As surely as the seasons change and the tides rise, pharma will continue raising the prices of medications wherever and whenever it can.
In one example from last week, the non-profit Institute for Clinical and Economic Review (ICER) found that the new class of cholesterol medications, the PCSK-9s, is grossly overpriced. The first two brands in that class, Repatha from Amgen and Praluent from Sanofi and Regeneron, each go for wholesale prices of more than $14,000 per patient per year. ICER's analysis concluded that a price representing the true value of those products would fall somewhere between $3,615 and $4,811 a year, a 67 percent discount below their current prices.
For PCSK-9s not to raise everyone's health care costs in the form of higher co-pays, larger deductibles and increased insurance premiums, the ICER analysis concluded that the annual price would have to come down to $2,177.
Then there is the ongoing saga of the Trans Pacific Partnership, an international agreement that the Obama administration is pushing as payback to pharma for not opposing the Affordable Care Act. In July Doctors Without Borders labeled the TPP as the most harmful trade deal ever in terms of its potential for limiting access to medications.
The Public Health Association of Australia (PHAA) stated that, "The United States is pressing other countries to accept longer monopolies for biologic products," many of which "cost more than a hundred thousand dollars per patient per year." Increasing the period of patent protection on high-priced specialty drugs, "by even one year," according to the PHAA, "would drain hundreds of millions of dollars from...[Australia's] Pharmaceutical Benefits Scheme." That would cause "higher co-payments for medicines" that hit hardest at the country 's "sickest and poorest people." Any higher drug costs in Australia would be even worse here.
Pharma's intention to keep charging whatever the U.S. market will allow led Tom Norton, a principal with an Illinois marketing communications firm, to predict last week that pharma will bring price controls down on itself in a scenario beginning next year. The process Norton envisions works this way.
- Pharma will continue increasing the prices of new drugs above the ability of the U.S. health care system to afford them. "These pricing policies," according to Norton, "will foster continued, general outrage by the American public towards the Rx industry."
- In response to this public outrage, at least one state – Norton sees California as the most likely – will enact a pricing transparency bill and mandate the state's Medicaid to pay the lower prices that only the Veterans Administration now pays in this country. (Of course, the major European nations pay considerably less than the VA.)
- A handful of other states will then enact similar legislation.
- Voters in lagging states that still permit damn-the-public drug pricing will then demand the lower prices paid by people in neighboring states that did enact VA-level pricing. Congressmen and Senators from those lagging states will need to address those constituent demands and they will likely do so by permitting Medicare to negotiate drug prices.
- Private payers such as insurers and employers across the country will then use the price negotiated by Medicare as a starting point for negotiating deals of their own.
"At that point," Norton predicts, "the U.S. pharmaceutical industry, in both its public and private markets, will essentially be operating in a price-controlled environment."
But Kim Slocum, an experienced health policy consultant in West Chester, casts a skeptical eye at Norton's scenario. He claims that public opinion in this area rarely gets translated into policy.
"We've been doing consumer surveys for a long time," says Slocum, "and we consistently found that a two-thirds majority of the US public favors Rx price controls. We've found this year after year after year. And what has that viewpoint accomplished? Nothing, nada, squat."
Although he's correct about the lack of policy results, Slocum's view of the process behind it is open to argument. For starters, the ability of surveys to accurately assess levels of public vehemence on various issues remains hotly debated.
The relative importance that the public assigns to an issue is one factor which determines the vehemence with which a majority maintains its view on a subject. More than 80% of the U.S. public favored stronger gun controls after the mass killing at the Sandy Hook elementary school in Connecticut, but no legislative action occurred because while a large majority of the public favors tighter restrictions, the importance of gun control to most people ranks well below that of several other concerns. On the other hand, many people experience prescription costs as a dagger in the side every time they go to the drug store. For that reason, public demand for affordable medication ranks behind only a few matters such as preventing major economic downturns and terrorist attacks.
Not only does the public rank the importance of affordable medication as relatively high, their passion for it grows steadily. Fifty-five percent of the American public receives its health coverage through employment. As recently as five years ago, when Congress passed the Affordable Care Act, most of those people were content with their coverage for medication and the various health care services. But since that time, the cost shifting to employees/consumers in the form of higher deductibles, co-pays and premiums has steadily increased public discontent.
So while the desire to enact stricter gun control rises after a mass murder and then subsides, the demand for affordable medication persists and grows. Large majorities favor both tighter gun laws and affordable drugs, but the attitudes and the social dynamics behind the two are vastly different.
Nonetheless, Slocum makes a point that deserves attention. As long as Republicans control the Congress and a large segment of state governments, it's hard to imagine anything remotely resembling price controls getting past those legislative servants of the C-suites and the super-rich.
Slocum himself believes the only force capable of influencing pharma and obedient Republicans is what he calls "the concerted efforts of the 'money people.' " – employers, insurers, hospitals, and organized medicine.
In the past, these payers and providers either supported pharma's profit über alles moves or at least failed to oppose them. Pharma's consistent price gouging, however, is now causing the industry to lose these traditional allies, especially among providers. "If all these groups act in unison," according to Slocum, "and say that they cannot manage drug spending through the market," then they may be able to force pharma to act more socially responsible.
Well, anything is possible but it seems unusually idealistic to expect social responsibility from pharma in the form of U.S. drug prices comparable to those of other advanced countries. More likely that Texas will embrace gun control and Kansas will favor deficit spending and taxing the rich.
Besides, even though pharma's campaign contributions usually sway Congress, people can still directly influence their legislators to support affordable drug bills by showing fervor in petitions, emails, phone calls, electioneering and other methods. How does the public influence an insurer such as Independence Blue Cross or a provider network such as Main Line Health to shun overpriced drugs when each one can pass along the high costs? Main Line will keep demanding costlier contract terms from payers and Blue Cross will just raise its premiums. The idea of putting everyone's profit at risk, dependent on cost-effectiveness, is good in theory but, to this point, it has not held down rising health care costs to the same level as the overall cost of living.
In the end, there is no sure or easy way for the U.S. to obtain affordable medications. Politicians are bought and paid for, the big insurers and provider networks just want to boost their own profit margins.
Every country gets the health care system it deserves. If Americans remain complacent about paying two to three times more than other advanced countries and getting worse care, then that's what it will be. For those people who are no longer content with this arrangement, relying on politicians, insurers or hospital networks will guarantee only a long wait and inadequate change. Obamacare offers a clear example.
Sometimes if people want a job done right, they have to rely on themselves to do it and just bring the politicians and the others along for the ride.