TAKE ACTION FOR LOWER DRUG COSTS! STOP PHARMA’S BACKROOM DEALS!

Working with consumer advocates across the country, Consumer Catalyst has launched a campaign to stop  ‘Pay-for-Delay’ deals that hurt consumer health!

What you can do:

1. Sign the consumer petition on Change.org
2. Join the discussion on twitter and share your story, using the hashtag: Stop the #RxRacket! And ask others to share their stories too. Also follow us at @postscriptrx.
3. Join our community on Facebook to keep up with the campaign and join our email list of impacted consumers by sharing your story.

You can also tell us your story, if you are interested in joining us as a consumer advocate and speaking out on these issues to local media.

Pharmaceutical companies are colluding to keep drug prices high – and taking that money right out of your pocket.

Did you know drug companies have made more than 160 secret, back-room deals that

• Have kept 100 generic drugs or more off the market for years
• Drive up the cost of each drug by an average of $3,000 a year
• Keep all of our prescription costs high, while divvying up the spoils!

Right now, the Supreme Court is currently deliberating over whether these back-room deals are legal – but we know they’re wrong. Since 2005, as many as 142 different generic drugs have been unfairly kept from consumers, according to government reports. Delaying the launch of a generic drug lets the drug companies make bigger and bigger profits, while patients are stuck footing the bill, or going without the medicines they need.

The Supreme Court heard arguments by the drug companies, and fortunately Justices Kagan and Sotomayor raised consumer concerns – but the Court did not hear the perspective of the thousands of Americans unable to afford their medications. That’s because most people don’t even know that these deals are costing consumers thousands, and our health system billions of extra dollars, each year!

Help us raise awareness of this #RxRacket. The public deserves to know how this decision will affect us all – how thousands of Americans are being forced to choose between skipping their medications or going into credit card debt, just so that drug companies can make even more profit. Not to mention, how health care costs for everyone have gone up, because insurers pay most of these higher costs!

Whatever the Supreme Court decides, help spread the word, so we can help make sure that these deals come to an end, once and for all.

Target drugs: 
If you have taken Cipro, Provigil, or Androgel, you have definitely paid more because of a pay-for-delay settlement. And according to legal experts, it is very probable that many drugs including blockbuster drugs like Lipitor, Plavix and Nexium — have been delayed by pay-for-delay deals.*

We need you to tell everyone you know that this is happening, and help gather and share the stories of people you know that have been negatively impacted. Read the stories shared by two women, Tanna and Karen, who were unable to afford their medications due to pay-for-delay deals that kept generic Provigil off the market for six years. Also, read how the companies’ legal arguments make no sense.

You can find all the information you would ever need about this issue on our Pay-for-Delay info page. Please also feel free to add your thoughts on this #RxRacket in the comments, below.

Thank you for helping us protect your right to affordable medicine!

*The Full List – Drugs Likely to Have High Prices from ‘Pay-for-Delay’ Deals:
Adderall XR, Aggrenox, Altace, Arthrotec, Caduet, Carbatrol, Clarinex, Comtan, Duac, Effexor XR, Eloxatin, Ethyol, Femcon Fe, Fentora, Flomax, Lipitor, Lamictal, Levaquin, Lexapro, Loestrin-24 Fe, Loprox, Lotrel, Lybrel, Namenda, Naprelan, Nexium, Niaspan, Niravam, Olux, Opana ER, Ortho Tri Cyclen Lo, Oxytrol, Plavix, Propecia, Razadyne, Razadyne ER, Rythmol SR, Sinemet CR, Skelaxin, Solodyn, Stalevo, Tricor 145mg, Vanos, Vfend, Wellbutrin XL (150 mg), Xopenex, and Zantac!

This past Tuesday, PhRMA was before Congress.  Not  lobbying to block price negotiations or generic competitors, but attending a hearing in their honor (click here for details of the hearing).  Chairman Henry Waxman, of the House Energy and Commerce Committee, has called upon PhRMA to explain their recent price increases exposed by AARP  mid-November in its Rx Watchdog Report.

