Determining if Drug Price Increases are Justified

Drug prices continue to increase but the reasons for the increases are often nebulous. The Institute for Clinical and Economic Review (ICER) evaluated the pricing in partnerships with SSR Health Inc, a research firm, calculated the increases excluding discounts and after-market rebates (1). It was the first such annual report by the Boston-based research group, which assesses the cost-effectiveness of drugs.

A list of 78 drugs with price hikes at more than twice the rate of medical inflation was developed. From this list 9 drugs were selected for detailed review because they had the largest increase in drug spending due to a net price change. ICER reviewed these 9 drugs to determine if the price increases were supported by new clinical evidence based on new indications or data suggesting superiority over other drugs. Of these 9 drugs, ICER concluded 7 did not have justification for the price increases.

Advair, Glaxo’s beta agonist/steroid combination was the only bronchodilator on the list but was not selected for detailed review. Rituxan, a drug which can be used to treat granulomatosis with polyangiitis (GPA, formerly known as Wegener's Granulomatosis) and microscopic polyangiitis (MPA) was one of the drugs selected for review and ICER concluded the price increase was not justified.

ICER acknowledged it was difficult to determine the actual increase in spending on the drugs, but said it was confident that the seven drugs cost increase were more than other drugs (2). "If manufacturers weren't raising prices if they haven't shown a new important benefit, I think that would help," ICER Chief Medical Officer David Rind said. He added that he hoped pricing drugs based on new benefits could help slow cost hikes.

Not surprisingly pharmaceutical companies with drugs on the list were critical of the report. Gilead, Lilly, Pfizer and Roche were all critical of the report or defended their drug pricing policies (2). Both California and Vermont now have laws tracking substantial drug price increases, requiring drug manufacturers to submit information that might justify increases above a certain threshold (1). ICER hopes their report is a first step in providing the public and policymakers with information they can use to advance the public debate on drug price increases.

Richard A. Robbins, MD

Editor, SWJPCC

References

1. Institute for Clinical and Economic Review. Unsupported price increase report: 2019 assessment. October 8, 2019. Available at: https://bit.ly/31XIdyk (accessed 10/11/19).
2. Humer C. Humira, Rituxan top list of U.S. drugs with biggest price increases: report. Reuters Health News. October 9, 2019. Available at: https://www.reuters.com/article/us-usa-healthcare-drugpricing/humira-rituxan-top-list-of-u-s-drugs-with-biggest-price-increases-report-idUSKBN1WN1BE (accessed 10/11/19).

Cite as: Robbins RA. Determining if drug price incrases are justified. Southwest J Pulm Crit Care. 2019;19(4):123-4. doi: https://doi.org/10.13175/swjpcc064-19 PDF 

Drug Prices Continue to Rise

President Trump asserted in a Tweet that drug prices declined in 2018 for the first time in nearly 50 years. However, President Trump’s assertion does not agree with my personal experience or the facts.

I take dofetilide (Tikosyn®) for atrial fibrillation. However, when I recently ordered the medication, my co-pay for 3 months increased from $95 in October, 2018 to $140, an increase approaching 50%. The amount the drug manufacturer (Pfizer) raised the price is unclear but the amount charged by the on-line pharmacy (AllianceRxWalgreens) that my insurance company (Blue Cross/Blue Shield Arizona) mandates I use, likely reflects a price increase in the drug.

Trump’s claim that drug prices decreased in 2018 is wrong. A recent analysis of brand-name drugs by the Associated Press found 96 price increases for every price cut in the first seven months of 2018 (1). At the start of last year, drug makers hiked prices on 1,800 medicines by a median of 9.1 percent, and many continued to increase prices throughout the year.

Trump met with Ian Read, CEO of Pfizer, in July, 2018 following a scolding via Twitter where Trump condemned Pfizer’s increase in drug prices. Pfizer agreed to delay the increases until early 2019 and now those price increases are apparently occurring.

