Big Pharma Using Mail-Order Pharmacies to Maintain High Prices

The United States has the dubious honor of paying the highest prescription drug costs in the world. Many healthcare economists attribute this to relatively lax cost regulation compared to other wealthy countries; however, a decade of insurers paying only for generic drugs when available and limiting drug choice in specific formularies has had little modulating effect. The most recent focus has been on the newer, very costly agents that have come to market. Targeted cancer therapies may be priced at $70,000-$115,000 per year, reformulated chemotherapeutics may also reach the six-figure level and the new hepatitis C therapies are major effective advances, but cost about $80,000 for a 12-week course. Unlike the above diseases, multiple sclerosis requires life-long treatment and the latest player, Plegridyis, is pegged at $62,000 per annum.

 

As opposed to being feted for prolonging life and easing suffering, the major pharmaceutical companies are being attacked for price gouging at the expense of the public. The industry has pushed back, citing that the 10% of healthcare dollars going to prescription drugs has been the same percentage since 1960. Moreover, they emphasize that drug development is long (10-15 years), rather inefficient as most formularies never get to market, and costly (about $1.3 billion). This investment in time and money is reflected in the final price of the medication. The arcana of drug pricing is beyond my pay grade, given the variables of the potential market, duration of therapy, efficacy of treatment, socioeconomics, and societal commitment to equitable healthcare. A simple, transparent and fair pricing system may be more utopian than feasible and the politics of effecting change is a maelstrom of special interests.

 

However, there is one villain trying to sidestep the barriers on pricing whom I find particularly reprehensible. Several small pharmaceutical manufacturers circumvent restraints by insurers and pharmacists to switch patients to generics by promoting mail-order pharmacies affiliated with the drug company. The high-priced drugs are delivered quickly and copays are subsidized and because some insurers will pay the often exorbitant charges, the scheme is economically viable. Here are examples-- Horizon Pharma has a pain reliever, Duexis, which contains two generic equivalents of Motrin and Pepcid. It is targeted to patients as offsetting the gastrointestinal side effects of the NSAID.  Daily Duexis therapy costs about $1500/month, while the two drugs sold separately cost $20-$40/month as generics or OTC. The company says that combining the drugs into a single pill taken three times daily makes compliance more likely as patients will get the benefit of stomach protection. Valeant Pharmaceuticals does much the same thing for its dermatology products with its specialty pharmacy Philidor Rx Services

 

This is sophistry at its finest. Fortunately these attempts of dampening the sticker shock of using these drugs have caused many benefit managers to refuse all payment for these products. Moreover, these companies have also received subpoenas from federal prosecutors in New York and Massachusetts seeking more information on their pricing practices. Of more immediate harm, investors have seen the light as Valeant’s market capitalization has decreased 70% since August. This all begs the question: who writes these prescriptions and why? We do, and I cannot think why.

 

By Norman Silverman, MD, with Ryan McKennon, DO and Ren Carlton

 

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Michigan Physicians Society Supports Inner-City Education

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