Controlling the pharmaceutical industry

Earlier this month, drug manufacturers tried to beat the federal government by proposing to share on their web sites list prices with price information of pharmaceuticals. That wasn’t enough disclosure for Alex Azar II, secretary of the U.S. Department of Health and Human Services and former president of a division of Eli Lilly and Co., the pharmaceutical giant. HHS said on Monday that it wants each drug company to list the retail price of a 30-day supply in television advertisements.

The New York Times reports that drug company executives and some consumer advocates say this information could mislead consumers, and perhaps discourage them from taking medications, since most people don’t pay the list price. I take exception to that. Even though a health-plan participant may initially pay just a co-payment or out-of-pocket maximum, they pay for the drugs in the cost of health insurance. If the plan pays $25,000 for a 30-day supply of a medication, the total medical insurance premiums for that company rise by that amount, plus plan expenses. Plan members surely pay for the increase out of their paycheck.

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The American Medical Association (AMA) supports a ban on pharma advertising targeted directly to consumers. I don’t agree with that either. Patients should be told that new drugs exist to treat conditions or diseases. Patients may not have discussed the condition with their doctors, or they may be on a treatment plan that isn’t effective. And, let’s face it, doctors aren’t perfect. There’s nothing wrong with offering a suggestion to a physician who may not have read about a new drug or a problem exhibited by an older one.

The more educated consumers are about treatment options, the better. But consumers need to be a part of the solution. I advocate a legend approach similar to cigarette advertising. Consider this: “The retail cost for a 30-day supply of XYZ Medication is $XX,XXX. Please refer to your health insurance plan or call your insurance provider to determine what this drug would cost you. Drug costs are a large component of health insurance costs, which comprise a portion of your future insurance premiums.” I like that approach.

On Oct. 4, I wrote a blog post about Drug Patent Protection – More Low-Hanging Fruit. There, I suggested that Gilead, the manufacturer of Harvoni, might be reacting positively to drug pricing concerns when it introduced a lower-cost, similar version of their drug before its patent expired. This week, I learned at a client review meeting with Cigna the actual reason for this new drug release. Medicaid and the U.S. prison system rejected the Harvoni price tag, of more than $90,000 for several weeks of treatment, and refused to cover the drug. Harvoni is a few years old. Many of the known Hepatitis C patients outside these populations have had treatment. Medicaid and prison populations represent an enormous opportunity for Gilead if only the drug were covered. Presto! Like magic, the cost plummeted almost 75%. Is anyone as outraged about this as I am?

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