Six Things to Know about Your Medicare Advantage plan’s Drug Coverage & Costs

 

  1. Significant taxpayer subsidies are given to private health insurers through Medicare to provide prescription drug plans (Medicare Part D) to eligible seniors and disabled individuals.
  2. There is no annual limit on your out-of-pocket prescription drug expenses in Medicare Advantage plans.
  3. Private insurers control their drug expenses by restricting their subscribers’ access to medications through the design of their formularies including what medications are excluded, requiring prior insurer authorization, limiting quantities, requiring subscribers to take lower cost drugs before higher cost drugs and establishing different drug price tiers, annual deductibles, co-pays and coinsurance.
  4. There are significant differences among Medicare Advantage plans including the drugs they include and the premiums, deductibles, co-pays and coinsurance that subscribers are required to pay.
  5. Although Medicare Advantage plans are not allowed to deny coverage or charge higher premiums to people with pre-existing conditions and chronic diseases, prescription drug policies that insurers establish provides a clear message of who they want as subscribers.
  6. The cost of medications to treat millions of Americans with life-threating diseases such as diabetes, multiple sclerosis, Hepatitis B, inflammatory diseases, respiratory diseases, various cancers, organ transplants are all extremely high and most require ongoing medications for life.

 

Medicare DrugCost

A review of four major Medicare Advantage insurers in Upstate New York including national for-profits: Aetna and United HealthCare and regional non-profits: MVP and Excellus Blue Cross revealed the following observations.

  • All insurers target enrolling healthy seniors and provide incentives of low or no monthly premiums along with gym memberships.
  • All insurers have developed disincentives for subscribers who use “non-preferred” brand name and generic medications by using medication exclusions, deductibles and higher drug co-pays and co-insurance.
  • There are significant differences among insurers in the number of brand name and specialty drugs that they exclude in their formulary.
  • Subscriber co-insurance for Tier 5 specialty drugs can be as high as 33% of the insurers published cost and 100% for drugs that have been excluded from the plan’s formulary. This can result in thousands of dollars of out-of-pocket expenses.

In summary, you may have insurance for your prescription drugs in your Medicare Advantage plan, but you may not have coverage or the ability to pay for your critically needed medications for life-sustaining treatment.

As result,  it is very important that you that you educate yourself and confirm that the Medicare Advantage plans that you considering meet your needs and budget during this Medicare open enrollment period that ends, December 7th.

How Pharma is So Successful in Keeping US Drug Prices Extraordinary High?

USvs.WorldDrugPrices

The simple answer is: Pharma is a trillion dollar industry that uses their enormous power and profits (that are made on the backs of very serious & chronically ill patients) to buy loyal support and kill their opposition with the aid and assistance of lawmakers and regulators.

Who else is affected by the collateral damage from the US having the highest drug costs in the world? The answer is the vast majority of people including the primary payers of insurance such as public and private employers and employees (who are burdened with high drug costs via insurance premiums, co-pays, and deductibles); federal, state and local governments that pay for drugs via Medicaid, Medicare, VA, and federal, state and local: hospitals, nursing homes, schools, jails and prisons.

Who pays the most for the high cost of drugs? ….Everyone who pays local, state and federal taxes.

While pharma companies receive the biggest financial reward for their lucrative business model, there are other groups that also receive significant benefits from the high cost of drugs. These include insurance companies, their executives, and employees, Pharmacy Benefit Management (PBM) companies, who make money from deals arranged for insurance companies with pharmaceutical companies and pharmacies, hospitals that receive high profit margins on drugs that they administer, and the advertising and media industry that sells non-stop ads that bombards consumers with TV, radio and print drugs ads every 24 hours. In 2015, pharma spent a record $5.4 billion on direct advertising to consumers, primarily through television.

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Big Pharma tries to justify the high cost of new drugs due to the high cost of research and development. However, their claims are not supported by the facts. Big Pharma spends 170% more on marketing and sales of their drugs than research and development. Secondly, the same drugs that are available throughout the world, cost up to 300% more in the US. Why….because elected federal and state officials have sold out the American people to Big Pharma. Politicians accept millions of dollars in drug money and in exchange, let Big Pharma do whatever they want without any ethical or moral boundaries.

