Drug prices and corporate greed: there may be limits to our gullibility

“A Huge Overnight Increase in a Drug’s Price Raises Protests”, by Andrew Pollack in the New York Times September 20, 2015, features the story of Daraprim, the brand name for pyrimethamine, a drug used to treat toxoplasmosis. “Toxo”, often associated with cat feces, is a protozoan and was an fairly rare infection prior to the HIV epidemic, when it became a significant cause of brain infections in those with very low CD4 counts. Luckily, pyrimethamine, a drug available for over 60 years, had reasonably good success. Now, rights to the drug have been acquired by Turing Pharmaceuticals and its price has been raised from $13.50 to $750 a pill. Turing’s founder and CEO, Martin Shkreli, is a former hedge fund manager who seems to know an opportunity to make a killing when he sees one. A few days later, the Times ran an AP story on a interview Shrkeli gave ABC news which reported that Turing would reduce the price, albeit to one that was unspecified. “’We've agreed to lower the price of Daraprim to a point that is more affordable and is able to allow the company to make a profit, but a very small profit,’ Shkreli told ABC.”

But this is, as the Pollack article points out, not the first or only time this has occurred. In the last few years new drugs, mainly those made in labs from recombinant DNA rather than from plant sources, for hepatitis C, high cholesterol, and various cancers have been criticized for their astronomical prices, but we are talking about old drugs here. One example is cycloserine, used to treat multi-drug resistant (MDR) TB, the price of which has been raised from the previously expensive $500 for a month’s supply to $10,800. (Please note that I am being careful with my decimal points; this is, indeed, over a 2000% increase.) The general manager of the manufacturer, Rodelis, “…said the company needed to invest to make sure the supply of the drug remained reliable.” And thus, of course, required the 2000% increase. Right.

And many more common, prosaic drugs have had the same increases. One I have previously written about several times is colchicine, an ancient treatment for gout derived from the autumn crocus (and I mean “ancient”, not like “20^th century”; there are records of its use in Egyptian papyruses from 1500BC!). Dr. Stephen Griffith’s guest post "VISA and colchicine: maybe the banks and Pharma really ARE in it for the money!” said ”the FDA has encouraged pharmaceutical companies to study some of the older drugs for true effectiveness, and the company can then apply for a three year patent on the medication. URL Pharma, Inc. did the clinical trials on less than 1,000 patients, and proved that a drug everyone already knew worked, worked. Amazing! They received a three year patent, and now a pill that was $4 per month long before the $4 per month plans existed, is $5 per pill! Since it is usually given twice a day, the drug will now cost patients $10 per day when it formerly cost about a quarter.” What? The FDA is encouraging this?

The Times articles cites increases in other common drugs; two heart drugs, Nitropress and Isuprel, were acquired by Marathon Pharmaceuticals in 2013 and had their prices quintupled. Then this year, they were acquired by Valeant Pharmaceuticals which “…promptly raised their prices by 525 percent and 212 percent respectively.” The most depressing one for me is doxycycline, a form of the antibiotic tetracycline, which is broad-spectrum, effective, and, until recently, cheap. It is frequently used for pneumonia acquired in the community, as it is effective against both common bacterial and “atypical” causes of pneumonia, and generally effective against the very dangerous “methicillin-resistant Staphylococcus aureus”, or MRSA. It is used as a first or second-line drug for several sexually-transmitted infections (STIs), including syphilis, and is even effective for prevention and treatment of malaria. An altogether good drug. When I was a medical student, it had recently been introduced (under the brand name Vibramycin) and it was considered expensive compared to other tetracyclines, even if often more effective. So we were all very happy when it became generic and cheap. Indeed, the Wikipedia entry for doxycycline says “Doxycycline is available as a generic medicine and is not very expensive.^[1][5] The wholesale cost is between 0.01 and 0.04 USD per pill.^[6] In the United States 10 days of treatment is about 14 USD”.  Um,  that seems to be dated. The Times article tells us that “Doxycycline, an antibiotic, went from $20 a bottle in October 2013 to $1,849 by April 2014.” Oh. A 9200% increase. Kind of high for treating your bronchitis, or even your outpatient (or inpatient) pneumonia, or for your Lyme disease, or Chlamyida vaginitis, or for taking malaria prophylaxis.  Maybe you wouldn’t be very happy to have to pay that when you pick up your prescription, if you don’t have prescription drug coverage. And if you do, I’m sure that your insurer is not. The issue of how this price increase was allowed to happen is described as “murky” by David Lazarus in the Los Angeles Times. [Note: it seems that some of the generic forms of doxycycline have come back down, per a search on the valuable-for-health-care-providers-or-anyone-taking-prescriptions app, Goodrx.]

