Time to rein in prescription drug costs

Profits yes, but not unchecked profits at expense of patients

WHEN MICHELLE KATS was diagnosed with diabetes in 2001, her parents would stay in her room at night and check her blood sugar to make sure it was not too low or too high. Now it’s the rising cost of insulin that keeps Michelle and her family up at night. Although Michelle currently has insurance and enough money to pay for copays, her situation can easily change, so she must constantly monitor the price of the drug.

The Health Care Cost Institute found that insulin prices nearly doubled from 2012 to 2016 and they continue to increase. Michelle and her family are concerned she might not be able to continue to afford the medication and fear she could have to resort to rationing her doses – something she has had to do in the past.

She is not the only Massachusetts resident struggling to afford needed prescription drugs. It’s a national problem. Nearly one in three adults nationally have not taken a medicine as prescribed due to its high cost, according to the Kaiser Family Foundation.

Nationwide, the cost of prescription drugs that have no generic alternative rose an average of 142 percent between 2006 and 2014. Here in Massachusetts, the Health Policy Commission has found that spending on prescription drugs rose more than twice as fast as overall health care spending last year.

Some of the most commonly used drugs are seeing enormous price increases. For example, the price of Humira, a top selling arthritis medication, increased from $19,000 a year per patient seven years ago to more than $38,000 today, an increase of 100 percent. The price of nitrofurantoin—a drug used to treat bladder infections—increased 400 percent last year from $475 to $2,392.

Specialty drugs come with enormous price tags. Current therapies for hemophilia cost between $580,000 and $800,000 a year. By comparison, individuals in other high-income countries spend nearly half of what Americans spend on the exact same drug, as a recent article in the Journal of the American Medical Association reported.

Right now, there is little transparency or accountability when it comes to these drug costs. Pharmaceutical companies get to set their own arbitrary prices in secret, leading to higher co-pays, rising premiums, and, in some cases, drugs not being covered by insurance at all. Access to life-saving medications and new treatments could not be more important. However, these treatments don’t help people if they can’t afford them.

High cost-sharing for prescription drugs leads patients to not take the drugs their doctors prescribe. A quarter of patients with diabetes underused insulin because of the cost, according to one study in the Journal of the American Medical Association. Another study published in the Journal of Clinical Oncology found that 67 percent of cancer patients didn’t buy chemotherapy drugs when they had to pay $2,000 or more.

The issue is not only impacting individuals and employers who are dealing with higher health care costs, but also the state budget. MassHealth drug spending has nearly doubled in the last five years from $1.1 billion to $1.9 billion. The fiscal 2020 budget plans put forward by the governor, House, and Senate all included provisions to address the rising cost of prescription drugs in the program. The budgets from the governor and the Senate include stronger language to hold drug companies accountable by publicly disclosing the proposed value of high-cost drugs if MassHealth can’t reach an agreement with the manufacturer on the drug’s price and the drug’s cost is deemed excessive. We are optimistic the final budget will provide MassHealth with this tool that gives manufacturers the right incentives to come to the table and tackle this growing problem.

This would be a step forward, but a comprehensive approach is required to tackle prescription drug costs beyond MassHealth for everyone in the Commonwealth. Legislation has been filed to provide price transparency by requiring drug manufacturers to disclose the underlying costs to produce prescription drugs. The bill also ensures accountability by authorizing the Massachusetts Health Policy Commission to analyze costs and potentially set upper payment limits for unreasonably high-priced drugs. The legislation then requires that these savings be passed on to consumers.

Meet the Author

Amy Rosenthal

Executive director, Health Care for All
Pharmaceutical manufacturers play a critical role in bringing new innovations to market and should be able to make a profit for their important work. However, if you are in the business of saving lives, you shouldn’t have an unchecked amount of profit. When many of the largest companies spend more on advertising than they do on research and development, there is something wrong with the incentives in this system.

Massachusetts leads the country in providing near universal health coverage and is making progress toward bringing down the cost of care because everyone pays their fair share: all of us are required to have health insurance, businesses pay assessments to cover costs, and health insurer and hospital cost growth is subject to review before the Health Policy Commission, as are any mergers and acquisitions they want to undertake. Only pharmaceutical manufacturers have not shared in this responsibility. It is time that they join the rest of us and contribute to helping us all get the health care we need.

Amy Rosenthal is the executive director of Health Care For All.