A number of well-documented articles in Kaiser Health News and other sources have described some of the very effective strategies that Big Pharma and their $270 million trade organization (PhRMA) use to buy loyal support from US elected officials, healthcare practitioners, and patient groups.

Common strategies include:

  • Eliminate product and price competition by successfully having federal and state elected and appointed officials ban re-importation of the brand name prescription drugs from Canada, Europe, and other counties at substantially lower costs to US consumers.
  • Restrict drug competition with lengthy drug patent protection, the extension of patents, allowing pharma to legally “pay to play” to influence FDA new drug guidelines/regulations and for pharma’s  “pay to delay” the release of generics by other companies resulting in substantially higher costs to consumers.

MostAdvertised-Drugs2015

  • Marketing their newest and most expensive brand name products, Big Pharma spent $5.4 billion in 2016 to market their drugs directly to consumers using TV, radio and print media. They focus on describing symptoms to create increased patient demand and encouraging individuals to talk to their doctor about prescribing their specific brand name prescriptions. By comparison, this sales practice is prohibited in the vast majority of other developed countries in the world and is opposed by the American Medical Association.
  • Pharma also tries to lure patients to use their expensive new drugs with coupons and low-cost trial offerings of their drugs.
  • Pharma has established a proliferation of complicated Patient Assistance Programs that are aimed at increasing demand for their individual drugs while deflecting criticism of their high cost. However, as patients explore these programs, they realize that the drug companies control access to these drugs with personal, financial and insurance eligibility hurdles. For example, they exclude almost half the population that receives Medicare or Medicaid.

DrugMoney

  • In 2016, Pharma spent over $57 million in contributions to the state, congressional and presidential candidates and office-holders. When members of Congress, especially in leadership positions, receive millions of dollars in drug money, do you really think they are going to bite the hand that feeds them?
  • Pharma also spent more than $2 million in donations to various non-profit organizations that provide education, support, and direct services to individuals/families (current & potential customers) that are afflicted with serious and chronic diseases that align with their pharma products. Some of the major groups that have received over $100,000 in 2016 include the American Autoimmune & Related Disease Association, the Lupus Foundation, the Juvenile Diabetes Research Foundation and the American Lung Association.
  • Individual pharma companies and the PhPMA trade organization also employ doctors and nurses to build relationships and “educate” other practitioners on the specific pharma products that they represent. Relationship building with prescribing practitioners is also pursued by funding “medical education” lunches/dinners, sponsoring conferences and providing honorariums to individuals for providing “medical education” and sharing their client user data.
  • Pharma has launched a new $7 million pharma campaign (Go Boldly) that is designed to shape a positive public opinion of the pharma industry.
  • PhRMA and individual pharma companies have spent over  $175 million to defeat a California proposal that would have required California agencies to pay no more for drugs than does the federal Department of Veterans Affairs.
  • In Louisiana, where policymakers were considering proposals to make drug prices clearer to consumers, PhRMA gave more than $600,000 in campaign contributions directly to scores of state and local legislators last year and were successful in defeating the legislation.
  • PhRMA also gave hundreds of thousands of dollars to help defeat a ballot proposal for single-payer health care in Colorado.
  • PhRMA also aimed significant spending in other states including Arizona, Connecticut, Ohio, Michigan, Maryland, Massachusettes, New York, New Jersy, New Mexico, Oregon and Washington where legislators are considering pharma-related regulations that propose drug price limits and greater price transparency.
  • Pharma has established a very effective job training and recruitment program in which they financially invest in politicians and their staff;  evaluate their performance and loyalty in carrying out pharma priorities, and after they have proven themselves (at taxpayers expense), they hire a select group, at lucrative salaries to work as lobbyists for the pharma industry. These former elected officials and staff members come with a network of government insider relationships and intelligence which pharma exploits to their advantage.
  • Pharma and other industries have also been very effective in placing their loyal people in strategic federal governmental departments at executive levels often serving as senior policy advisors, where they develop budgets, write legislation and develop policies and procedures that favor pharma while dismantling other laws, regulations and procedures that pharma doesn’t like. Recently, pharma employees and lobbyist have been appointed by the Trump administration into  leadership positions in key federal agencies including the Food & Drug Administration, Department of Health & Human Services and the Drug Enforcement Administration
  • Big Pharma has effectively restricted competition with the assistance of elected and appointed officials and dismisses federal and state penalties and lawsuits for violations of laws and regulations including fraud and marketing unauthorized uses of medication as insignificant compared to the revenue that their actions generate. Ultimately, these financial penalties are viewed as the “cost of doing business” that is passed on to patients, taxpayers and employers and has little impact on their profits, sales, reputation and investor interest.
  • Pharma has also been routinely criticized for their brazen price-gouging of generic and life-threating treatment and maintenance drugs, needed by both acutely and chronically ill patients without any change in their behavior. Pharma continues to be very lucrative with minimal regulation, competition, oversight and the absence of ethical standards.