These price increases for long-standing generic drugs are outrageous, even more than the predatory prices of the new recombinant DNA drugs. It is blatant opportunism on the part of the drug manufacturers certainly, who could be considered to be cold-blooded profiteers on human misery (which of course they are, not to say evil, immoral, unconscionable and inhuman). But, hey, they are in business and are taking an opportunity to make more money, as does every cold-blood, profiteering business, in what is apparently a legal way. This, of course, raises the question of “how come it is legal? What the heck happened?”  Where is the FDA? Where is the Department of Health and Human Services? Where is the Executive Branch? Where is the Congress? Remember, we’re not talking small price increases. We’re not talking fair pricing. We’re talking thousands of percent increases in common drugs that people need, drugs that I, and other doctors, prescribe a lot.

People care a lot about the price of prescription drugs, and the amount that their co-pay is, because this affects them directly, in their pocketbook, regardless of what party they vote for. Margot Sanger-Katz of the Times, in “Prescription Drug Costs Are Rising as a Campaign Issue”, reports on a Kaiser Family Foundation survey that Americans identify costs for drugs for specific diseases and prescription drug costs overall as their #1 and #2 health concerns. “Americans have long paid the highest prices for drugs. Because the United States gives drug makers long periods of patent exclusivity and lets a multitude of insurers each negotiate with drugmakers on price, drug spending here is, on a per capita average, roughly double the amount spent in many developed countries.” (see figure)

I started out saying that these companies were making a killing, but the problem is that the ones being killed are the rest of us. Sounds like something Jim Hightower would say, and he’d be right. The real issue is why do we keep electing people who put our interests, our health, behind the rapacious profits of corporations. It is only because of the enormous coverage Turing’s increase in the price of Daraprim engendered, and the calls for investigations in Congress, that Shrkeli is planning to lower the price. It has nothing to do with his, or any other corporate leaders’, concern for the public (see, for example: Volkswagen diesels, poisoned peanuts).

By the way, you might want to write down the names of the two Congresspeople the Times article notes have called for an investigation of this: Representative Elijah Cummings of Maryland and Senator Bernard Sanders of Vermont. Yes, that Bernard Sanders; the one running for President. Hmm.

Battling for Biomedical Supremacy? How about improving the people's health?

In an editorial on August 30, 2015, the New York Times discusses the “Battle for Biomedical Supremacy”, looking at the practice of what they call “poaching” of biomedical researchers by one state or university from another. Their main focus on the receiving end is Texas, because it has the highest profile of spending really big money to recruit researchers from universities in other states, and its main concern is (unsurprisingly) New York, which has more medical schools than any other state, and especially private medical schools with big endowments and big research programs to be “poached”. They raise the issue, but I am not (after reading it a few times) quite sure what their position is and I am afraid that they may not be either, since usually the position of the Times editorialist is clear. It seems to be saying “Well, New York needs to join this, but not spend too much public money on it.” But the editorial certainly does not condemn the practice.

