Are you paying too much for your medicines? We keep reading how politicians are trying to lower high drug prices. But current prospects are looking grim. Everybody in Washington talks a good game. But, have you ever heard the phrase “Everybody complains about the weather, but nobody does anything about it”? The same thing could be said about plans to lower high drug prices.
“We’ll Save You Money” – Blah…Blah… Blah!
Politicians of almost every description have called for lower costs of critical medicines. And yet legislators of all stripes are happy to take big bucks from Big Pharma. Open Secrets.org describes itself as “Following the Money in Politics.”
According to OpenSecrets.org, Democrats received $31,285,386 from Pharmaceuticals / Health Products in 2020. Republicans took in $17,008,965. Democratic senators got an “average contribution” in 2020 of $131,987. Republican senators “only” received an average contribution of $107,449. The total spent on lobbying for Pharmaceuticals/Health Products during 2021 was $266,846,347 according to Open Secrets.
We are barely a week into the new year. And yet Open Secrets claims that $6,432,937 has already been funneled to Congress.
Price Increases for 2022!
No sooner did the new year get going than drug companies started raising prices.
According to Axios (Jan. 4, 2022):
“Drug companies raised the prices on hundreds of medications on Jan. 1, with most prices up 5% to 6% on average.
“By the numbers: Pharmaceutical companies increased prices on 460 drugs on Jan. 1, according to drug prices monitored by research firm 46brooklyn.
The number of drugs that had price increases on Jan. 1 of prior years according to 46brooklyn: 629 (2021), 385 (2020), 359 (2019), 538 (2018) and 494 (2017).
Many drugmakers implement price hikes on other days throughout January, so expect more increases in the coming days.”
How Pricey Is Pricey?
Some of these drugs were already pricey. For example, the breast cancer drug Ibrance will go up nearly 7% from an initial cash price of about $13,000 a month.
Trikafta for cystic fibrosis currently has a list price of over $300,000 a year.
According to the website www.Drugs.com:
“The cost for Trikafta oral tablet (50 mg-37.5 mg-25 mg and ivacaftor 75 mg) is around $24,957 for a supply of 84, depending on the pharmacy you visit. Prices are for cash paying customers only and are not valid with insurance plans.
“This Trikafta price guide is based on using the Drugs.com discount card which is accepted at most U.S. pharmacies.”
We believe that represents about a one-month supply.
The manufacturer has announced a price increase of almost 5%. That might not seem like much, but when applied to a drug that is so expensive, it could turn into a lot of money.
FIERCE Pharma is an industry insider publication.
In the Jan. 4, 2022 update it was noted that:
“Pfizer is behind the largest number of price jumps, plus the steepest among any company. The company kicked off the New Year by dialing up the price tags of nearly 100 meds, ranging from a 0.5% jump on insomnia drug Halcion to a whopping 16.8% hike on immunology med Solu-Cortef.”
Keep in mind that Pfizer has made an enormous amount of money from its COVID vaccine. It will also reap huge sums from Paxlovid, its oral anti-viral medicine against COVID-19.
Build Back Better?
We keep hearing about the Build Back Better plan. One key feature of this legislation is supposed to be affordable drug prices. No doubt you have heard politicians bragging about the provision that caps out-of-pocket insulin costs at $35 a month.
According to Forbes (Jan. 5, 2021):
“Newer versions of insulin retail for between $175 and $300 a vial. Most patients with diabetes need two to three vials per month, and some can require more.”
Let’s do some quick calculations. If someone with diabetes needs three vials a month at $300 each, that adds up to $900. Even if a patient “only” needs two vials, we’re still talking about hundreds of dollars a month. It is hardly any wonder that some people with type 1 diabetes are unable to afford their life-saving medicine.
I find it unconscionable that politics is impacting the price of insulin.
According to an article in the Washington Post (Dec. 13, 2021):
“Politicians from both parties have promised for years to find ways to lower the skyrocketing price of insulin — a drug that more than 7 million Americans depend on to keep their bodies functioning, according to the American Diabetes Association. But bipartisan pledges, investigations and even new government policy under President Donald Trump have produced little tangible effect, as pharmaceutical companies continue to patent tweaked versions of a drug that dates to a century-old medical breakthrough.”
Disappeared Without a Trace!
A few years ago the Trump administration came up with a plan to shame pharmaceutical companies into lowering their prices. I thought it was a brilliant plan.
The idea was to force drug companies to include the list price of their costly prescription meds in television commercials.