Trump’s tweet comes just days after the president summoned his top domestic policy advisers, including health secretary Alex Azar, to the White House to discuss the slate of drug price hikes that came Jan. 1. Last week, Trump blasted pharmaceutical companies for those increases, writing on Twitter “drug makers are not living up to their commitments.”

Azar, who has been vocally defending his agency’s work to lower drug prices in television appearances and on Twitter this month, retweeted Trump’s claim of an historic price drop in 2018, but tacked on a comment saying, “President Trump has done more to address high drug prices than any President in history. More to come!”

Clearly, both Trump and Azar are engaging in Washington spin. Just before the November 2018 election, Trump announced a price-reduction plan that ties what Medicare pays for certain drugs to much lower prices paid in other economically advanced countries (1). Congressional Democrats have also introduced legislation to tackle the issue. However, Trump and congressional Democrats are now locked in a stalemate that shutdown the government and it seems unlikely they could come together to take actions on drug prices this year.

Richard A. Robbins, MD

Editor, SWJPCC

Reference

1. Associated Press. Trump hails drug price decline not supported by the evidence. January 11, 2019. Available at: https://www.apnews.com/bce3a214039c4271b3f3337e0e522b2a (accessed 1/14/19).

Cite as: Robbins RA. Drug prices continue to rise. Southwest J Pulm Crit Care. 2019;18(1):20-1. doi: https://doi.org/10.13175/swjpcc002-19 PDF

Big Pharma Gives Millions to Congress

Pharmaceutical companies contribute millions of dollars to U.S. senators and representatives as part of a multipronged effort to influence health care lawmaking and spending priorities. Kaiser Health News (KHN) recently developed a database of contributions by pharmaceutical manufacturers to members of Congress for the past 10 years (1). This was done by examining campaign finance reports from the Federal Election Commission to track donations from political action committees (PACs). The amounts are totaled quarterly and the exact amounts but can change as amendments and refunds are reported. Occasionally, refunds are reported in a different cycle from the original contribution, resulting in a negative total for the cycle. The database can be used to look up any individual candidate or pharmaceutical company and will be updated periodically according to KHN. Contributions to members of Congress from the Southwest states of Arizona, California, Colorado, Hawaii, Nevada and New Mexico are summarized in Appendix 1.

The drug industry ranks among lawmakers' most generous patrons. In the past decade, Congress has received $79 million from 68 pharma political action committees, or PACs, run by employees of companies that make drugs. The amount has steadily increased each year from $11.8 million in 2008 to $15.8 million last year. Since the beginning of last year, 34 lawmakers have each received more than $100,000 from pharmaceutical companies. In the Southwest one of those – Rep. Kevin McCarthy of California, the House Republican majority leader, received more than $200,000 so far this election cycle (2017 and 2018 to date) and has received more than $1,000,000 over the past 10 years (Appendix 1).

While PAC contributions to candidates are limited, a larger donation frequently accompanies individual contributions from the company's executives and other employees. According to Medpage Today, it also sends a clear message to the recipient, one they may remember when lobbyists come calling: “There's more where that came from” (2).

The KHN analysis shows that pharmaceutical companies give generously to a wide swath of lawmakers. Since the beginning of 2017, drug makers contributed to 217 Republicans and 187 Democrats, giving only slightly more on average to Republicans, who currently control both chambers of Congress (2). This was also the case for Democrats during the 2010 election cycle, when they controlled Congress.

Money also tends to flow to congressional committees with jurisdiction over pharmaceutical issues that can affect things like drug pricing and FDA approval. in early 2017, For Example, Rep. Greg Walden from Oregon has watched his coffers swell since he became chairman of the powerful House Committee on Energy and Commerce (1). Walden has received over $278,000 this election cycle. The six members of the committee from Southwest states (Reps. Walters, Eshoo, DeGette, Matsui, McNerney, and Peters) have also received $415,500 to date.