At Tuesday’s hearing, Rep. Waxman put the price increase in perspective. He said:

Our nation is trying to recover from the largest economic downturn since the Great Depression. The Consumer Price Index has actually dropped over the last year. Social Security checks will remain stagnant. Millions of Americans have lost their jobs and their health insurance.

Yet, the brand-name prescription drug industry raised prices by more than 9% over the last year.

Rep. Waxman also noted that the health reform bill passed by the House last month will both provide insurance coverage to “36 million citizens who would otherwise be without it” but he cautioned legislators must not “write the pharmaceutical industry a blank check as we reform the health care system.”

Rep. Waxman also praised the approach under the House bill:

The House health care reform bill strikes an important balance that puts consumers and taxpayers first. In return for the billions of dollars in new market opportunities, we require that the drug industry provide additional discounts for the Medicaid program. And we end the multi-billion dollar windfall that the industry received when dual-eligible enrollees were switched from Medicaid to Medicare Part D drug coverage.

The House bill uses the money raised from these industry concessions to help millions of Americans afford health care coverage and to close the Part D donut hole.

At the hearing, Kathleen Stoll, Deputy Executive Director, Director of Health Policy at Families USA, testified that:  “In recent years, Americans have spent a significantly larger amount on prescription drugs. In fact, total spending on prescription drugs in the United States nearly doubled between 2000 and 2007, rising from $120.6 billion to $227.5 billion.”

Ms. Stoll praised the House health care reform bill, noting that it would improve access to prescription drugs by requiring coverage for drugs in all health plans sold in the individual market, and by eliminating annual and lifetime caps on benefits, and capping out-of-pocket costs.

The  chair of the board of AARP, Bonnie Cramer, also testified about the effect of rising drug prices on AARP members, seniors, and other consumers. She noted the costly impact of rising drug prices on government spending for subsidized seniors under Medicare Part D, and for seniors or others on Medicare Part B.  Her testimony noted that the specialty, or biologic drugs covered under Part B are the biggest current drug cost.  for the program’s entire $17 billion spend on drugs in 2007.

The top six biologics represented $7 billion of the total [$17 billion in Part B drug costs in 2007], or 43 percent of all Part B drug spending. To put this in context, Medicare Part B spending for one biologic drug – Epoetin alfa – in 2007 ($2.6 billion) was greater than FDA’s , with over 10,000 employees, entire FY2008 budget (2.3 billion).

Ms. Cramer also voiced concerns for the “millions of Americans … that fall into the donut hole each year.” And she noted that the number of part D plans charging 33% co-insurance for the very high priced specialty drugs has risen from only four of the nearly national plans to “more than half” of the Part D plans today.  This means that drug price increases are felt directly by the patient. Ms. Cramer put this in perspective as follows:

… rheumatoid arthritis medicines such as Enbrel and Humira averaged $1,633 per prescription in 2008. The average cost of a multiple sclerosis drug was $2,006. At 33 percent coinsurance, enrollees cost would exceed $500 per prescription. Most patients with either of these conditions filled at least eight such prescriptions in 2008.

The AARP report revealed the shocking price increase of 9.3 % for brand-name drugs, 10.3% for specialty drugs.  This is contrasted to the 7.8% decrease in the price of generic drugs during the same 12-month period ending September 30, 2009.  The report notes that all but one of the top 25 selling brand name drugs used by Medicare Part D plans rose from between 4.8% and 19.7%, and all but two of the top 25 specialty drugs also rose in cost, some by as much as 28.2%. Ten of these best-selling specialty drugs rose by more than 12%. This is happening at a time when the economic recession had driven the prices of most other goods and services down.

The New York Times covered the reports release, and noted that  the drug industry’s own major consulting firm, IMS Health, reversed their earlier market prediction of a 1% declines in sales for 2009, and now predicts a 4.5% growth in drug sales.  This means $21 billion in added drug costs in 2009, a windfall profit for the industry as the rest of the country grapples with record unemployment and ongoing recession.

