According to a new AARP drug price report, in 2006 the average cost of prescription medication increased by 3.6%, just a little higher than the rate of inflation in the U.S. which was 3.2% that year. In 2013, in stark contrast, drug costs were up 9.4% above 2012 with a corresponding rate of inflation of 1.5%. In fact, the average annual cost of popular medications for chronic conditions used by seniors went from $4,140 in 2005 to $11,341 in 2013.
Many of these brand drugs are covered by private and public pharmacy benefit plans, including Part D – but too often they are not, which leaves Americans having to foot the bill out of pocket. Even covered brand name drugs often mean very high co-payments or co-insurance. If you’re paying out of pocket and can’t afford your brand name drug, international online pharmacies have much lower prices – an average of 84% less on a basket of popular medications.
In the past, AARP has been criticized, not surprisingly by the pharmaceutical industry, for just looking at brand name drug prices in its drug price reports and not generics, which help moderate increases. But this latest report measured 622 drugs, a large basket that included brand, specialty and generic drugs. Brand and specialty drug prices were up an average of 12.9% and 10.6%, respectively, compared to a decrease in average generic drug prices of 4%.
AARP’s report concludes that it’s possible, “we can no longer rely on lower priced generics to counterbalance the price trends seen in the brand name and specialty prescription drug markets.” And things appear to be getting worse.
After reading the report, which looked at prices up to 2013, I was curious to find out how much brand name prices increased last year. In 2015, brand name drugs still under patent were up almost 15%, and generics, which tend to get cheaper, had even increased by almost 3% on average [Source]. These drug price increases corresponded with an inflation rate increase of .1%!
With about 30 million Americans still uninsured, many more millions of underinsured with inadequate pharmacy benefits, and drug prices continuing their ascent, tens of millions of Americans will continue to forgo prescribed medication entirely. Fewer will have to make this choice by comparing drug prices among safe international online pharmacies and local pharmacies using prescription discount cards at www.pharmacychecker.com.
Martin Shkreli, founder and chief executive of Turing Pharmaceuticals. Not that cool.
It’s no secret that Americans are unhappy with Big Pharma. Pharmaceutical companies regularly rank as one of the least loved industries, right up there (or down there) with Big Oil and Big Government. And while this has usually been expressed as contempt towards the industry as a whole, recently the negative spotlight is shining brightly on one man: Martin Shkreli, hedge fund investor and drug company entrepreneur.
Soon after his company Turing Pharmaceuticals purchased the marketing rights to the drug Daraprim, Shkreli raised the price of Daraprim from $13.50 per pill to $750.00 per pill in the U.S. market where Turing has exclusive marketing rights. But that only affects America! Thankfully, consumers can purchase Daraprim, marketed by GlaxoSmithKline in the UK, from a verified international online pharmacy for as low as only $1.53 per pill. A mere savings of 99.8%.
Daraprim is used to treat toxoplasmosis, a disease that results from infection with the Toxoplasma gondii parasite. This parasite is very common (in fact it’s been estimated that 22% of U.S. population have been exposed to it and it usually infects people who have eaten undercooked meat, raw vegetables, or have handled cat feces. In healthy people it usually only causes flu-like systems. However this disease can cause severe complications in people with compromised immune systems, such as those with HIV or cancer, including brain lesions and seizures. The disease can also be very harmful to women who are pregnant, leading to a stillborn child or a child born with birth defects.
It’s not rare for medications that treat a rare disease or a small patient population to be expensive. Moreover, it’s understandable that pharmaceutical companies want to recoup the extensive costs of developing a drug and make a profit, although Big Pharma’s lust for profits appears insatiable. But let’s take a deep breath…Daraprim is not some new wonder drug. It was originally developed and marketed by Burroughs Wellcome and patented back in 1953 (the patent expired in the 70s). A relatively inexpensive drug, it was long manufactured by GlaxoSmithKline, until that company sold the U.S. marketing rights to CorePharma in 2010. Impax Laboratories later bought CorePharma, and turned around and sold the rights to the drug to Turing.
At that point Mr. Shkreli and our friends at Turing decided to change how Daraprim was distributed. Hospitals, instead of going to a wholesaler, now had to order from Turing’s “Daraprim Direct” program. Patients, instead of going to their neighborhood pharmacy had to order from Walgreen’s Specialty Pharmacy. And since there is no approved generic in the United States, patients who need Daraprim face monopoly pricing, with no competition to Turing on the horizon. Many people of all political stripes seem to be enraged over price gouging like this, because it seems like they’re getting the worst of corporate monopoly and government protectionism.
