The Worst Possible Choice: Food or Medicine
With prescription drug prices rising rapidly, Americans plead with lawmakers for help as manufacturers brace for a fight
The skyrocketing premiums a majority of Americans face for their health insurance in 2017, along with a diminishing choice of care, are dominating headlines — and rightly so. Yet access to the prescription drugs we need and the prices we pay for them are perhaps of most concern.
“Almost every pharmacist in the country has seen customers who have to choose between medication and food,” said Santo J. Leo, CEO of MailMyPrescriptions.com in Boca Raton, Florida. “Pharmacies aren’t allowed, legally, to help these people pay for their medications because it’s considered a kickback. We need some real reforms to the system ASAP.”
The global pharmaceutical industry earns $330 billion a year; that number may rise to $440 billion.
The latest Kaiser Family Foundation poll shows Americans believe the high cost of prescription drugs needs to be a top health-care priority for the next president and Congress. The survey found that “making sure high-cost drugs for chronic conditions, such as HIV, hepatitis, mental illness and cancer are affordable to those who need them” is viewed as a “top priority” by 74 percent of the public — across party lines.
Pharmaceutical company Mylan NV continues to come under intense scrutiny for increasing the price of its EpiPen by more than 500 percent, to a price of $494 to $795 for a two-pack (according to prices from GoodRX). While most Americans are familiar with that case, Mylan is not alone in aggressively jacking up prices of life-saving drugs.
Gilead Sciences rolled out a drug called Epclusa this past June to treat all viral forms of hepatitis — at a price of $74,760 for a 12-week treatment. The company had previously produced drugs that target other strains of hepatitis: Sovaldi, priced at $84,000, and Harvoni, which cost $94,500.
ARIAD raised the price of its drug Iclusig to treat chronic myeloid leukemia by 8 percent each quarter, until it reached a 39-percent increase, taking the price tag from $120,000 to $200,000 a year. Lawmakers this month formally asked for an explanation.
In September 2015, Turing Pharmaceuticals increased the price of the HIV/cancer drug, Daraprim, by over 5000 percent after acquiring rights to the drug a month earlier.
Drug companies are quick to point out the amount of time and money spent on research — but profits don’t lie. The global pharmaceutical industry earns $330 billion per year; that number is expected to rise to $440 billion in three years, according to the World Health Organization. Between 1998 and 2014, the pharmaceutical industry spent $3 billion alone on lobbying efforts.
- The pharmaceutical lobby hiked dues for member companies by 50 percent this summer to generate an additional $100 million per year as the industry gears up for a post-election battle over drug prices. The funds will increase the trade group's coffers to more than $300 million per year.
Gilead Sciences earned a $27.6 billion profit, while Mylan posted a $9 billion profit in 2015. Iclusig generated sales of $65.3 million in the second quarter.
Even when a drug doesn’t prove effective, its manufacturers often use it for another disease or condition — Viagra is just one example. Designed to be used as a high blood pressure and heart disease drug, it failed to be effective for that. Instead, it was repackaged as an erectile dysfunction medication to capitalize on one of its side effects — increased erections in males. Viagra is still highly profitable after 15 years on the market, earning over $1 billion per year for Pfizer.
Two primary factors responsible for the high cost of prescription drugs are market exclusivity and insurance environment, said Dr. Spencer Malkin, CEO of Prescriber’s Choice in Miami, Florida. Market exclusivity occurs when generic and branded manufacturers consolidate or merge, creating a virtual monopoly for drug makers. Using generic forms of a drug once gave the consumer a financial break — but monopolies often prevent savings.
The insurance environment is more complicated. Insurance networks delegate prescription coverage to Pharmacy Benefit Managers (PBMs). PBMs are unregulated and often base prices upon great need or uniqueness of the drug. They also receive rebates from manufacturers and base prices to boost profit potential.
“This creates an unstable environment that deters drug price reductions and encourages higher priced drugs,” Malkin told LifeZette.
It’s where consumers are often taken advantage of, said Leo. “A complete lack of transparency in pricing structure basically creates monopolies. PBMs, which are mostly owned by pharmacies or insurance companies, negotiate pricing in secret and retail pharmacies are contractually obligated to accept that pricing if they accept insurance. This leads to huge markups.”
Leo's company, MailMyPrescriptions.com, allows consumers to see the wholesale cost of thousands of medications and determine the markup on the drugs they use. "We need to find a way to cut the wasteful markups and price gouging on everyday maintenance medications. These are often marked up hundreds of percentage points only to line the pockets of PBMs and retail pharmacies."
With prescription drug use growing in the U.S., a hefty market can be manipulated for gain. A 2013 study by the Mayo Clinic showed 70 percent of Americans take at least one prescription drug, more than half take more than one drug a day — and 20 percent take five or more drugs per day.
Pat Barone, MCC, is a professional credentialed coach and author of the Own Every Bite! bodycentric re-education program for mindful and intuitive eating, who helps clients heal food addictions.