Impacts of the price increase:
The new price increases have reversed the trend and produced two results — an immediate profit increase for 2009-2010; and a significantly higher base price for their future revenues once the approximately 30 million newly insured customers are added through the passage of health reform.  Drug companies set the price for the drugs they sell, and can raise or lower them at any time.  Additionally, the companies offer rebates and other discounts based on their price to different insurers, state Medicaid agencies and federal agencies.  The higher the base price, the more leverage for the drug company in negotiating with purchasers.  The result of this market manipulation is an approximately $120 Billion profit.

PhRMA appears to have gone back on their deal by changing the prices so radically and shifting an $80 Billion loss into a $120 Billion profit-grab.  PhRMA has been one of the most vocal supporters of health reform—they should be given that they have literally billions to gain if the law passes.  Drug industry  ads in support of reform, rather than in opposition, have been a welcomed on Capitol hill.  But the good will PhRMA generated supporting reform may have been    shaken by the recent price increase.

This profiteering has caught the attention of Congress.  The House Energy and Commerce’s subcommittee on Health is investigating this price increase, presumably with an eye towards strengthening the drug cost containment measures in the health reform bill.  Up until now, many drug cost containment initiatives have been off-limits due to the ‘PhRMA deal’.  PhRMA made a deal with President Obama and some Congressional leaders last Spring that was to  provide $80 billion in drug savings over the next 10 years, mainly through discounts to brand name drugs in the Medicare D doughnut hole..  In exchange, they would support health reform.  One of the biggest potential areas for savings that was declared off-limits by industry is the ability for Medicare to negotiate drug prices.

Even Senator Baucus, who chairs the Senate Finance Committee, and brokered the deal with Pharma on behalf of the Senate, has said that the total amount in future saving legislators will require from Pharma is “still in discussion.”

Tuesday’s Congressional hearings may help influence the current Senate debate, and the negotiations in the conference process (which would reconcile the differences between the legislation passed by the House and any future Senate bill.) We hope our Congressional leaders will see the stark reality exposed by the AARP Watchdog Report – that Pharma’s control of drug prices makes their proffered discounts illusory and holds us all hostage to their profiteering.

Julie Appleby at USA Today has a story in today’s edition, “Drug costs rise as economy slides”. In it, she says:

People with health insurance are having more trouble paying for prescription drugs as higher out-of-pocket costs for medications and a slowing economy strain family budgets, according to surveys and health care analysts….

“Incomes aren’t going up, but co-payments are,” says Gary Claxton of the Kaiser Family Foundation, which studies health policy.

In some cases, the patient’s share of drug costs is no longer a flat dollar amount, but a proportion that can range from 20% to 70%.

What appears to be happening is that insurers are coming full circle on how they deal with drug costs. Up until the mid-90s, many patients had insurance that had them pay a percentage of the cost of their prescription drugs (often 20%). When “managed care” became the trend (which limited people to seeing only doctors in the insurer’s network, required referrals for specialists and is most famous for health plans denying coverage for various treatments), there was a move to the “fixed copayment.” Back then, most health plans had one fixed copayment for all drugs — brand-name or generic, new or old, expensive or cheap.

Direct-to-Consumer Advertising of prescription drugs took off after the FDA loosened the rules on drug advertising in 1997. Health insurers saw the costs of the drugs taken by their members skyrocket, and sought to discourage the use of expensive newer brand-name drugs, and encourage the use of older, less expensive generic drugs. So health plans moved to the “tiered” copayment, where cheaper generics had one copayment (say $5), the “preferred” brand-name (i.e. often the one that the insurer got the best deal on from the drug company) had another (say $10), and “non-preferred” brand-names had the highest (say $20).

Over time, as drug costs went up, and as promotions to doctors and consumers led many more people to use prescription drugs on a regular basis, copayments crept up too. Gone are the days of the $5 copayment. Many people now have copayments of $10-$15 for generics, $20-$25 for preferred brand-names and $40+ for nonpreferred brand-names. Plus, more people are facing separate and much higher copayments for “specialty” drugs (i.e. drugs to treat serious illnesses like cancers).

