Unsustainable Drug Price Increases: Issues and Solutions. Scott Knoer, MS, PharmD, FASHP Chief Pharmacy Officer Cleveland Clinic

Transcription

1 Unsustainable Drug Price Increases: Issues and Solutions Scott Knoer, MS, PharmD, FASHP Chief Pharmacy Officer Cleveland Clinic

2 Disclosure The speaker has nothing to disclose 1- Reference 1 2- Reference 2Refe

3 Objectives 1. Describe the multiple schemes PhRMA uses to dramatically increase drug prices and utilization. 2.Describe potential legislative solutions to combat drug price increases

4 2017 CC Pharmaceutical Purchases $ 919 Million Millions Ambulatory % Specialty % Other 90 10% HOP/Clinic % Inpatient % Source: Pharmacy Purchasing Datawarehouse YTD through Q4 2017

5 The Face of Drug Price Increases

6 Egregious sole source generic increases Turing Purchased the rights to Daraprim in Aug & immediately raised the price by 5,455% $13.50 to $ per pill Valeant Raised prices on Nitropress (200%); Isuprel (501%); Mephyton (527%); & Edecrin (879%) Iroko Raised the price of Indocin suppository (407%) in 2017 $16.75 to $85.00 per suppository

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8 Mylan raised the price of EpiPens over 450% Cost of two EpiPens (adjusted for inflation) $ $100 $0 $100 $200 $300 $400 $500 $600 $700 Cost of two EpiPens (adjusted for inflation) Profit Margin % 55% 0% 10% 20% 30% 40% 50% 60% Profit Margin

9 Daranide to Keveyis a journey of greed Merck introduces Daranide in 1958 for Glaucoma. Later used off-label for periodic paralysis Merck discontinues in Cost is $0.50 per tablet Patients import from Europe. Cost is $5.00 per tablet. Sun buys rights in FDA grants approval with 7 year exclusivity in Sun raises price to $ per tablet Strongbridge buys rights in 12/2016. Raises price to $150 per tablet The annual cost of treatment for dichlorphenamide has increased from $360 to $108,000 since 2000.

10 Insulin costs patients $900 / month There hasn t been a bit of change in terms of their synthesis, their manufacturing, and yet the costs have gone up extraordinarily. There are no adults in the room to tell the companies they can t charge whatever they feel like. David Nathan, Harvard Medical School Professor, HBR January 22, 2018

11 And without insulin, people with Type 1 diabetes die

12 How much does Pharma really spend on R&D? We need to raise cost so we can invest in R&D Valeant R&D = 3% of sales Pharma R&D = 15% of sales Marketing = 20-25% Claims $500M per new drug but actually $51-71M after taxes 1 NIH spends $31B/year for medical research 25% 20% 15% 10% 5% 0% R&D spending as a percentage of total revenue 3% 13% 15% 17% % Valeant Pfizer GSK Novartis Roche

13 What s under the Radar Limited visibility to smaller % increases but impact is significant With average annual increases of 9%, Humira Pen has more than doubled in price in the last 5 years $5, $4, $4, $4, $3, $3, $2, $2, $2, $1,500.00

14 New therapies are very expensive Solvaldi $84,000 dollars in US $900 in Egypt PCSK9 inhibitors $14,000/year per patient in US Treatment needs to be $2,400/year to be cost-effective 2 2.6M US patients will qualify for treatment in the next 5 years with a total impact of $109 Billion

15 Cancer drug prices are rising faster than prices in other health care sectors Annual cost of a new cancer drug exceeds $100K Medical bills have become the single largest cause of personal bankruptcy Results suggest that current pricing models are not rational but simply reflect what the market will bear Source: Five Years of Cancer Drug Approvals: Innovation, Efficacy, and Costs JAMA Oncol. 2015;1(4): doi: /jamaoncol Linear Regression Analysis of Drug Price vs Percentage Improvement in Survival Each point on the graphs represents 1 drug. Copyright 2016 American Medical Association. All rights reserved

16 Brand drug prices have more than tripled in price Express Scripts Prescription Price Index Brand Prescription Price Index Consumer Price Index Source: Express Scripts 2016 Drug Trend Report.

17 Specialty drug sales are growing fast

18 PhRMA Just Doesn t Learn

19 Other issues leading to increased Rx costs Physician marketing $24 Billion to healthcare professionals in 2012 Pay to delay Legal impediments to generic entry Limited distribution and misuse of REMS Turing and Celgene DTC advertising Including the creation of new diseases like Low-T

20 Big Pharma spent $6.2 Billion on DTC ads in 2016

21 Over $50 Million in just the top two drugs alone!

22 Pharmaceutical companies have been spending money like drunken sailors Rino Scanzoni, chief investment officer of WPP Plc s GroupM Since 2012, DTC spending by pharmaceutical companies has increased 62% Pharmaceutical Commerce Drugs with DTC ads had nine times more prescriptions than those that did not 2011 Report by the Congressional Budget Office

23 Drug manufacturers spent $170M to lobby in 2017 Monies paid to132 Clients Using 880 Lobbyists 66% of which had prior jobs in government PhRMA (Pharmaceutical Research & Manufacturers of America) spent $26M alone Source: OpenSecrets.org; Senate Office of Public Records

24 An example of Pharma lobbying: Mylan Increased the use of lobbyists every year since 2001 Convinced FDA to increase access to drug In 2013, Congress passes the Epipen Law CEO Heather Bresch: We have passed legislation in 48 states to allow undesignated EpiPens to be in schools We re now passing legislation in 30 states to have them in restaurants and hotels.