In order to get this medication, American consumers may need to look across the pond. As mentioned above, GlaxoSmithKline may have sold their U.S. marketing rights to Daraprim in 2010 but not in many countries around the world, such as England, where it’s sold for pennies to the pill!
It only seems fair, not to mention in the interest of public health, that an important drug like this, that’s listed on the World Health Organization’s List of Essential Medicines, should not be one subject to the twisted reality and bizarre rationalizing of hedge fund managers.
A new report by Express Scripts has found that medication spending by commercial health plans grew by 13.1% last year, primarily due to the release of high cost Hepatitis C meds. Spending also increased significantly for compounded drugs. In the prior decade, total spending ranged between three and six percent.
Keep in mind that the headline statistic of 13.1% applies to how much was spent on drugs; it actually doesn’t tell us anything about the prices of the drugs. If drug utilization, which refers to the amount of drugs taken, increases while prices stay the same, then there’s more spending. As it turns out, utilization decreased by a marginal 0.1 % and d prices increased by 13.2%, demonstrating that drug costs were the primary cause of increased drug spending. In fact, a vice president at Express Scripts referred to the drug price increases as “unprecedented and unsustainable.”
Specialty drugs, which often require careful handling, administration, or monitoring, saw a dramatic 30.9% increase in spending. As mentioned earlier, spending on hepatitis C treatments was the primary driver in overall spending, skyrocketing by 742.6%. Other notable (though nowhere near even 100%) increases include 20% for oncology drugs, 24% for treatments for inflammatory conditions, and 17% for hemophilia drugs. It’s not uncommon for these medications to cost many thousands, even tens of thousands of dollars per month. Sovaldi, a hep C drug, costs $1,000 per pill. We covered the Sovaldi saga in depth.
The story for traditional medications, such as those commonly used to treat asthma, depression, diabetes, GERD, high cholesterol, and pain is much more mixed. Despite drug prices rising by 6.4% overall, prices dropped for five out of ten therapy classes. Depression medication prices, for example, plummeted by 18%. Interestingly, the report noted compound drugsas a therapy class, even though they treat a variety of conditions. These drugs had an unusually large price increase of 128%! Excluding compound drugs, drug prices for traditional meds were up only 2.3%. (more…)
Last year we discussed the cost of hepatitis C (“Hep C”) wonder drug Sovaldi for Americans paying in cash or using their health insurance. Notably absent, in both analyses, were how our most economically challenged citizens could afford the $84,000 treatment. According to Governing, “Many of the estimated 3.2 million people living with Hep C in the United States are poor, imprisoned or elderly, which means the cost of Sovaldi falls disproportionately on Medicaid and Medicare.”
To treat every one of the 750,000 Americans with Hep C who receive state-funded treatment through Medicaid or the prison system with Sovaldi would cost $55 billion, according to Express Scripts, and budget realities mean that that simply won’t happen. Public health officials will use prior authorization guidelines in determining who will be covered, similar to the way benefits administrators with private health plans determine eligibility.
Unlike private insurers, drug manufacturers must give Medicaid a 23% discount. The lower price is helpful but does not necessarily make Sovaldi affordable. Current models of drug pricing under Medicaid are not tailored to handle Sovaldi and other specialty medications. According to a letter sent from National Association of Medicaid Directors, “Simply put, the federal Medicaid statute is not designed to allow states to respond to this new pricing approach for pharmaceuticals. Sovaldi is just the first of many such exceptionally high-cost ‘curative’ specialty drugs.”
That letter recommends several federal policies to address Sovaldi and other high priced medications, including the creation of a special federal fund for specialty meds, similar to Ryan White federal funds for AIDS; additional rebates for specialty medications that reach a certain threshold in the percent of the population affected; and, my favorite because of the ludicrousness of international price disparities where U.S. prices are twice the average of other rich countries, “Modify the ‘best price’ policies for breakthrough drugs to include the selling price in other countries.”
There are more suggestions by the NAMD, and they are good future possibilities, but we’ve got to get down to the bottom line here: if you have Medicaid, then under what circumstances will you get Sovaldi? The states are all over the place in terms of coverage policies, but usually a person has to be very sick to get Sovaldi!
The Sovaldi Squeeze, written for Medicaid Health Plans of America (MHPA) by Viohl and Associates, takes a good stab at identifying Medicaid coverage policies. Thirty-five states require prior authorization. Most, if not all, of those states require enrollees to take a liver biopsy; the results of which determine whether or not Sovaldi will be covered. Some states will only cover someone who has not used illicit drugs and alcohol for three years. Other states, including Illinois, Florida, and Louisiana will limit coverage terms to make sure the patient is complying properly with the regiment. For example, Louisiana will only cover Sovaldi for 28 days at a time.