Trump’s Commitment to Drain the Swamp and Lower Drug Prices

Although Republican presidential candidate Donald Trump has boasted that he could save $300 billion in lowering drug costs, two years later, Trump has not taken any executive or legislative action to lower the costs of prescription drugs that continues to personally bankrupt many Americans and substantially adds to the accumulated debt of states and the federal government.

However, in his State of the Union speech on January 30, 2018, Trump once again stated that he will dramatically lower the high cost of prescription drugs for the American people under the leadership of newly appointed Alex Azar, Secretary of the US Department of Health and Human Services.

trump&azar

Azar replaced Tom Price MD, former Georgia Congressman and previous Trump HHS Secretary, who resigned in disgrace after only 7 months of repeated issues of unethical behavior.

It should be noted that Mr. Azar is very familiar with Big Pharma and the high cost of prescription drugs. Mr. Azar has served on the board of Biotechnology Innovation Organization, a pharma lobby and was the hired by Eli Lilly as its top lobbyist in 2007. Azar continued to advance within Lilly and in 2012, became President of Lilly USA.

LillyInsulinPrices

During Azar’s tenure at Lilly, their drug prices rose substantially, especially for insulin which is necessary to sustain life. Insulin was discovered, as a life-sustaining treatment of Type 1 diabetes, by two Canadian research physicians who were awarded a Noble Peace Prize over 90 years ago. Ninety years later, the US consumer cost and drug company profits derived from insulin in the continues to rise dramatically, while millions of people with diabetes, in the world, needlessly suffer and die as a result of not having access to affordable insulin.

In 2009, Lilly pleaded guilty and paid a record settlement of $1.4 billion for criminal and civil charges for marketing the unapproved uses of Zyprexa, a powerful antipsychotic Lilly drug. Zyprexa was heavily marketed by Lilly during the period of 1999-2003 to seniors and their families, nursing homes and healthcare professionals for the treatment of Alzheimer’s and other symptoms. However, Lilly never requested nor received the required FDA approvals for these expanded uses.

 

So, time will tell how committed and effective Trump and Azar in actually lowering the cost of prescription drugs to tens of millions of Americans. We are in the second year of Trump’s term and waiting to see if his actions will match his words.

References:

  • Drug Watch
  • Kaiser Health News
  • Kantar Media Intelligence
  • Open Secrets
  • Public Citizen’s Health Research Group
  • Stat News
  • The Washington Post
  • The New York Times
  • US Department of Justice
  • World Health Organization

 

 

 

updated 2.3.18

 

Forty-Five States Sue 18 Generic Drug Makers for Price-Fixing Collusion

 

Reuters News has reported that forty-five states and the District of Columbia have joined forces in accusing well-established generic drug makers and their executives of personally engaging in a broad price-fixing conspiracy involving more than a dozen medicines that are used to treat debilitating chronic diseases.

The suit alleges that companies and specific executives have colluded to limit competition and dramatically raise prices of maintenance drugs that are used by millions of people to treat infections, and debilitating diseases such as diabetes, glaucoma, epilepsy, high blood pressure and anxiety.

While the initial response to the allegations was a denial of wrongdoing, former executives from Heritage Pharmaceuticals pleaded guilty in January to conspiring to price fixing and limiting competition. In addition, the former Heritage Pharmaceutical President and the Board Chair & CEO reached a plea deal, agreed to pay fines and cooperate with the broader investigation of generic drug maker pricing practices.

The suit against the generic pharma companies has broadened to include well-known established companies and their executives including  Mylan, Sandoz, Teva , Emcure and Sun. In addition to the suit by the State Attorney Generals, the US Justice Department has begun a parallel criminal investigation into these allegations.

