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Why Are Physicians Silent About Outrageous Drug Prices?

  • MedPage Today
Jan 14, 2022 11:04 am

This article was written by Dr. Milton Packer, who wonders why physicians are struggling to get their priorities straight.

One of the bizarre aspects of drug pricing in the U.S. is that the government is not permitted by law to negotiate the prices of drugs with pharmaceutical manufacturers. In most of the world markets, the national health authority in each country engages in long (and often difficult) discussions with drug sponsors about what the government is willing to pay for a newly approved drug. These negotiations dramatically reduce the cost of prescription drug prices throughout most of the world.

But not in the U.S. In the U.S., pharmaceutical companies can essentially dictate prices for their drug products, and Medicare and Medicaid are not allowed to challenge or disagree with the offer. If a company wants to charge $80,000 a year for a new drug, it can. If a company wants to increase the price of an old drug by 10%, 50%, or 500% each year, it can easily make the price increase a reality.

In employment-based insurance, negotiations typically take place between pharmaceutical companies and pharmacy benefits managers (or 340B contract pharmacies), who play a middle-man role. But the process is not transparent, and all too often, much of any achieved price reductions are retained by the intermediary entities as profits. Any discounting of a drug's price by a pharmaceutical company is not necessarily translated into a lower cost for the employer or the patient.

As a result of these policies and forces, drug prices are much higher in the U.S. than in the rest of the world. According to the RAND corporation, U.S. prices are 2.56 times higher than in 32 other countries. Of all OECD (Organisation for Economic Co-operation and Development) nations, total drug spending was $795 billion. The U.S. accounted for 58% of the sales, but just 24% of the volume. Other studies suggest Americans pay four times more than residents in other wealthy nations for the same drugs.

Accordingly, the profits of most multinational pharmaceutical companies are driven by sales in the U.S. If the CEO of a company desires to increase profits by 20% in any given year, he or she can most easily accomplish that goal in the U.S. Because U.S. profits are so generous, the company can charge much lower prices in Europe, Asia, or Latin America, or can sell drugs essentially at cost in lower-income countries.

In essence, U.S. residents are effectively subsidizing the cost of drugs for patients in the rest of the world -- without realizing they are doing so.

Some might argue that wealthy countries (like the U.S.) should subsidize the costs of healthcare for economically disadvantaged countries. But many of the countries that benefit from the enormous U.S. subsidy are rich industrial giants. In a recent study of 65 cancer drugs, prices rose faster than the rate of inflation for 74% of the drugs in the U.S., with a median monthly treatment cost increase from $5,790 in 2009-2010 to $14,580 in 2018-2019. In contrast, only 13% of the drugs in Switzerland, 2% of the drugs in England, and 0% of the drugs in Germany experienced price increases that rose faster than inflation.

U.S. residents suffer horribly from this policy. Because of the outrageous pricing of drugs, access to drugs is restricted for many people in the U.S. For many, insurance plans will not cover scores of innovative medications. And even when coverage is provided, patients are required to pay high out-of-pocket expenses every month (which can exceed $30,000 per year), a level of hardship that has been termed "financial (drug) toxicity." A substantial proportion of patients cannot afford these costs, and thus, never fill prescriptions or elect to stop a therapeutically important medication simply because they need to pay for food or housing. Many physicians do not even try to complete the preauthorization forms typically required for expensive drugs. In contrast, drug costs seem never to be an impediment to drug access in other economically wealthy countries (e.g., Germany).

As a result, many patients -- especially those with chronic diseases requiring therapy for many years -- are not receiving drugs that have been newly developed in the past 10 to 20 years. Newer drugs for diabetes have been shown to prevent heart attacks, strokes, heart failure, and kidney failure -- beyond their effects on blood glucose -- but they are being used by a small fraction of diabetic patients. Sadly, most patients with type 2 diabetes or with heart failure are currently being treated with drug regimens that have not changed since the 1980s or early 1990s.

Attempts to allow drug price negotiations and enhance drug pricing transparency have been blocked in Congress by special interests. Some modest proposals for improvement have been included in H.R. 5376. But the legislation is puny; the bill would apply to only a tiny fraction of drugs and only 9 to 13 years after approval. Yet, even these modest proposals are being met with stiff resistance. Pharmaceutical companies and pharmacy benefits managers are important contributors to the campaign war chests for House Representatives and Senators who are interested in re-election. The Pharmaceutical Research and Manufacturers of America (PhRMA) has advertised to the public that passage of H.R. 5376 would restrict access to innovation, a claim that has been deemed false by the Annenberg Public Policy Center.

