Skyrocketing Prescription Drug Prices Lead to Policymaker Scrutiny
by: Ron Lanton, True North Political Solutions
We are living in a time of breakthrough drug therapies, the prices of which represent a significant increase in the cost of transformative medications. According to Express Scripts, which is the country’s largest pharmacy benefit manager, the “U.S. prescription drug spend increased 13.1% in 2014—the largest annual increase since 2003—and this was largely driven by an unprecedented 30.9% increase in spending on specialty medications.” With the current philosophical tug of war occurring between manufacturers and payers over costs, the extreme drug price increases in the specialty sector have raised eyebrows.
Turing Pharmaceuticals became the latest example of excessive price increases when, earlier this fall, the company’s CEO, Martin Shkreli, made a controversial decision to increase the price of the drug Daraprim from $13.50 to $750 overnight—after Turing acquired the rights to the drug. This represents an increase of more than 5000%. The drug treats toxoplasmosis, which is a parasitic disease that affects pregnant women as well as individuals with AIDS and cancer.
Express Scripts responded by announcing its partnership with Imprimis Pharmaceuticals to provide a compounded oral combination of pyrimethamine and leucovorin as their formulary alternative for just $1 instead of $750. Turing has been hard pressed to explain how a drug that has existed in the marketplace for over 60 years should suddenly be worth such an excessive amount absent similar demand.
Another example of extreme price increases comes from Valeant Pharmaceuticals, whose actions helped trigger a recent Congressional hearing. In a Nov. 2015 letter to Valeant CEO J. Michael Pearson, the Senate Special Committee on Aging asked for more information about his company’s acquisition of the rights to sell Isuprel and Nitropress, which treat cardiac arrests, and Cuprimine, used to treat Wilson’s Disease. In particular, the Committee asked for more details regarding: “The increase in the price of Nitropress by 312% the same day that Valeant purchased the rights to Nitropress, from $257.80 to $805.61 per vial; the increase in the price of Isuprel by 820% from $4489 for 25 0.2 ml ampules to $36,811; and the increase in the price of Cuprimine by 2949% from $888 for one hundred 250mg capsules to $26, 189.”
Policymakers have come out forcefully against these extreme price increases.
- Last month the Department of Health and Human Services announced a public forum on pharmaceutical innovation, access, affordability and better health. According to HHS, because specialty medication spending has been rising sharply, the forum, which brought together consumers, providers, employers, manufacturers, health insurance issuers, representatives from state and federal government, and other stakeholders, was needed to “… increase access to information, drive innovation, strengthen incentives and promote competition.” The announcement also indicated that HHS was seeking input on how to foster a healthcare system that “leads in innovation and delivers the most affordable, highest quality medicines and results in healthier people.”
- Recently, the U.S. Senate Committee on Finance released the results of an 18-month investigation into Gilead Sciences, providers of the much-discussed hepatitis C medications Harvoni and Sovaldi. The investigation revealed that the company’s pricing and marketing strategy was designed to “maximize revenue regardless of the human consequences” and didn’t appear to be directly related to the company’s research, development or drug acquisition costs.
- As mentioned, the Senate Special Committee on Aging, led by Senators Collins (R-ME) and McCaskill (D-MO), just hosted the first in a series of hearings to investigate the recent ascent of generic drug price increases. The Committee has asked for information from Valeant, Turing, Retrophin and Rodelis Therapeutics.
- Some presidential candidates have presented plans that support giving power to Medicare to negotiate drug prices, which could eventually keep prices lower.The issue of progressive science versus improved patient outcomes is a delicate one. We all know that there is a cost of producing a solution that, over the long term, results in lower healthcare costs. While drug manufacturing is a business, the question becomes, “When does a product’s cost become excessive?” I have no doubt that the above examples of policymaker scrutiny do not represent the last time that medication prices are litigated via public discourse.For more information from Ron Lanton, please click here. See how CPR+ can streamline your pharmacy operations with a complete patient management system.
 The 2014 Express Scripts Drug Trend Report http://lab.express-scripts.com/drug-trend-report/
 United States Senate Special Committee on Aging November 4, 2015 Letter to Valeant Pharmaceuticals http://www.aging.senate.gov/imo/media/doc/ValeantDocumentRequest.pdf
 Department of Health and Human Services November 3, 2015 Press Release titled HHS Announces Forum on Pharmaceutical Innovation, Access, Affordability and Better Health http://www.hhs.gov/about/news/2015/11/03/hhs-announces-forum-pharmaceutical-innovation-access-affordability.html
 U.S. Senate Finance Committee December 1, 2015 Wyden-Grassley Sovaldi Investigation Finds Revenue-Driven Pricing Strategy Behind $84,000 Hepatitis Drug http://www.finance.senate.gov/newsroom/ranking/release/?id=3f693c73-0fc2-4a4c-ba92-562723ba5255