GenericDrugPriceIncreases

While most of the generic drug price hikes were between 100% and 500% over the 7 year period, approximately 1000 generic drugs had increases of a minimum of 500% to more than 1,000%

Unregulated and rapidly rising US pharmaceutical prices have had a negative impact not only on individuals and their private employers and but also on taxpayer-funded village, town, county and state governments including their health insurance costs for teachers, police and other public employees.

And finally, the rapidly rising cost of medications is passed on to taxpayers in the form of increased local and state taxes.

Elected US politicians, who talk about wanting smaller government and lower taxes need to be held accountable for giving Big Pharma an unconditional pass while they accept huge campaign contributions and allow the pharma industry to write the laws and regulations that serve their financial interest over US citizens, who need access to affordable, life-sustaining medications like the rest of the developed world.

 

 

 

 

 

Buyer Beware in Selecting a Medicare Prescription Drug Plan (PDP)

med prices

Individuals who use original Medicare A & B for their medical care, with or without a Medigap Plan (not a private Medicare Advantage plan), need to check the formulary and costs of various private insurer PDPs that are available in your area very carefully. And, don’t assume that an insurer that provides a good value for one type of plan (eg. MA or Medigap) provides the same quality, value and coverage in their PDPs. Unlike MA plans that include the same medication formulary, PDPs often have different medications, deductibles and co-pays among their various plans, so check carefully.

An example is United HealthCare, who is a leader in sales and value for their Medigap plans in NYS, ranks much lower in sales & value for their MA and PDPs. There are also dramatic differences in the drug formularies and subscriber cost among the 3 different UnitedHealthCare PDPs that are offered.

The UHC Rx Preferred plan includes over 3,500 drugs on their formulary and has their most expensive premium ($91/mo. but does not include a deductible). By comparison, the RX Savers Plus plan excludes over 400 drugs that are included in the Preferred plan for $55/mo. and includes a $405 deductible. And their lowest cost premium plan is the UHC RX Walgreens plan for $26.50/mo. with a $405 deductible, but it doesn’t cover 500 medications that are included in the high premium cost UHC Preferred plan.

Other popular insurers such as SilverScripts, Humana and Cigna that offer multiple PDPs in NYS also share similar issues which makes it difficult for an individual to clearly understand and choose a plan that includes their medications at a price they can afford.

Medicare.gov provides a valuable, free Plan Finder service that allows you to anonymously enter your medications and your preferred pharmacies and then compare the total cost of different plans (including MAs and PDPs) from different companies that you are considering.

Once you enter your medications You will also see differences in:

  • Your medications that are not included on the plan formulary.
  • Your medications that have restrictions.
  • Your brand named medications that have generic alternatives.
  • Your cost or a one month or a 3 month supply of medications from different pharmacies.
  • And, finally the total comparative cost differences of each plan including their premiums, deductibles and co-pays that you are considering.

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Another nice added feature is that your Plan Finder medication data can be printed and is stored anonymously online. It can be retrieved (with your assigned Drug List ID number and Password date for your future review and updating.

Investing some time in objectively comparing coverage and costs differences of your Medicare plan options can save you money and problems in the future.

If you or your family members needs assistance, you can contact the free State Health Insurance Assistance Program at http://www.shiptacenter.org or 800-Medicare.

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Insulin Makers Accused of Fraud and Price Fixing in Class Action Lawsuit

Sanofi, Novo Nordisk and Eli Lilly, who manufacture and sell insulin under the brand names of Lantus, Levemir, Novolog and Humalog, were accused of a price fixing scheme that resulted in excessive price increases to diabetic patients who desperately need insulin to live.

Hagens Berman filed this nationwide class action lawsuit on January 30, 2017 in the US District Court in Massachusetts. The lawsuit alleges that Sanofi, Novo Nordisk and Eli Lilly committed fraud and illegally raised the price of insulin by over 160% in the last five years for millions of diabetic Americans.

Hagens Berman further alleges that the pharmaceutical companies created fictitious list prices that were enormously higher than the actual prices that they negotiated with drug distributers that are known as “pharmacy benefit managers”.

