Now, more than ever before, cost is becoming a determining factor in making healthcare decisions. I therefore applaud Johnson & Johnson’s recent decision to put the cost of their medications and ‘anticipated patient copay amounts’ in their advertisements. They’re starting with an aFib drug, Xarelto, and will phase in others in the future. (See news story here: https://www.bmj.com/content/364/bmj.l751.abstract)
One of the reasons I write this blog is that I truly believe that knowledge is power. The more we know about something, the better decisions we can make. This is especially critical when you’re dealing with a chronic disease. Another critical area is managing your money.
The actual cost of the drug is but one component that affects what patients actually pay. And while knowing how much something costs might help us make better decisions, does this transparency help us control the rising cost of drugs?
I discussed this question in more depth in a previous post which I’ve included below. Two disclosures. The first is that J&J manufactures the medication in my current treatment for RA, but I have received no consideration for this post nor have they had any part in review or commenting on it. The second is that the following post is long and complex, but hopefully rewarding to read.
Money and Medicine: Is Transparency the Answer?
One of the greatest shocks that a patient has after being diagnosed with RA (which is the first shock) is how expensive treatment is. Besides doctors’ visits and labs and physical therapy and tests like X-rays, there is the cost of medication. Many patients are started on methotrexate and perhaps another DMARD which can be inexpensive to moderately priced. However at the point that the patient “graduates” to biologic medications, and many of us do, the costs really escalate. A recent study I read reported that approximately 87% of all patients were switched to a biologic as the next treatment step after oral methotrexate (as opposed to injected methotrexate or other DMARDs).
There are two ways of looking at prescription sales. The first is the physical number of prescriptions that are filled. Depending on the list you find, generic Lipitor (a cholesterol drug) is at or near the top. Interestingly in this day of opioid crisis, the hydrocodone/acetaminophen pain killer also makes the top 10 list. There are no RA-related drugs on the list. The closest I’ve found is prednisone, which is used for all kinds of things, not just RA. It comes in at number 19.
The second way to look at prescription sales is by the dollar amount. That is, even though the actual number of prescriptions is not as great as the first list, the cost of the drug propels it on to this list. Again, it depends on the list and when it was produced, but you’ll likely find not one, but four, biologics used for treating RA: Humira, Enbrel, Remicade and Rituxan. That’s 40% of the top-10 drugs by sales.
It’s hard to miss headlines that raise concerns about price-gouging by pharmaceutical companies. Turing Pharmaceuticals CEO who raised an HIV/AIDs drug from $13.50 to $750 overnight and the increase of Epipen prices to $500 are two that come immediately to mind.
But why is that? I’ve been around a lot of different industries and I’m here to testify that inflated pricing occurs all over the place. We don’t see headlines or Congressional investigations when fancy new smart phones or even basics like housing are overpriced.
It’s because, right or wrong, we hold pharmaceutical companies to a higher standard. We tend to think that it’s wrong to make a profit from people who are ill.
I agree completely that any product that affects people’s health or safety should be held to a higher standard than those that don’t. That’s why we have agencies like the FDA – to help ensure that medications do what they are intended to do and do so at minimal risk to the patient.
But should pharmaceutical companies be held to a different standard than any other company that produces commercial products? Like other companies, pharmaceutical companies have a wide range of stakeholders. Many are public companies and therefore have shareholders that have a right to expect a return on their investment. They need financial resources to attract scientific talent. They must fund new drug development. The last figure I saw, which is a few years old now, estimated that it takes $5 billion (with a “b”) to bring a new drug to market. And the drugs that do pass all the reviews and regulatory hurdles must bear the burden of paying for the research and development of drugs that didn’t make it.
So why do we think it’s such a bad idea to let pharmaceutical companies – who hold the keys to our future health – make a profit? I personally feel that all companies (not products) should be treated under the same standards. In case you missed it, the point is any company that engages in unethical behavior should face sanctions regardless of what kind of company they are. But I also believe that all companies must make a reasonable profit to thrive.