The most extraordinary criterion I saw is referred to as the “once in a lifetime” rule in the MHPA report. As you imagined, if a patient doesn’t adhere to their covered Sovaldi treatment then it won’t be covered again.
Like we discovered with private health insurance and certainly for people who must pay the full price in cash, there are serious obstacles to obtaining Sovaldi even if you’re covered on Medicaid. The costs are just too prohibitive. Yes, Gilead is right that unlike maintenance medications Sovaldi (and other new Hep C meds we’ll discuss below) can cure the patient, which means lower healthcare costs overall. Nonetheless, the market is not established to handle such insane upfront costs.
You might expect that more treatments with the curative-type power of Sovaldi would add competition to bring down prices. Indeed, there are three new Hep C specialty meds on the market. Olysio, marketed by Jansen is cheaper than Sovaldi, but still sells for $840 per pill. Harvoni is actually more expensive than Sovaldi, carrying a price tag of$94,500 for three months, about ten grand more than Sovaldi. Unfortunately, like Sovaldi it is made by Gilead so the competition factor is diluted! Harvoni does have the advantage of being a stand-alone treatment, however, whereas Sovaldi is taken in conjunction with ribavirin.
The market dynamics for Sovaldi and other breakthrough medications like it are highly complex but largely stacked in favor of pharmaceutical company profits against taxpayers and consumers. Neither Medicaid nor private health insurers can afford to treat the millions of people who are infected with Hep C.
To conclude, I’ll leave you with the words of Caroline, who commented on our Part 1 post about paying for Sovaldi in cash, as she sums it all up perfectly:
“Well I’m insured but this medication is not on the formulary for either health care companies offered at my job. They are two well-known companies and according to my GI doctor, none of the insurance companies are approving this drug unless you are at least at stage 3 liver disease. So I’ll have to get a little sicker before I can get it. Thanks Gilead!”
Back in July, we brought you Part I of a series of posts about how to afford Sovaldi (sofosbuvir), the new Hepatitis C (Hep C) cure in the form of a $1,000 pill — $84,000 for the standard 12-week treatment. We focused on consumers paying for Sovaldi in cash. It wasn’t pretty.
Thankfully, most Americans who are taking and will take Sovaldi are covered by health insurance. And if Sovaldi is on the drug list of your health insurance plan then the cost can be a co-pay of $75/month or sometimes $175/month, which is not too bad all things considered. However, as we know – health insurance policies don’t cover all medications, even ones that are far less expensive than Sovaldi. Not surprisingly, health insurance companies are resisting open coverage policies for Sovaldi. In fact, there’s a big battle brewing between Big Health and Big Pharma about who is to blame for problems with affordable access to Sovaldi and other specialty meds – but that’s for another day.
The short answer to the blog title question is – Sovaldi coverage depends on multiple and often technical variables, such as, your age, current health, efficacy of other treatments, intolerance to treatments that are recommended to be taken with Sovaldi, Hep C genotype, history of drug abuse, and more! Herein I do my best to shed some light on what’s up. I believe you’ll find below that most privately insured Americans with Hep C are not guaranteed access to Sovaldi. (more…)
Specialty drugs have been in the news for their exorbitant prices lately. Gilead Sciences’ Hepatitis C cure Sovaldi has received media exposure for costing $84,000 and in 2012, when Memorial Sloan-Kettering Cancer Center refused to use the colon cancer medication Zaltrap because of its $11,000 a month price, the manufacturer responded by offering discounts of 50%. Will these high prices come way down once the medications go generic?
A new study from the National Bureau of Economic Research, examined costs and utilization of specialty drugs (specifically cancer meds) as generic versions are introduced. Generally, prices for generic drugs drop as more manufacturers produce them due to price competition. This should presumably happen for specialty drugs, but there’s a catch. Many specialty drugs have a small user base and some of them are formulated as solutions or injection, which may require more specialized and expensive manufacturing processes compared to traditional oral drugs (i.e pills, liquids). For those reason, the drugs price discrepancy between brands and generics is not as great among specialty medications compared to regular medications.
The study didn’t analyze the best way to actually pay for these medications. But a recent analysis by HealthPocket took a look at Obamacare plans and specialty meds. Check that out here. We are still researching paying for specialty drugs and will have our own analysis and tips for saving at some point in the future.
Keep in mind that over time specialty drugs, such as Sovaldi, will go generic in the U.S. and be prices considerably lower than the brand. But unlike many pills for high blood pressure, depression, or cholesterol, you won’t find $4 Zaltrap at your local Rite-Aid anytime soon.
I wish I had a more concrete answer and analysis on the prices and access to specialty meds. It’s something that we here at PharmacyChecker.com are keeping an eye on, and we will certainly have updates in the future.