25 Potential Solutions Support the Campaign for Sustainable Rx Pricing The campaign is a non-partisan coalition of hospitals, physicians, nurses, pharmacists, consumer groups and insurers, among others focused on finding bi-partisan, market-based solutions to lower drug prices in the U.S. Focus on transparency and competition

26 Potential Solutions Pass the Creating And Restoring Equal Access To Equivalent Samples Act (CREATES) Act of 2016 Act requires manufacturers of brand-name drugs to provide the required samples of their products to generic manufacturers for bioequivalency studies Allows generic versions of these drugs to get to market faster, creating a competitive market

27 Potential Solutions Ban direct-to-consumer advertising AMA & ASHP have endorsed banning DTC ads because it leads to the over-prescribing of expensive drugs when more cost-effective options often exist Only the U.S. and New Zealand allow DTC advertising & their residents take significantly more drugs than those in comparable countries The U.S. only allowed DTC for drugs in 1999

28 Potential Solutions Eliminate pay-to delay payments Manufacturers of brand-name drugs will pay the generic manufacturers to not produce a generic version as a product nears patent expiration This practice should be illegal as it crushes competition and manipulates the marketplace unfairly

29 Potential Solutions Eliminate patient assistance co-pay cards These supposedly help patients reduce their outof-pocket expenses The real goal is to direct patients to higher cost branded drugs Eliminating a co-pay may save patients money but shifts the payment burden to insurance companies, which is eventually passed on to consumers.

30 Potential Solutions Allow some drug imports when companies egregiously raise prices Require the FDA to allow drug importation to hospitals through existing supply chains, as long as FDAs quality standards are met This does not mean importation to patients via online pharmacies in Canada or other countries

31 Other Potential Solutions Competition Speed up generic approval process especially for lifesaving drugs Incentivize competition for sole source off-patent drugs via expedited FDA review Strengthen post-market clinical surveillance Fix exclusivity laws to prevent me-too drugs Promote biosimilars

32 The PBM Dilemma Shifts clinical decision making from physicians to actuaries Adding a middle-man increases costs Manufacturers increase product costs to offset margin loss from PBM rebates Patients may be directed to higher cost drugs that are carved into plan Rebates are profit generators for PBMs and not fully shared with employers or patients

33 PBM Gag Clause Legislation is gaining steam Contractual language bars pharmacists from telling consumers about less-expensive price options Requires co-pay collection is greater than usual & customary charge Restricts conversations about less-costly therapeutically equivalent drugs Approved in 4 states last year Will be introduced in 10 states this year

34 Since No Federal Laws Have Been Passed, States are Acting

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36 Vermont

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38 PhRMAis Ready for a Fight

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40 Trump Administration Talks Tough but Does Not Act

41 In fact, It Appears to do PhRMA s Bidding: One New Target is 340B hospitals Effective January 2019, reduced Medicare reimbursement to 340B hospitals Previous reimbursement: ASP + 6% New reimbursement: ASP 22.5% ASP: Average Sales Price CMS Hospital Outpatient Prospective Pay System Final Rule

42 Drug Pricing is Impacting Hospitals

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44 Can We Turn the Tide?

45 There is hope

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48 Average annual price increases have declined at least four years in a row for20 of America s top-selling brand-name prescription drugs, according to a STAT analysis of data from Truven Health Analytics, an IBM Watson business. The data suggest that public and political outrage over the high cost of vital medicines may be swaying corporate strategies. Price growth was especially low in 2017 perhaps due, in part, to peer pressure, as several top pharma companies have made public pledges to limit price hikes.

49 GAO Report on Drug Industry Dec Analyzed drug industry from 2006 to 2015 Drug sales increased from $534 billion to $775 billion in 2015 dollars 67 percent of all drug companies saw an increase in their annual average profit margins Among the largest 25 companies, annual average profit margin fluctuated between 15 and 20 percent. For comparison, the largest non-drug companies fluctuated between 4 and 9 percent

50 Is PhRMA Making Money?

51 GAO Report on Drug Industry Dec From 2008 through 2014, worldwide companyreported R&D spending, most of which went to drug development (rather than research), increased slightly from $82 billion to $89 billion in 2015 dollars Fewer competitors in the drug industry are associated with higher prices, particularly for generic drugs

52 Questions?