Academic Study Underscores How Big Pharma’s Price-Gouging on Treatments for Diseases Like Cancer Drives Crisis of Affordability
An academic analysis published this week in Health Affairs examines Medicare enrollees’ habits when prescribed new, high-price specialty drugs for four specific conditions. The analysis compares the difference between the number of prescriptions filled and picked up for patients who receive low-income subsidies versus those without these subsidies, which lower out-of-pocket spending. The analysis looked at more than 17,000 prescriptions issued between 2012 and 2018 and found that seniors were almost twice as likely to pick up or fill their prescriptions when they had this low-income subsidy.
Further, the analysis reveals that Medicare beneficiaries without subsidies did not fill or pick up almost 30 percent of prescriptions written for high-cost cancer-fighting drugs, 22 percent of hepatitis C treatments, and more than 50 percent of disease-modifying therapies for either immune system disorders or hypercholesterolemia.
The findings underscore the importance of market-based solutions to crack down on brand name pharmaceutical manufacturers’ egregious pricing practices that are the underlying cause of out-of-control drug prices.
THE CAUSE: BIG PHARMA’S PRICE HIKES AND SKY-HIGH LAUNCH PRICES
The root causes of the affordability crisis for drugs used to treat serious conditions, like cancer, are the egregious pricing practices of brand name drug companies, including repeated price hikes on existing treatments and sky-high launch prices on new medications being introduced to the market.
Prices On 54 Cancer Drugs Increased 40 Percent Over Eight Years: “The affordability problem is worsened by soaring list prices for many specialty drugs used to treat cancer and other serious diseases… For instance, prices for 54 orally administered cancer drugs shot up 40 percent from 2010 to 2018, averaging $167,904 for one year of treatment, according to a 2019 JAMA study. Bristol Myers Squibb, the manufacturer of Clark’s drug, Pomalyst, has raised the price 75 percent since it was approved in 2013, to about $237,000 a year.” (“Seniors Face Crushing Drug Costs as Congress Stalls on Capping Medicare Out-Of-Pockets,” Kaiser Health News, January 4, 2021, Harris Meyer)
Cancer Drug Price Hikes Outpace Inflation: “The cost of oral cancer drugs increased by almost six percent over inflation from 2010 to 2018, leading to increases in out-of-pocket costs for Medicare patients despite reductions in the Part D coverage gap, according to an analysis of formulary and pricing data.” (“Costs of Oral Cancer Drugs Rising Faster than Inflation,” MDedge, May 28, 2019, Richard Franki)
List Prices for New Cancer Drugs Rose More Than 50 Percent In Five Years: “It wasn’t all that long ago that a six-figure price on a debut cancer drug was big news. Now, it would be more surprising if an oncology launch didn’t carry a price tag of $100,000 or more—and the high cost of those new rollouts is helping drive cancer treatment costs toward $100 billion annually in the U.S. alone. According to a new IQVIA report, U.S. cancer drug spending climbed to almost $50 billion last year, about twice the $24.8 billion spent in 2012. Along the way, median U.S prices for new therapies climbed above $160,000 last year, more than double the median $79,000 launch price in 2013.” (“Super-Pricey New Cancer Drugs Drive Mega Increases in Treatment Spending,” FiercePharma, May 24, 2018, Eric Sagonowsky)
Every New Cancer Drug Brought To Market In 2017 Cost $100,000 Or More: “Spending on cancer drugs has doubled over the past five years, and little wonder: Every new cancer drug brought to market last year cost $100,000 or more, according to a new report. The average cost of a new drug released in 2017 was $150,000, according to the report from The IQVIA Institute for Human Data Science, formerly IMS Health and Quintiles. Those drug costs are expected to double again by 2022, the report finds. That compares to the average $79,000 cost of new cancer drugs that hit the market in 2013.” (“Cancer Drug Spending Doubled In Last 5 Years, Report Says,” NBC News, May 24, 2018, Maggie Fox)
Drug Companies’ Price Hikes Costing Patients And Taxpayers: “Drugmakers raised prices on more than 400 drugs in the early days of 2020, including two blockbuster cancer treatments that have been top-expenditure drugs in Medicare Part B, according to healthcare analysts and CMS data… Two of the 10 physician-administered drugs that Medicare spent the most money on in 2018 have seen price increases this January, healthcare research firm 3 Axis Advisors found… Merck instituted a price increase of 1.5 percent for Keytruda, the second-highest expenditure Medicare Part B drug in 2018. Bristol-Myers Squibb increased the price for Opdivo, a drug used to treat small cell lung cancer, by 1.5 percent. Opdivo was the third-highest Part B expenditure drug in 2018.” (“Two Blockbuster Cancer Drugs see New Year Price Hikes,” Modern Healthcare, January 3, 2020, Rachel Cohrs)
Breaking Down Big Pharma’s Pricing Of Blockbuster Cancer Drugs
THE KICKER: PRICES RISE WHILE VALUE LAGS
Big Pharma’s price increases are not connected to increases in clinical value. That is the consensus of multiple studies that find drug companies price hikes on cancer products in their portfolios are unjustified and carry little to no connection to clinical improvements.
Big Pharma’s Prices Have “No Association” With Clinical Benefit: “The cost of cancer drugs continues to escalate with each new product that comes on the market, often presenting formidable challenges to both patients and healthcare systems. But a new analysis suggests these high costs cannot be justified with respect to clinical benefit. The analysis considered 65 oncology drugs launched in the past decade and found no association between clinical benefit and monthly treatment cost… ‘Prices of cancer drugs should be better aligned with their clinical benefit to improve access to beneficial medicines and enable limited resources to be used for treatments that offer patients improved outcomes,’ said lead author Kerstin Noëlle.” (“High Cost Of Cancer Drugs Does Not Reflect Clinical Benefit,” Medscape, May 13, 2020, Roxanne Nelson)
Cancer Drug Pricing “Not Aligned With The Actual Benefit:” “A new analysis found that costs for dozens of cancer drugs in the U.S. were 2.3 times higher than in four wealthy European nations. And at the same time, there was generally no association between the clinical benefits of the drugs and the monthly treatment costs in most of the countries. In other words, pricing was not aligned with the actual benefit.” (“What Value? Costs For Dozens of Cancer Drugs Aren’t Tied To Better Clinical Benefits,” STAT News, April 30, 2020, Ed Silverman)
Price Increases on Cancer Medications Outpacing Value: “The cost of new anti-cancer drugs increased more than five-fold from 2006 to 2015, but a new analysis suggests that cancer patients and insurers may be getting less for their money. Anticancer medications account for the lion’s share of global drug spending, and the average price per month of these drugs is known to have more than doubled in recent years, Dr. Kelvin Chan of Sunnybrook Health Sciences Centre in Toronto and colleagues note in the Journal of Oncology Practice.” (“As Cancer Drug Prices Climb, Value Not Keeping Pace,” Reuters, April 12, 2018, Anne Harding)
Learn more about market-based solutions to hold Big Pharma accountable and lower drug prices HERE.