Nearly 50 drug makers made contributions with the amount roughly following the size of the company. Genentech, Pfizer, Amgen, Bristol-Myers Squibb and Eli Lilly were the top 5 over the past 10 years. The PAC for Purdue Pharma, the embattled opioid manufacturer, gave to only a handful of members this cycle. However, it focused much of its giving on lawmakers from North Carolina, its headquarters for manufacturing and technical operations. Insys, the opioid manufacturer from Chandler, Arizona, was not listed as making any contributions.

Campaign contributions tell only part of the story. Drugmakers also spend millions of dollars lobbying members of Congress. So far over $430 million has been spent this election cycle by pharmaceutical companies lobbying Congress (3). Another source is indirect lobbying through to patient advocacy groups, which provide patients to testify on Capitol Hill and organize social media campaigns on drug makers' behalf. A previous investigation by Kaiser Health News, "Pre$cription for Power," examined charitable giving by top drugmakers and found that 14 of them donated a combined $116 million to patient advocacy groups in 2015 alone (4).

Previous studies have suggested that political contributions may influence voting behavior. These sizable contributions may help explain, at least in part, why drug prices in the US are the highest in the world and why Congressional legislation regulating these prices has been so difficult to pass.

Richard A. Robbins, MD

Editor, SWJPCC

References

1. Lucas E, Lupkin S.   Pharma cash to Congress. Kaiser Health News. October 16, 2018. Available at: https://khn.org/news/campaign/ (accessed 10/23/18).
2. Huetteman E, Lupkin S. Drugmakers funnel millions to lawmakers. Medpage Today. October 16, 2018. Available at: https://www.medpagetoday.com/washington-watch/electioncoverage/75737?xid=nl_mpt_investigative2018-10-23&eun=g687171d0r&utm_source=Sailthru&utm_medium=email&utm_campaign=InvestigateMD_102318&utm_term=InvestigativeMD (accessed 10/23/18).
3. Pharmaceuticals/health products. OpenSecrets.org. August 28, 2018. Available at: https://www.opensecrets.org/lobby/indusclient.php?id=h04 (accessed 10/23/18).
4. Kopp E, Lucas E, Lupkin S. Pre$cription for power. Kaiser Health News. 2018. Available at: https://khn.org/patient-advocacy/#+initialWidth=1170&childId=patient_advocacy&parentTitle=Pre%24cription%20For%20Power%3A%20KHN%20Patient%20Advocacy%20DatabaseKaiser%20Health%20News&parentUrl=https%3A%2F%2Fkhn.org%2Fpatient-advocacy%2F (accessed 10/23/18).

Cite as: Robbins RA. Big pharma gives millions to Congress. Southwest J Pulm Crit Care. 2018;17(4):117-8. doi: https://doi.org/10.13175/swjpcc113-18 PDF 

Hospitals Plan to Start Their Own Generic Drug Company

The New York Times reports that groups representing more than 450 hospitals plan to form their own generic drug company (1). Intermountain Healthcare is leading the collaboration with several other large hospital groups, Ascension, SSM Health and Trinity Health, in consultation with the U.S. Department of Veterans Affairs, to form a not-for-profit drug company. The new firm is looking to create generic versions of about 20 existing drugs that the group says cost too much now or are in short supply. The article did not name the drugs targeted but expects the first of its pharmaceutical products to become available in 2019. Members of the consortium will contribute funds to finance the new drug company.

Richard A. Robbins, MD

Editor, SWJPCC

Reference

1. Abelson R, Thomas K. Fed up with drug companies, hospitals decide to start their own. New York Times. January 18, 2018. Available at: https://www.nytimes.com/2018/01/18/health/drug-prices-hospitals.html (accessed 1/19/18).

Cite as: Robbins RA. Hospitals plan to start their own generic drug company. Southwest J Pulm Crit Care. 2018;16(1):48. doi: https://doi.org/10.13175/swjpcc014-18 PDF

Election Results of Southwest Ballot Measures Affecting Healthcare

Earlier this week an article was posted listing Southwest ballot measures that affect healthcare. Below are the results obtained from various internet sources.