On May 8, 2019, Alex Azar, then head of Health and Human Services (HHS) offered (“Remarks on Requiring List Prices in Drug Ads”):
“Putting prices in TV ads may be the most significant single step any administration has ever taken toward this very clear commitment: Patients have a right to know the price of the healthcare they receive, before they receive it.
“We believe today’s step on transparency will help make prices in healthcare work much more like they [sic] in any other market—not utterly uniform, but more predictable and more competitive.
“We’re moving from a system where patients are left in the dark to where patients are put in the driver’s seat. That’s the kind of healthcare system that will deliver the affordability Americans need, the options and control they want, and the quality they deserve.”
What Happened to Price Transparency?
Not surprisingly, drugmakers such as Merck, Eli Lilly and Amgen did not take kindly to the idea of such transparency. They went to court to avoid providing price information on prescription medications.
On July 8, 2019, a federal judge sided with these drug companies. He told Alex Azar and HHS that they could not require drug prices in prescription drug commercials. So much for transparency or putting patients in the driver’s seat.
More Bad News on Strategies to Lower High Drug Prices:
Alex Azar used to be a drug company executive before taking over as head of HHS.
In his May 8, 2019, announcement about the administration’s “American Patients First prescription pricing blueprint,” he offered another idea:
“A related problem in today’s drug market is the system of drug rebates, which are passed around a labyrinthine drug pricing system rather than going directly to patients. In Medicare Part D, we’ve proposed replacing today’s system, which involved $29 billion in rebates last year, with a requirement that all negotiated drug discounts go to patients.
“This change will substantially diminish the incentive for sky-high list prices, making the new advertising rules that much more useful. List prices already matter to patients—but in a truly competitive drug market, without today’s broken rebate system, they’ll be even clearer signals.”
“1 : blocking the passage of radiant energy and especially light: exhibiting opacity
“2 a: hard to understand or explain b: OBTUSE, THICKHEADED”
We would describe the rebate system described above by Alex Azar of HHS as opaque. It is one of the most thickheaded boondoggles we have ever encountered. Even insiders have a hard time explaining how it works.
Pharmacy benefits managers (PBMs) are middlemen between drug companies and insurance companies and buyers of medications. Drug companies offer PBMs secretive rebates for negotiating deals. The PBMs retain a percentage of the rebate. Confused? We’re not surprised. It’s all very mysterious. Rarely do patients or pharmacies see any of the rebates.
Alex Azar’s plan was to do away with the opaque PBM rebates and/or discounts. This was supposed to lower drug prices and save Medicare patients billions of dollars. Then his bosses in the administration did a U-turn. They decided to keep the “broken” rebate “system” in place after all. Not surprisingly, pharmacy benefit managers and big insurance companies saw their stock prices go up after the announcement that the status quo was back.
FDA Can’t Lower High Drug Prices:
While the US Food and Drug Administration regulates drugs, it does not regulate drug prices. As a result, Americans pay far more for their prescriptions than anyone else in the world. Prices for the same medications in Canada frequently cost just one third what they do in the US.
Where does that money go? Pharmaceutical firms frequently argue that it is essential for the research and development that must go into discovering new treatments. But we suspect a lot goes to marketing.
You can’t watch television without seeing slick and expensive prescription drug commercials. You know that those ads add to the cost of your medicines.
Big Pharma Pays its CEOs Handsomely:
In addition, pharmaceutical CEOs enjoy pretty impressive salaries. On May 26, 2019, the New York Times offered a table prepared by Equilar Figures based on 2018 remuneration. Total compensation packages, including stocks, options and perks, are breathtaking.
Here are a few examples: Leonard Schleifer, CEO of Regeneron Pharmaceuticals, gets $26,520,555 total. Miles White of Abbott Laboratories racked up $22,872,393 and Kenneth Frazier of Merck took home $20,934,504 in total. It is hard to imagine that paying a CEO $20 million (like AbbVie and Johnson & Johnson do) doesn’t impact drug pricing. Other executives and middle managers are also compensated handsomely.
The 2022 Election: Will Politicians Promise to Lower High Drug Prices…Again?
With the 2022 election campaign looming, Americans will be paying attention to proposals for controlling drug prices. We have little doubt that many politicians will once again campaign on the slogan that they want to lower prescription drug prices. Don’t hold your breath. In the meantime, you can learn more about online Canadian pharmacies in our eGuide to Saving Money on Medicines in the Health Guide Section of of this website.
Share your own thoughts about how to lower high drug prices in the comment section.