In truth, the profit margins of pharmaceutical companies are almost three times the average of the S&P 500. And it has been estimated that brand-name pharmaceutical companies could lose $100 billion a year in sales and still remain the most profitable industry in the U.S. With these resources at their disposal, pharmaceutical companies will not lessen their drive to develop innovative drugs, because it is in their financial interest to develop new drugs.

Physicians fully recognize the enormous problems for patient care that have been created by the exorbitant cost of drugs in the U.S. They complain that many patients cannot access a substantial proportion of the advances in medical care that have taken place over the past 10 to 20 years. But what have physicians said about this?

Almost nothing.

The American Medical Association (AMA) hotly debated the issue in November 2021. Quite shockingly, many delegates strongly opposed any AMA advocacy for price negotiations. Why? The AMA delegates were concerned that if they supported "price controls" then such a policy would be applied to physicians. Even more amazingly, some delegates refused to support H.R. 5376 until they would be assured that any cost savings would be passed down to physicians!

In December 2021, the Association for Clinical Oncology, the American College of Rheumatology, and the American Academy of Neurology issued a joint statement of support for H.R. 5376, but with a catch. They wanted to make sure that payments to physicians for prescribing very expensive drugs would not be reduced; they wanted only payments to pharmaceutical companies to be affected.

The only large physician-based organization to voice support for the principles of price negotiations included in H.R. 5376 has been the American College of Physicians, which issued a letter on this issue in July 2021. But most medical societies have been silent, intentionally so. And as far as I know, none have engaged in any strong or meaningful advocacy.

What have individual physicians said?

Most practitioners bemoan the cost of drug prices, but few have taken a public stance. The silence applies not only to those who are on the frontlines of healthcare, but also those who are leaders in clinical research. When I have raised the issue with my colleagues who spearhead large-scale clinical trials, their reticence to become involved is palpable.

What do they say? (This is not verbatim): "I want to continue to do large-scale trials with new and exciting drugs. Therefore, it is my interest for pharmaceutical companies to be replete with the funds that are necessary to promote my work. So it is best to say nothing right now."

But, as Ian Tannock, MD, PhD, and Anthony Joshua, MBBS, PhD, note, the pricing of drugs bears no relationship to costs of development and manufacture, the drug's effectiveness, or the extent to which public funds were used in its development. Price is set to maximize profit, based on what the market will bear.

There are a few notable exceptions to the silence of physicians. Mathew Maurer, MD, of Columbia University, was the principal investigator of the landmark clinical trial of tafamidis (Vyndamax) in the treatment of cardiac amyloidosis. The trial was published in the New England Journal of Medicine and directly led to FDA approval of the drug. Pfizer sponsored the entire cost of the drug's development (including the clinical trial led by Maurer), and Maurer earned consulting fees for his work on the study. But when Pfizer decided to price tafamidis at $225,000 per year, Maurer was outraged, publicly called the price exorbitant, and demanded that Pfizer lower the cost. Together with Jerry Gurwitz, MD, he expressed his strong disapproval both in the medical literature and to the press, joking that his overt anger might lead the pharmaceutical industry to retaliate and cost him a job. Fortunately, that concern never materialized. (Disclosure: Maurer was one of my heart failure fellows, and I recruited him to the faculty of my division when I was at Columbia. He is one of the finest physicians I know.)

As I have described in an earlier column, I have also argued with pharmaceutical executives to lower the price of an expensive drug that I helped develop. But my discussions focused on a drug that was less than 2% of the list price of tafamidis. And I failed miserably in trying to convince the company to lower the price.

Here is the irony. Most clinical trials do not show that a drug is safe and effective for its intended use. But in the few instances when a trial is successful and leads to drug approval, the most important goal of a clinical investigator should be to ensure that all patients who can benefit from the new drug actually have an opportunity to receive it without incurring financial hardship. Otherwise, what is the point?

We need to be clear: Physicians can no longer stay silent about outrageous drug prices. Those who think that allowing negotiations for drug pricing in the U.S. will hurt our professional and personal interests need to get their priorities straight.

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Milton Packer, MD, is currently distinguished scholar in cardiovascular science at Baylor University Medical Center at Dallas and visiting professor at Imperial College in London. Packer is an internationally recognized clinical investigator who has made many seminal contributions to the field of heart failure, both in understanding its mechanisms and defining its rational management. His work has spanned more than 40 years and has established the cornerstone of the current modern treatments for heart failure, including ACE inhibitors, beta-blockers, angiotensin neprilysin inhibitors, and SGLT2 inhibitors. He has authored nearly 600 peer-reviewed publications and has been the overall principal investigator for 20 large-scale international trials of novel interventions in heart failure.

Disclosures
The author has no conflicts of interest to disclose related to this subject

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