This lawsuit seeks reimbursement from these drug manufacturers to diabetic consumers who were victims of this scheme. To learn more and/or participate in this class action lawsuit go to https://www.hbsslaw.com or call 888-381-2889

The High Cost of Diabetes is Killing Americans and our Economy

Background

According to the Centers for Disease Control and Prevention – CDC , diabetes is a serious disease that affects 30 million Americans with another 86 million individuals who have elevated glucose levels that are considered pre-diabetic.

Diabetes can progress to become the underlying cause of other costly, disabling and deadly conditions such as cardiovascular diseases, damage to the brain, eyes, kidneys, nerves and result in lower limb amputations.

adv-cost-of-diabetes

Diabetes accounts for 4.6 million deaths worldwide and is the 7th leading cause of deaths in the US.

While the cost of treating diabetes and death rates varies considerably among counties, the US leads all other countries with $322 billion annually in direct and indirect costs.

By comparison, the United Kingdom, Japan and Norway have consistently had the lowest death rates due to diabetes over the past five decades and spend only a fraction of what the US does.

Why does the US Spends so Much and Get Such Poor Results?

The answer is simply because pharmaceutical companies, insurance companies and health care providers make billions of dollars with this costly, inefficient and ineffective method of selling, paying and delivering health care in the US.

According to the Center for Responsive Politics – open secrets , the pharmaceutical and health products industry employs more than 3 lobbyists for every member of Congress; spends about $1.2 million lobbying every day Congress is in session. It has also created a career path for loyal Congressional and federal employees to become well-paid private-sector pharma lobbyists.

Hundreds of million dollars are spent each year on lobbying and contributing to House and Senate members to maintain this monopoly and the industry’s control in setting their own drug prices, unlike the rest of the world.

Pharma Net Profits 2005-2012

Pharma’s huge profits occur at the great expense of taxpayers, employers and individuals with diabetes who experience the physical, emotional and financial pain and suffering.

Negative Impact of High Health Care Costs on the Economy

Health care spending in the US far exceeds that of other countries. It consumes 50% more of the economy than other countries. And, high health care expenses have a negative effect on patients, employees, employers, city, county, state and federal governments and the taxpayers that pay higher taxes for this efficient and ineffective system.

High health care expenses increase the cost of everything that is made in America and makes them less competitive to imports that don’t include high health care costs. High medical and drug expenses have resulted in decades of double-digit insurance premium increases, wage stagnation, high personal debt, medical bankruptcies, growing government deficits, higher taxes, the collapse of the middle class and a weaker US economy.

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Price Waterhouse Cooper – PwC   in its Pharma 2020 Vision report concludes: “the current pharmaceutical industry business model is both economically unsustainable and must fundamentally change the way it operates.”

Who Pays for Diabetes

The cost of diabetes treatment in the US continues to rise uncontrollably without any corresponding improvement in outcomes. And taxpayers, employers and patients pay the bills.

HCCIinfographicDiabetesCostFINAL_0

A study by the Health Care Cost Institute – HCCI, showed that employer health insurance spending on employees (under 65) with diabetes was $15,000 a year or 300% more than for people without diabetes.

And, Medicare spending is astronomical with over $5.5 billion dollars being spent on just two diabetes drugs- Januvia and Lantus insulin in 2014.

It Doesn’t Have to be this Way

The most troubling fact is it doesn’t have to be this way. Diabetes is not a rare, deadly infectious disease or an aggressive, deadly form of cancer that can’t be treated. And, no other country in the world allows drug companies to charge these exorbinate prices or regulate and require them to disclose more clinical testing and drug cost information.

Diabetes is a relatively easy to diagnose, monitor and treat disease in the majority of cases with appropriate education and interventions. But like other chronic diseases, diabetes has biological, behavioral, educational, care delivery, political and financial dimensions that need to be addressed in order to improve access to affordable and effective treatment.

Opportunities for Taxpayers to Save Billions and Improve Outcomes of Diabetes Treatment

Politicians frequently campaign on the need to cut wasteful government spending. However, after elected, they protect their sacred cash cows that finance them. They place their political and financial self-interest over the needs of millions of Americans with serious and disabling conditions to have access to affordable and effective health care including prescription drugs.

Numerous studies and reports have indicate that the US wastes hundreds of billions of taxpayer, employer and patient dollars that can be saved by:

  • Congress insuring that all citizens have access to affordable health services like the rest of the develop world.