I am not sure that I am wholly against it, either. Biomedical research is important. Researchers who can get better jobs (higher paying, more money to support their work) should not generally be criticized for accepting them. People have that right. On the other hand, from the point of view of the institutions that are being poached from, there can be not only feelings of sadness, betrayal, and anger, but in many cases financial losses that result from money they spent to recruit these “top researchers”, and now is down the drain, or so it seems. Sometimes these researchers are signed to contracts, just as physicians who bring in lots of money for a hospital are. These contracts for physicians may contain “non-compete” agreements, which (try to) restrict the area in which a physician leaving their employment can practice. They are more enforceable when they are more local, preventing them from going over to direct competitors, but not when someone is moving from NY to Texas. And the competition in biomedical research is much more national than the competition for direct medical care. On the other hand, if you hire mercenaries, you run the risk that someone will offer them more.

So it can increase the income and resources for the individual investigator (and his/her “team”) and can increase the status of the successful university, and might (in some cases) impact directly or indirectly on the economies of the local area, and thus state. Whether it is “worth it” from a direct financial return-on-investment (ROI) point of view probably depends upon the individual situation. It is almost never financially “worth it” directly; universities (medical especially) almost always lose money on their research endeavors even when you don’t factor in multi-million dollar recruitment packages; most “wet-lab” (biomedical) research (as opposed to say, community based or epidemiologic research) costs a lot more than even the sum of the “direct” dollars from the National Institutes of Health (NIH) and the indirect dollars (often 50% or more of the “direct”) that is supposed to help support the infrastructure. Add in another $5, $10, $20, $40 million more and you have a really hard time coming out anywhere close to break even.

But so what? The money for biomedical research has to come from somewhere; the usual source is NIH, but if states want to sweeten that, why not? After all, there are privately funded research institutes (the Stowers Institute in Kansas City is a local example); why not state, as well as federal. There are some concerns in that the federal (NIH) funds are the result of a competitive peer-review process, while these state funds are often just awarded to researchers based upon cachet. Still, if the state believes it has a chance for direct or indirect economic benefit, maybe it should “go for it”.

The bigger issue is not whether biomedical research should occur or who should support it, but why there should be competition for which university or state gets the big researchers. Does this facilitate biomedical researchers finding out more about how to treat or cure disease? I guess if more money is available, more progress could be made. But the bidding wars between universities and states seem to me to be more about local glory and (if lucky) economic development than real advances in biomedical research. It is similar to states and localities trying to lure employers by tax breaks, which may sometimes cost more than the economic benefit. Or, in the case of the Kansas City metropolitan area which straddles two states, luring companies back and forth across the state line (so that employees don’t even have to move) in what seems not-even-break-even mode (considering the cost of tax breaks). There may sometimes be benefit to science or the public good from relocating researchers and their laboratories but certainly not at the level and frequency it is occurring, and not enough to justify the huge expenditures. Often there is little or no new value being generated, but rather a shifting of resources from one place to another, maybe with a little loss in the process. However, this is how much of our economy works; the stock market and most of the financial industry – moving money around, skimming off profit (HUGE profit – the profiteers here are most of the richest of the billionaires) without creating any real value for the society.

Even more important is the implication that this is benefiting people’s health. If we wanted, as a society, to actually benefit people’s health, there are a lot more direct, effective, cost-effective and rational ways to do so. This, of course, could partly be providing financial access to health care for everyone regardless of their socioeconomic or other status, including those who have been left out of the ACA expansion because they life in states that have not expanded Medicaid, because they are undocumented, or because the level of health insurance that they can afford on the exchanges doesn’t meet all their health needs. A single-payer health system, Medicare for all. It also could mean enhancing geographic access, for those who are in rural areas or underserved urban areas, by using whatever is necessary (like financial incentives) to get doctors and hospitals to service these communities. It could also mean increasing the number and percentages of health care providers entering our most needed specialties, such as primary care, either by direct subsidy or by stopping the skewed and counterproductive reimbursement of subspecialists at much higher levels. (In Denmark, I discovered, general practitioners usually earn more than subspecialists! It is all about policy, not about the market.)

