When the FDA instituted new testing standards to relicense old or untested drugs, surely their goal was to ensure the safety and efficacy of prescription medications. But the change also allows drug makers to gain exclusive rights to sell retested drugs, and force the production of “copies” to cease, meaning the costs of routinely-used medications could increase a hundredfold with minimal added research, development and clinical value.
For example: In women with prior preterm deliveries, 17 alpha-hydroxyprogesterone caproate (17OHP) was found to reduce the risk of preterm births and several related medical complications in preterm infants. It was widely available by prescription at specialized pharmacies, costing $300 for the 20-week treatment course.
[See also: Drug costs to rise up to 4 percent in 2013]
In 2011, the FDA approved Makena, a manufactured compound identical to 17OHP with the same medical indications. The cost, however, was different: $29,000 for the same treatment.
Data from The New England Journal of Medicine revealed that for every dollar invested in the “old” 17OHP, $8 to $12 in healthcare costs related to prematurity was saved, while Makena required $8 to $12 of investment to avoid one dollar of prematurity costs. The price change harmed public programs, employers and individuals who purchase insurance and share these costs, and decreased access to an effective, cost-saving medicine. This re-approval process has occurred with at least 86 other drugs.
These actions are those of businesses trying to optimize their bottom line, but how can companies that manufacture products that prevent discomfort, improve health and save the lives of those with acute and debilitating illnesses be allowed to maximize profits as if they were selling the latest toy or designer fashion?
Such actions by pharmaceutical companies make many people feel justified in blaming them as the cause of unethical drug prices and the necessary source of change. However, drug companies do not have the monopoly on unethical drug pricing.
With the advent of universal and more centralized healthcare, pharmaceutical manufacturers negotiate sales with ever-larger groups of payers, such as pharmacy benefit managers, prescription drug plans, insurance companies and the government.
These negotiations provide discounts to buyers in the form of rebates – sometimes up to 60 percent of gross sales and an estimated $40 billion yearly – to gain positions on insurance and hospital formularies.
Drug companies also cooperate with programs providing a safety net of pharmaceuticals to those unable to afford their medications. The 340B Drug Pricing Program, created by the U.S. Department of Health and Human Services in 1992, provides drugs at discount rates to approved providers, including federally qualified health centers, nonprofit medical centers, state Medicaid agencies, even Walgreens. However, these discounts and benefits are not always delivered to those who need them.
Recently, Sen. Charles Grassley (R-Iowa) sent letters to three North Carolina hospitals, a health system in Georgia and the chief executive officer of Walgreens, questioning the reselling of discounted 340B program drugs at a markup to those insured through Medicare, Medicaid and private companies. One of those letters indicated a hospital was acquiring a common cancer drug at a discount and then charging patients seven times the average sales price.
To infuse ethics into drug pricing, drug makers, physicians, patients and the entire healthcare system must all participate.
Drug companies should continue to compete for business from large buyers, and be held publicly accountable for maximizing profits on minimal innovation.
Physicians, as a conduit of drug distribution, should use their position to demand valuable pharmaceutical additions for health management and advocate for patient needs. To engage patients in fair drug prices, price transparency is necessary. When patients know what their plans pay for drugs, and what their out-of-pocket costs will be for various treatment regimens, they will be more empowered decision makers when navigating the healthcare system.
So while it is easy to point fingers at the pharmaceutical companies, all parts of the healthcare system must take part in providing affordable medications to those who need them through encouraging competition, accountability and transparency to incentivize the distribution of superior drugs at lower prices.