The excessive financial burden placed on patients with serious and chronic medical conditions that require costly medications and treatment needs to be significantly reduced in employer-sponsored and ACA Exchange High Deductible plans as well as Medicare plans.

  • Medicare, Medicaid, ACA Health Exchange and employer-sponsored plans need to change from paying drug companies and medical providers based on the volume of medications, tests, procedures and visits provided to paying for the value and results of the drugs and treatment provided. To what extent does the treatment cure or manage the progression of the disease and minimize the patients’ pain, suffering and disability?

There is no positive relationship between medical care expenses and success in preventing or managing the debilitating progression of diabetes in the US. 

  • Congress needs to promote competition and free-trade by reducing drug and devise patents terms and extenders consistent with other countries;
  • Congress needs to approve a strict Code of Ethics and Conflict of Interest policies with civil and criminal penalties that prohibits members of Congress and individuals and corporations with a financial interest before the federal government from soliciting or accepting direct or indirect payments, gifts or favors that place private interests over the public good for members of Congress and other federal employees. Investigations and the prosecution of violators should be independent and the responsibility of the US Justice Department and not Congress.
  • The FDA should be adequately funded and authorized to impose sanctions against pharmaceutical companies including the revoking of patents when ethical standards, regulations and laws have been violated;
  • Congress needs to repeal the section of 2003 law that prohibits Medicare (the largest drug purchaser) from establishing reimbursement rates with pharmaceutical companies like the VA and every other country does;
  • Congress needs to eliminating the ban on the importation of lower cost prescription drugs and biologics from Canada and other counties;
  • The Federal government needs to become an equity investor and require a financial return including royalties, from all intellectual property and patents developed and sold that have received government-funded basic & applied research, grants and loans. 
  • Congress needs to ban direct marketing of prescription drugs to consumers and require that pharmaceutical companies fully disclosure the outcome of all clinical trials, drug research and the actual cost of research and development, manufacturing and administration including sales and marketing.

 Summary

The current $322 billion being spent on diabetes with such poor outcomes is not sustainable. For meaningful change to occur, there needs to be major changes in the pricing, financing and delivery of care.

With the entrenched pharmaceutical industry’s interest to maintaining their influence and control over Congress, change will only come about by confronting members of Congress  to determine whether they are for or against actions to lower the price of drugs and medical services, increase transparency and adhere to standards of ethical conduct.

Taxpayers, patients, employers and the US economy are being badly hurt by Congress’s lack of leadership and deference given to the trillion dollar health care and pharmaceutical industries over the interest and needs of American patients, employers and taxpayers.

2016 provides an important opportunity for citizens to learn the positions and records of national candidates for President, the House and Senate and elect candidates who will represent the peoples’ interest over their own political and financial self-interest.

You and your family’s life may depend on it.

How Congress Legalized the High Cost of Drugs in 2003

Rapid Growth of Drug Costs in US Compared to Other Countries

The rapid growth in drug prices and profits in the US over the past 12 years since the Medicare drug benefit law was passed in 2003, reflects what pharmaceutical companies believe they can receive from payers thanks to Congress and President Bush. And, the payers of prescription drugs are largely the federal and state governments, insurance companies and ultimately US taxpayers, employers and patients.

While the costs of drugs has been skyrocketing, Congressional leadership has done virtually nothing over the past dozen years to investigate price gouging or even allow Congressional discussions and votes on bills to modify and improve the Medicare drug law.

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The costs of pharmaceuticals in the US is $1,000 per person compared to $500 per person for 30 other benchmark counties.

As a result of the rapidly rising prices set by drug makers, federal, state and local taxes and deficits continue to grow, insurance rates continue to escalate and unpaid medical bills are the largest reason personal bankruptcies.

In addition, a large percentage of people whose resources  become depleted and don’t file for bankruptcy, they become eligible for Medicaid and their medical expenses are then shifted directly to federal, state and local taxpayers.

            Bankruptcy-Causes

As a result, Americans have substantially less access to affordable medications unlike most other countries around the world.

At the same time, Congress and many health care providers and researchers continue to accept millions of dollars each year from Big Pharma in support of their financial needs and interests.

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How Other Countries Control the Costs of Drugs

As illustrated below, the 2013 Canadian Patented Medicine Prices Review Board’s (CPMPRB) Annual Report, indicates that the average price of drugs in the US is 100% more than in Canada and other benchmark European countries.