But, even more narrowly, talking about research, there is the question of getting out the therapies that research has already shown work, and are effective, and often cost-effective, to the people who need them. Continuing to do more research and find out more things is great, but actually having a national (or even state) system to ensure that the important discoveries are disseminated and implemented, is a greater priority. There are many common conditions, such as diabetes, for which we have treatments that are simply not available to many people, for many of the reasons above. Some of the unavailability of effective treatments are cost (the rapacious prices and profits charged by drug companies), but there are also treatments that are unavailable because – well, we don’t know why. While we continue to do more research on discovery, we need to do even more on efficacy, and fidelity, and finding out how to get our people to actually have improved health. Competition for researchers without increasing value is as wrong as it is in any arena.

The most effective treatments need to be available to all, the ineffective to none. We don’t need biomedical supremacy of Texas over New York, or California universities over those in Massachusetts, or even in the US over the rest of the world. We don’t need one university to “win” over another. We need better health for all our people.

Does prevention save money? Is that the right question?

Does prevention save money? That is, does increasing access to preventive health care, doing more screening tests on a larger number of people, end up saving more money in the long term by reducing the cost of caring for the diseases that are prevented? This is the question asked in “Conventional wisdom clashes with data on health care savings”, by Margot Sanger-Katz in the New York Times on August 7, 2015. Ultimately, she answers “no”; indeed, in the online version dated August 5 that the link above takes you to, the article is titled “No, Giving More People Health Insurance Doesn’t Save Money”. Although it of course depends upon which preventive test we are talking about; “Counseling on contraception is one [of the preventive interventions that actually do save money] because the costs of prenatal care, delivery and pediatric care associated with an unplanned pregnancy are so substantial. But a lot of the preventive health measures that we tend to value a lot — mammography, screening for diabetes — tend to cost more than they save.”

The motivation for this article at this time is clearly the Affordable Care Act (ACA), which not only resulted in more people receiving coverage but mandated that preventive services be covered with no co-pay. President Obama made the case for it in part by talking about cost savings; Sanger-Katz quotes his 2009 address to Congress: “There’s no reason we shouldn’t be catching diseases like breast cancer and colon cancer before they get worse. That makes sense, it saves money, and it saves lives.”  But, in fact, the discussion on the cost vs cost-saving from preventive services is not new; it has been frequently addressed in the literature. I have written about it several times, including two sequential posts on February 2 and February 9, 2009: Prevention and Cost and Economics and Disease Prevention, that cited two important articles on the topic, by Russell in Health Affairs[1] and by Woolf in JAMA.[2]

Sanger-Katz also cites two studies to support the argument, one old and one more recent. The famous RAND health insurance experiment from the 1970s and 80s that examined the impact of providing free (to the patient) access to health care, and the more recent Oregon health insurance experiment, begun in 2008, where poor people who were not already on Medicaid were lotteried into receiving health coverage or not. As she notes, in both studies, people who got free or low-cost coverage used more care, and thus cost more money. This, she notes, is consistent with basic economic theory, and ”…follows the pattern for nearly every other good in the economy, including food, clothing and electronics. The cheaper they are for people, the more they are likely to buy.”

But, while true, this misses the most important point. I have written about both studies before, I discussed the RAND study in Insurance company profits up and patient care down, May 11, 2011, and also refer to it in my discussion of Oregon, The Oregon Lottery: Far from enough, but at least they are doing something, July 19, 2012. In the latter, I quote from a June 22, 2012 New York Times article by Annie Lowrey, “Oregon Study Shows Benefits, and Price, for Newly Insured” that the study “has found that gaining insurance makes people feel healthier, happier and more financially stable,” and that “The insured were 25 percent less likely to have an unpaid medical bill sent to a collection agency and 40 percent less likely to borrow money or skip paying other bills in order to cover their medical costs.” This is the truly important point; people are getting medical care that they need, and are not having to cut back on their other basic needs (remember, these are poor people who don’t have lots of discretionary income) to do so. It echoes the findings of RAND, which were basically: yes, people who got free health care used more care, and indeed used more care that experts considered “inappropriate” (the classic “going to the ER for a cold” trope). But it also found that, and this is the real take-home message, they used more appropriate care; the corollary trope is going to the ER for chest pain, instead of staying home and hoping it would go away because you’re afraid to incur the cost. Free health care not only saved lives, it improved health.[3]