There’s also been something of a trend towards “high deductible” health plans, which make consumers responsible for all of their medical costs until a deductible (say $1500) is met. This was supposed to make people more “responsible” about the cost of their health care but can perversely have the opposite effect, by making people delay medical treatment until it’s an emergency, when of course the treatment is far more expensive.

Medicare Part D has resulted in millions of senior citizens now paying for a percentage of the cost of their drugs, rather than fixed copayments. Which means when the cost of their drugs goes up, so do their out of pocket payments.

The end result of this is that it’s no longer just patients without insurance who can’t afford their prescription drugs — more and more people with insurance can’t afford them either. Someone with a chronic illness who takes, say, 8 or 10 drugs everyday can face hundreds of dollars a month just in copayments. And more and more health plans are putting annual maximums on what they’ll pay for prescription drugs. After you hit the maximum, you’re on your own.

Many drug companies have patient assistance programs that can provide free or discounted drugs to people who can’t afford them. But as a recent post on this blog illustrates, many of those drug company programs are closed to people who have insurance — even if they still can’t afford even the copayments on their drugs, or if their health plan doesn’t even cover the drug in question. In Jessica’s story: No help from Cephalon for cost of Provigil, a young patient with Narcolepsy describes how she couldn’t get any help from Cephalon to get the Provigil she needs. She was ineligible for their program because she had insurance.

As long as drug prices continue to rise, and drug companies convince millions of doctors to prescribe and millions of patients to take expensive, newer brand-name drugs instead of equally effective and much less expensive generic drugs, we’re going to see more and more insured patients, not to mention the uninsured, face drug bills they can’t afford.

The most recent issue of Health Affairs (subscription required) has an intriguing proposal on how we might pay for drugs to maximize the number of people who need drugs actually taking them while minimizing cost. (“Drug Licenses: A New Model For Pharmaceutical Pricing”). The authors introduce the problem:

High drug prices are a major barrier to patients’ access to drugs and compliance with treatment. Yet low drug prices are often argued to provide inadequate incentives for innovation.

While their analysis of whether prices really influence R&D is, in my opinion, flawed, their underlying point is accurate: High drug prices reduce patients’ compliance (i.e. whether patients actually take the drugs they’re prescribed). For conditions where drug treatment has a significant impact, that can affect the patients’ health and also increase health costs overall. The drugs the authors focus on are a good example: statins for high cholesterol. Ensuring that patients who actually needs statins can afford to take them can prevent heart attacks and hospitalizations, which are of course far more expensive than the drugs. The authors point to studies showing that even modest increases in the copayments that patients have to pay for statins under their insurance can significantly reduce patient compliance.

The authors’ proposed solution is to change how we pay for drugs like these. The main costs associated with a producing a drug are upfront: the research, the clinical trials, the steps to get the drug approved, etc. Once approved, the cost of producing each tablet or capsule is, for most drugs, very low. Thus, paying by the pill it is not necessarily the only, or the best, way to compensate the drug company. We already pay for certain products the way the authors propose, the most familiar example being computer software and cable TV:

The licensing model we propose is referred to by economists as “two-part pricing.” Numerous examples of this exist in the nonmedical world, including Internet service, cable and satellite television, all-you-can-eat buffets, country club memberships, and cell phone plans. But perhaps the most relevant example is software. Instead of charging a fee every time a person starts his or her computer, Microsoft charges a one-time fee for the use of Windows. What makes pharmaceuticals similar to these products—and distinguishes them from other health services—are the very low costs of production and the existence of few good substitutes.

Uncoupling the cost of the treatment from each pill (or each monthly supply of pills) ensures that patients won’t stop taking the drug, or stop filling the prescription because of the cost of a particular bottle of pills.

It’s an interesting model to consider: That patients purchase not the pills themselves, but the right to as many pills as they need for a given year.
Whether this is the right model, or whether there are others that are better, remains to be seen. But our current system in which drug companies hyper-market drugs to consumers regardless of whether those drugs are truly needed, in which many consumers are shielded from the true cost of those drugs, and in which ironically many patients who actually need certain drugs can’t afford them, clearly isn’t working. This is one alternative worth considering.