Canadian to Foreign Drug Price Ratios

The huge price differential is attributed to the role and commitment that other governments have in assuring that their citizens have access to affordable and effective health care including new therapeutic drugs.

In Canada and Europe, the national governments review and approve the drug makers proposed prices based on a number of factors including: their cost; the evidence of added clinical benefits and outcomes; the comparative price in other countries; and the evidence of added value that these new therapeutics provide to patients over existing drugs.

None of this occurs in the United States.

 Drug makers set their prices unilaterally and may offer discounts to large buyers with the exception of Medicare, which has 55 million beneficiaries. This is due to the legislation approved by Congress and President Bush in 2003.

Growing Backlash from Stakeholders and Advocates

Big Pharma’s years of monopoly, greed, unethical sales and marketing has finally reached a tipping point. It has resulted in a revolt by various stakeholders including internationally known doctors, medical centers, pharmacy benefit management companies, insurance companies, advocates, patients, state governments, the media and federal prosecutors.

Cancer Specialists Take the Lead in a Call to Action

According to the Wall Street Journal, the highly respected, Dr. Leonard Saltz, chief of gastrointestinal oncology at Memorial Sloan Kettering Hospital (MSKCC), used the June    conference of the American Society of Clinical Oncology (ASCO) that was attended by 25,000 to express his harsh and growing criticism of the ever-growing high cost of cancer drugs.

physician group

Dr. Saltz’s illustrated the issues with Bristol-Myers Squibb’s new experimental regime that combines two drugs for the treatment of melanoma. While he acknowledged that the benefits of these drugs were truly remarkable, he noted that they would cost about $295,000 a year per patient.

Dr. Saltz observed that if all patients in the US with metastatic cancer took drugs priced at $295,000 a year, it would cost $174 billion, just for one year and that is neither affordable nor sustainable.

He went on to add that the cost of cancer-drugs has more than doubled in recent years and the cost increases are not always related to their increased value or any substantial improvement in treatment outcomes.

Dr. Saltz also recommends that Medicare needs to change the way it pays doctors for infused drugs to eliminate the financial incentives and conflicts of interest, resulting in doctors using the most expensive versus the most cost-effective drugs.

In July, over 100 highly-respected cancer specialists from across the country published and signed a commentary in the journal, Mayo Clinic Proceedings. These oncology and hemotology clinicians voiced their outrage over the years of soaring cancer drug prices.

They called for new government intervention in regulating these costly therapeutics in the absence of any industry self-regulation or restraint.

They reiterated the need for Congress to repeal the provisions of the 2003 Medicare Modernization Act that bans Medicare from  negotiating prices directly with pharma companies (saving $16 billion a year) and to decriminalize the importation of drugs from Canada and other countries at a fraction of the cost charged in the United States.

The group also recommended the establishment of a new regulatory body that would help set drug prices after they received FDA approval and for Congress to reform patent laws that can restrict the timely development of less expensive generic drugs.

They also suggested that the newly created Patient-Centered Outcomes Research Institute and similar groups include the cost of drugs in their assessment of the value of treatment.

The cancer treatment leaders also urged other cancer specialists to critically consider:

  • the cost of different drug options and the financial burden placed on patients; and
  • the evidence of comparative benefits, side-effects, outcomes and limitations of different drugs when recommending treatment options to patients and families.

To assist cancer specialist, doctors at MSKCC have created a DrugAbacus calculator to assist in the education of clinicians and patients. The calculator currently provides information on 54 cancer drugs and calculates the relative value of drugs by adjusting the price to reflect both side-effects and benefits that they bring in extending life.

Finally, the cancer treatment leaders encouraged a public education campaign regarding these issues and a grassroots effort to protest the high cost of drugs and to demand changes that are in the best interests of patients.

Negative Media Exposure

In an October, 2014 60 Minutes interview, Dr. Saltz, MSKCC, provided the example of when the new patented drug, Zaltrap, was approved by the FDA for treating advanced colon cancer. He compared Zaltrap to Avastin, a similar drug that had been on the market and concluded that both deliver the same result – extending the median survival by 42 days. However, Zaltrap cost $11,000 a month, more than double the cost of Avastin. As a result, MSCC took the unprecedented position to reject  using Zaltrap over Avastin at MSCC due to its substantially higher costs and lower value.