I would have loved to have been at the American Medical Association’s National Advocacy Conference this week. There was a debate about prescription drug costs between Kirsten Axelsen, VP of Global Policy for Pfizer, Inc. and Aaron Kesselheim, MD, JD, MPH who is an associate professor of medicine at Harvard Medical School and a noted policy scholar. I won’t recount the debate here, but there were some incredibly interesting and introspective points made on both sides of the argument. A report of the debate by MedPage Today can be accessed here and is well worth exploring: http://www.medpagetoday.com/PublicHealthPolicy/PublicHealth/63550?xid=nl_mpt_DHE_2017-03-03&eun=g999342d0r&pos=2
The other interesting thing that happened along these lines this week was that Janssen released its U.S. Transparency Report. (The website, the full report, and an executive summary can be accessed here: http://www.janssen.com/us/us-pharmaceutical-transparency-report) Janssen’s parent company is Johnson & Johnson and I’ve been a fan ever since the 1982 Tylenol recall which still stands as the gold standard of public concern, crisis management, and transparency. For those of you are unfamiliar with this event, before tamper-resistant packaging, a few bottles of Tylenol were poisoned. Even though it appeared to be an isolated incident in Chicago, J&J recalled all the Tylenol capsules across the US and took steps to ensure a safe supply of the drug. It cost them millions.
Janssen’s is actually the first such transparency report I’ve seen. (That doesn’t mean that there aren’t any – just that I haven’t seen them.) Public pharmaceutical companies already face a huge amount of disclosure requirements from the Securities and Exchange Commission (SEC) and other regulatory agencies. This additional transparency reporting adds yet another layer of information to what is already available. While the full report should (IMHO) be packaged and sold as a cure for insomnia, the website as well as the executive summary is actually pretty approachable by most humans, and I applaud Janssen for that.
But is more transparency the answer?
I have done a lot of work with public companies over the course of my career. These companies (as noted above) must file all kinds of disclosure documents with the SEC to help ensure transparency for the investing public. In 2000, the SEC implemented the Regulation Fair Disclosure (Reg FD) and in 2002 Congress passed the Sarbanes-Oxley Act (SOX). The amount of effort and associated cost for companies to comply with these regulations was enormous.
What was the effect? While it’s definitely a mixed bag of results, on the downside, it definitely dampened the market. The burden of complying with RegFD and SOX caused some companies to stop being a publicly traded company while other companies cancelled their public offerings. While the regulations were put in place, in part, to help the individual investor, they probably helped them the least. I heard one securities lawyer quip that the RegFD and SOX filings were the only documents that got read more often before they were published than after. What he meant was that they were read more by the lawyers and accountants who were paid to produce them than read by the investors they were intended to help.
I think Pfizer’s Kirsten Axelsen makes this point very well in the debate stating that additional pharmaceutical company transparency laws, like the one recently passed by New Hampshire, won’t lower medical costs. Based on previous experience with similar SEC regulations, I would suggest that it would, in fact raise those prices. Sure you want transparency, but do you want enough to pay another $5 or $50 or $500 per prescription?
As a patient, even a nerd who actually reads the full version of transparency reports, I don’t necessarily care about more transparency. What I care about is affordable medication for those people who need it. And yes, I also want pharmaceutical companies to make a reasonable profit so they can continue to hire smart people and make new drugs.
Unfortunately, there is more to the patient’s cost of medication than just drug pricing. There are a lot of factors involved, but let’s be honest that much of a patient’s actual cost is determined by insurance coverage. I take a biologic that has a list price of more than $15,000 per infusion. Right now, because I have good insurance, I pay a $50 copay. If I hit my deductible and out-of-pocket limits, it won’t cost me anything. There are many, many people in this country that are not as fortunate as I am. They cannot afford their medications. They cannot afford to treat the diseases that may be killing them.
I’m not going to debate the Affordable Care Act (also known as Obama Care). It will no doubt be repealed in the near future anyway. The bad news is that no one seems to know what will replace it, so no one really knows whether they will be able to afford medical care (including medications) going forward. This type of uncertainty is far more damaging for patients than any lack of transparency.
A patient’s cost of care is many things. But as I heard from a friend just today, “… it’s policy, not politics.” It’s not in adding transparency requirements, it’s not in throttling the marketplace, it’s not applying a separate set of ethical standards to one type of company and not others. It’s making responsible policy decisions that create the environment in which all of us have access to reasonably priced health care.