Ultimately, as Sanger-Katz points out, everyone dies. While provision of preventive services may save lives from one disease “…every time you prevent people from dying from one disease, they are likely to live longer and incur future medical expenses. The patient who benefits from the cholesterol screening may go on to develop cancer, arthritis, Alzheimer’s or some other costly illness.” This may seem obvious, but only if you think about it. In the 1980s, I was the only physician student in a class on Health Administration; the other students were planning on being health administrators but did not have a medical background. In one class, a student reported that we were likely to save money in the future because people were adopting healthier lifestyles – eating better, exercising more, not smoking as much. I pointed out that the opposite was true; this would mean people lived longer, and were more likely to develop long-term chronic diseases leading them to, for example, long hospitalizations and nursing home stays. If you truly wanted to save money, you’d encourage a high-cholesterol diet, no exercise, and 2 packs of cigarettes a day, so everyone would drop dead from a heart attack in their late 40s and be done with the cost.

This may sound macabre, but the point it makes is that cost is not the only issue. Examining the cost of providing free health care, as in RAND 40 years ago, or free preventive care, as in ACA, is a legitimate activity, but it is not the only, or even most important outcome. Access to health care, prevention of premature death, and improvement in quality of life are also critical considerations. Cost is important, but cost control cannot be measured in such crude ways as “does prevention save money”? First, as Sanger-Katz noted, different preventive services have stronger evidence behind them, and have a smaller “number needed to treat” (NNT) to have an impact on either cost or lives saved or quality of life (thus a high priority should be expanding access to contraception and contraceptive counseling). Second, there is the expansion of indications (reasons for doing a test), either through providing preventive services to a larger group of people than those shown to have the most benefit in studies, or by ratcheting down the “goal” for things like cholesterol, blood pressure, or blood sugar. These both have the same effect; they decreases the average long-term benefit while increasing the cost (and, not coincidentally, the profits for the manufacturers of the drugs and purveyors of the tests).

Third, and by far the most important in terms of both cost and justice, is the application of different standards to different populations, based on insurance status, wealth, and race. Performing preventive services for people who are unlikely to benefit is a problem, but performing much more expensive interventions for people who almost certainly won’t benefit just because they want them, and they (or their insurer) can pay for them, and because the providers doing them make money, is a far greater issue for cost. In addition, there is the question of “what is a fair price?” for any service, preventive or therapeutic, indicated or not (well, if not indicated, the fair price is zero!). In The high cost of US health care: it's not the colonoscopies, it's the profit, Jul 28 2013, I cited the work of Elisabeth Rosenthal of the New York Times, on this topic; she presents the wide variation in costs for this and other procedures. Thinking of the myriad types of preventive interventions as if they were all the same and of the same value is like thinking of “cancer” as one disease, rather than hundreds; it is simple and it is incorrect.

Ultimately, the cost issue is addressed by equity. Everyone should have access to all interventions that are likely to help them, and no one to those that will not. 

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[1] Russell, LB, “Preventing chronic disease: an important investment but don’t count on cost savings”, Health Affairs, Jan/Feb 2009;28(1):42-45

[2] Woolf SH, “A closer look at the economic argument for disease prevention”, JAMA 4Feb2009; 301(5):536-8. (9th)

[3] Brook RH, et al., “Does Free Care Improve Adults' Health? — Results from a Randomized Controlled Trial”, N Engl J Med 1983; 309:1426-1434