth drug tiers, meaning that consumers were saddled with high co-insurance and would, in most cases, end up maxing out their deductibles and hitting their out of pocket limits (which averaged more than $13,000 across the different plans. This spending would come on top of what people paid in premiums)."

The Affordable Care Act has had the unintended conseuence of forcing payors and PBMs to  screw sick patients to stay afloat financially. Similarly, drug companies have cut deals with PBMs to exclude any number of medicines in exchange for deep rebates.  In some cases, such as psoriasis and psoriatic arthritis, patients are being denied access to safer new medicines and being forced to try other drugs that have more side effects.

This is insane.   Long term, every company in the business of helping patients get better needs to devote more time and effort to providing the most effective treatment for each patient.   And we need to continue to reduce the time and cost required to develop new medicines.  

We need precision medicine. And fast. 


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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