States

Arizona

1. Recreational marijuana. Proposition 205: Legalizes recreational marijuana use for people 21 and older. Opponents of the measure include the Arizona Health and Hospital Association and Insys Therapeutics, a company that makes a cannabis-based pain medication.

   Defeated: Yes    929,518 (48%)

                   No 1,011,836 (52%)

California 

1. Medi-Cal hospital fee program. Proposition 52: Requires the legislature to get voter approval to use fee revenue for purposes other than generating federal matching funds and funding enhanced Medicaid payments and grants for hospitals. The initiative, which was written by the California Hospital Association and is supported by most state lawmakers, would also make the program permanent, requiring a supermajority in the legislature to end it.

   Passed: Yes 5,950,642 (70%)

                No 2,599,764 (30%)

2. Tobacco tax. Proposition 56: Increases the state's cigarette tax by $2 a pack and impose an "equivalent increase on other tobacco products and electronic cigarettes containing nicotine." The revenue primarily would support healthcare programs.

   Passed: Yes 5,551,236 (63%)

                No 3,271,626 (37%)

3. Prescription drug price regulations. Proposition 61: Ties the prices California state agencies pay for prescription drugs to the discounts negotiated by the U.S. Veterans Affairs Department. The initiative, backed by the AIDS Healthcare Foundation, has drawn more than $100 million in spending from opponents, most of it from the pharmaceutical industry.

   Defeated: Yes 3,933,084 (46%)

                   No 4,570,245 (54%)

4. Legalization of recreational marijuana. Proposition 64: Legalizes recreational marijuana use for people 21 and older and creates taxes on the cultivation and retail sale of the drug.

   Passed: Yes 4,957,215 (56%)

                No 3,923,777 (44%)

Colorado

1. ColoradoCare, a single-payer health system. Amendment 69: Amends the state's constitution to establish a universal healthcare system financed by payroll taxes and governed by an elected 21-member board of trustees. The plan is opposed by Colorado Hospital Association.

   Defeated: Yes   478,107 (20%)

                   No 1,876,618 (80%)        

2. Cigarette tax. Amendment 72: Amends the state's constitution to increase the cigarette tax from 84 cents a pack to $2.59 a pack. Most of the revenue would fund health-related programs, research into tobacco-related health issues and education and prevention. E-cigarettes are exempt.

   Defeated: Yes 1,115,022 (46%)

                   No 1,291,961 (54%)

3. Physician-assisted suicide. Proposition 106: The End of Life Options Act allows physicians to prescribe a lethal drug to their terminally ill patients and allows terminally ill patients to be prescribed lethal drugs to end their life.

   Passed: Yes 1,542,219 (65%)

                No    847,978 (35%)

Nevada

1. Recreational marijuana. Question 2: Legalizes recreational marijuana use for people 21 and older.  

   Passed: Yes 602,400 (54%)

                No 503,615 (46%)

2. Medical equipment tax. Question 4: Exempts medical equipment like oxygen machines and hospital beds from the state sales tax.

   Passed: Yes 768,803 (72%)

                No 301,944 (28%)

Cities

1. Albany, CA. Soda tax: A 1 cent per ounce tax on sugary beverages.

   Passed

2. San Francisco, CA. Soda tax: A 1 cent per ounce tax on sugary beverages.

   Passed

3. Oakland, CA. Soda tax: A 1 cent per ounce tax on sugary beverages.

   Passed

4. Boulder, CO. Soda tax: Imposes a 2 cent per ounce tax on sugary beverages.

   Passed

Richard A. Robbins, MD

Editor, SWJPCC

Cite as: Robbins RA. Election results of Southwest ballot measures affecting healthcare. Southwest J Pulm Crit Care. 2016;13(5):223-4. doi: http://dx.doi.org/10.13175/swjpcc115-16 PDF