(Part three in a three part series)
1. Don’t fall victim to pharmaceutical value-based price anchoring: After Touring pharmaceuticals increased the price for Daraprim from $13.50 to $750 per pill, Stephen Lederer, a spokesman for Turing demurred, the pricing for Daraprim “reflected its clinical value.”
Imagine if surgeons priced their surgery this way: A surgeon is called to the bed of a 13 year old boy with a burst appendix and says, “Son, you have to ask yourself what is the ‘actual value’ of being alive for another 70 years? 6 million dollars you say? Well, then you should be happy to pay 5 million dollars for me to remove your appendix.” If the patient objected, the surgeon might add, “OK, I’ll enter into a value based contract with your insurer, and only collect the money if the surgery works.”
Don’t let the drug companies fool us into anchoring the price negotiation at the value of life, rather than the production cost of the drug.
2. Radical transparency: Sunshine is the ultimate antiseptic. Drug makers should publicly divulge the true cost of research and development for each drug, as well as what they charge for it. This is particularly true as healthcare is increasingly viewed by society as a right, not an option.
Vermont recently passed a law to this effect. Vermont requires drug makers to provide cost data on the 15 most costly drugs the state purchases.
One cannot identify, let alone fix, market breakdown until one views price in conjunction with cost. With fundamental production cost transparency, a miracle cure may still justify a higher price, but only if its development costs support that pricing.
3. Regulate big pharma like a public utility: Currently, their intellectual property rights allow brand name pharmaceutical companies unlimited pricing power for new drugs. This is the definition of a monopoly. Markets are not free if there is only one vendor. In America, if a product is considered essential, (such as electricity) we intervene in the market. Utilities open their books to utility regulators, and based on the cost of production, prices are set.
With pharmaceutical market breakdown, drug prices bear no relationship to the cost of production. A multidisciplinary regulatory commission can price a drug taking into account cost, overhead and reasonable profit, while protecting the public from price gouging.
4. Support the fledgling generic startup, Fair Pharma: Today, ruthless generic companies can corner the market by purchasing the sole generic manufacturer of a critical life saving drug, and overnight raise its price, 3000%. According to a recent report, when Valeant Pharmaceuticals purchased the rights to Cuprimine, used to treat a rare genetic disorder, Valeant next increased Cuprimine’s price from from $8.88 to $262 per pill.
Fair Pharma is a new nonprofit generic manufacturer spearheaded by Intermountain Healthcare. Fair Pharma is essentially a consortium of hospitals and health systems who have decided to band together to produce their own reliable supply of low cost generics. Their mission is not to maximize quarterly profits, but to maximize the free supply of low cost, high quality generic drugs to their patients and their customers’ patients.
5. Support drug reimportation or show me the dead Canadians: Patients in Canada and other countries pay 30% to 50% less than US patients because their governments successfully negotiate with the drug companies for significant discounts.
We could capitalize on these lower prices by allowing US drug stores and patients to re-import these less expensive drugs back into the US. This option is currently illegal. The supposed rationale for banning reimportation is that reimported drugs are somehow counterfeit, of low quality or unsafe. To which we paraphrase former Minnesota Gov. Tim Pawlenty, “show me the dead Canadians.”
Canadians are not dying from low quality pharmaceuticals. The reimportation ban is in actuality political payback to pharmaceutical firms. It is against the public interest. These medications are safe and purchased from the same manufacturers we buy them from.
Re-importation of drugs from Canada has support from activists on both sides of the political spectrum. Senator Bernie Sanders and President Donald Trump have both called for legalization of drug reimportation recently. 72% of Americans support allowing the reimportation of prescription drugs from Canada. Contrary to some paid alarmists, this can be accomplished safely. Most of these drugs are actually manufactured within the US already.
6. Allow the US government to negotiate drug prices: Canada and European countries successfully negotiate with the drug companies for significant discounts. The US government should likewise negotiate the price of the drugs it purchases. The US government is the largest purchaser of these drugs in North America. Yet US taxpayers pay more than any other consumer in the world for these medications. In any rational market, we would be entitled to a discounted price. This is a grotesque example of the US Congress capitulating to a special interest as opposed to representing the public interest. Congress actually passed a law making it illegal for the government to negotiate the price of the drugs it purchases.
This common sense solution enjoys overwhelming support from the US public; 92%. It also enjoys bipartisan support: Senator Bernie Sanders and President Donald Trump both support this obvious cost savings. Change the law. Enough said.
7. Use generics when appropriate: Hospitals, physician groups and health plans should encourage doctors and other prescribers to use lower cost generics whenever there is a lower cost generic of equivalent effectiveness.
8. Encourage so called “step therapy”: Step Therapy is an approach where inexpensive yet effective medications are tried first, prior to the prescription of more expensive medications.
9. On long term stable medications? Buy them in bulk. Encourage patients who are on chronic, long term, stable medications to buy them in bulk from the most cost effective source, often mail order.
10: Support prescribers with Clinical Decision Support: Encourage Electronic Health Record developers to include effective pharmacy Clinical Decision Support in order to insure prescribers have updated information regarding drug cost and efficacy at the point of order entry (when they are actually prescribing the medication).
11. Payer transparency: Insurers should provide patients and physicians alike with an up to date, fully transparent formulary of covered medications, alternatives, including information on patient co-pays, differing price tiers and generics.
12. Eliminate TV advertising by the drug companies to the consumer: The American Medical Association supports this solution, as they fear this advertising unnecessarily drives up demand for expensive drugs.
This would remove a large cost from the pharmaceutical industry. The only other developed country in the world which allows drug company executives to advertise directly to the public is New Zealand. (New Zealand physicians are also lobbying for a ban there too.) Banning ads will result in reduced drug prices, reduced inappropriate demand for drugs by patients and therefore, reduced medical harm from unnecessary side effects.
Perversely, given the complex US tax code, US taxpayers are actually subsidizing the very ads which drug companies utilize to drive up demand and prices for their products. Drug company TV ads are currently considered a legitimate tax deductible business expense.
I ask you to support these cost-effective and life-saving proposals by emailing your elected federal senators and representative to express your support for for this path to the future.