Dr. Saltz added that the high cost of drugs has negatively impacted patient care and high insurance co-payments have forced some patients to forego effective therapies because of the financial burden it imposes on them and their families.

Op-Eds and Editorials critical of Big Pharma’s pricing practices and its negative impact on public health and the plight of individuals have appeared in various media including 60 Minutes, The New York Times, The Wall Street Journal, USA Today, The Washington Post, Bloomberg, News, CNN and a variety of professional and public publications.

The High Cost of Other Specialty Drugs

The controversy surrounding high-priced patented drugs and biologics in the US is not limited to cancer treatment. It is also present with drugs for the treatment of other debilitating chronic diseases such as AIDS, diabetes, hepatitis C, multiple sclerosis cystic fibrosis, and various mental illnesses that affect millions of Americans.

Pharma Net Profits 2005-2012Bloomberg Business and the professional journal Neurology have reported that old brand-name medications for MS have become more expensive with each new therapy that has been developed.

Medications for MS that were introduced years ago now cost as much as newer, high-priced therapies. Now, all the MS drugs cost between $50,000 and $65,000 a year including the ones that were sold for less than $10,000 when they were first introduced.

Express Scripts, a large pharmacy benefit management company (PBMC) just reported that for the fourth consecutive year, medications to treat diabetes (which affect 29 million Americans) were the most expensive traditional therapy class.

The annual spending for drugs increased 18% in 2014, primarily from a 16% increase in specialty drugs.

Gilead’s new Hepatitis C drugs: Sovaldi and Harvoni are sold in the US for $1,000+ a pill and up to $100,000+ for a course of treatment. However, Gilead sells the same drug in the United Kingdom, where prices are regulated, for 33% less

In 2014, Gilead cashed-in more than $12 billion in sales revenue just from these two Hepatitis C drugs. And, there are more than 3 million Americans that have Hep. C, an infectious disease that can lead to cirrhosis, cancer and liver failure.

Forbes estimates that Gilead could make $227 billion, if it just treated all the US cases of Hep.C.

Other examples include Vertex’s new drug, Kaydeco for cystic fibrosis costs $300,000 a year and Cegene’s drug for multiple myleoma costs $150,000 a year.

Impact of High US Pharmaceutical Prices on Patients, Taxpayers, Employers and Governments.

According to the Health Research Institute (HRI), only 4% of patients currently use specialty drugs, but those drugs account for 25% of total US drug spending.

The impact of the unregulated, US pharmaceutical industry’s pricing is increasing taxes and adding consumer and government debt as spending for drugs has gone through the roof.

To illustrate, the number of people in the US with prescription drug expenses greater than $100,000 a year has tripled in 2014 according to Express Scripts.

The dramatic increase in budget-busting government spending for prescription drugs is reflected in financial reports of the US Departments of Veterans Affairs and Defense; Cities, Counties, States; prisons and jails; Medicaid, Medicare; and public and private employers.

When spending for drugs becomes so inflated, individuals, employers and governments spend disproportionately more for health care and drugs, and have to cut back on spending for other sectors of the US economy as well as go into debt.

These enormous expenses have also resulted in insurance companies and employers cutting back/eliminating/shifting health insurance expenses to their subscribers, employees and government to pay. Some private insurance companies and the VA have also had complaints filed against them for rationing and denying the use of expensive drugs.

According to Kaiser Health News, over 70% of Americans say “the costs of prescription drugs are unreasonable”. And, about 25% report that they or their family members ‘have not filled prescriptions in the past year and/or have skipped or cut pills in half because of these high costs.’

These high costs have also resulted in substantially higher insurance premiums with higher subscriber deductibles/co-pays and growing rates of unpaid health care expenses and personal bankruptcies.

Summary

Taxpayers and the US economy are being badly hurt by Congress’s irresponsible actions and preferential treatment of Big Pharma over patients, taxpayers, employers and other stakeholders.

This situation is very damaging to Americans and has grown to crises proportions. Congress needs to begin acting in the public interest like other governments in Canada and Europe.

A future blog will highlight some the promising actions underway aimed at reducing the these problems.

I look forward to your comments.