A blockbuster hepatitis C drug costs $84,000, straining state budgets. Martin Shkreli acquires the rights to a generic and raises its price 5,000 percent. Presidential candidates react to the public outcry, claiming they know what to do about the drug prices.
What does it all mean? Until recently, “there’s been an equilibrium in the public mind between a free market regimen of the market setting prices and what the public and payers are willing to pay,” said independent journalist Duncan Moore, “but there are indications this informal tradeoff has begun to swing out of control.”
Moore set the stage for a panel discussion on Feb. 23 about “Drug Pricing: Covering the Controversy” at Columbia College in Chicago, an AHCJ chapter event. He asked: “Does this represent a cultural shift in the orientation of pharmaceutical company executives and of the public’s tolerance to bear the burden of these kinds of possible abuses of the pricing power?”
In other words, are we ready for regulation on prices?
Panelist Roy Guharoy, Pharm.D., vice president and chief pharmacy officer at Ascension Health, said something needs to change. He called for more transparency in drug pricing, less direct-to-consumer marketing, more comparative effectiveness research and faster FDA approval for generics.
Ascension, the nation’s largest nonprofit health care system, has measured the impact of 12 months of pharmacy inflation at nearly $93 million.
In 2014, Ascension banned Genentech sales representatives from its hospitals after the drug giant changed its distribution methods for three cancer drugs, costing Ascension millions of dollars.
“We are going to take those kind of positions in the future,” Guharoy said.
Another view came from the economist on the panel. European-style price controls or Medicare negotiating prices would mean giving up a certain amount of innovation and discovery, said Craig Garthwaite of Northwestern University’s Kellogg School of Management. The question “How much innovation do we want?” should be part of the public discussion when Americans consider policies aimed at drug prices.
“I think it’s good we’re actually curing hepatitis C,” Garthwaite said.
For negotiating prices to work, Medicare also would need to be able to exclude drugs from its formulary, he continued.
“Just allowing Medicare to negotiate isn’t going to do much unless you allow exclusions to be paired with it,” Garthwaite said.
“Which oncology products do we want to say, that’s too much money for, that six weeks of life isn’t worth $120,000, which is a profile you see with some of these drugs?”
Representatives of Chicago-area research pharmaceutical companies were invited to contribute a panelist to explain the industry’s views on pricing. Local executives of AbbVie, Baxalta, Horizon, Astellas and Takeda were either unavailable or had scheduling conflicts on the evening of the AHCJ event.