Alan Cassels is a drug policy researcher at the University of Victoria and a regular contributor to the blog. He tweets as @AKECassels.
With the cost of medications approaching stratospheric levels, criticisms of the drug industry have been gobbling up a fair bit of media space these days.
In one particularly memorable take, John Mack, aka the “Pharma Guy,” writes that pharma CEOs seem to be living in an alternate reality where they easily justify their high prices, and will even go so far as to play the victim. Meanwhile, Mack writes, “the annual cost of a new cancer medication now routinely exceeds $100,000 and novel cancer treatments could cost $83,500 per month or more than $1m a year.” As we’ve reported before, this is happening without much proof the drugs work.
All of this apparent price gouging is beyond frustrating for David Mitchell, a D.C.-based consumer advocate who started Patients for Affordable Drugs. Mitchell’s group takes no money from organizations–including manufacturers, hospitals and pharmacy benefit managers–who have a stake in the pharmaceutical business. This is unlike many patient groups that have either open “corporate advisory councils” or more hidden ties to industry.
Mitchell has first-hand experience as a multiple myeloma sufferer who has taken Revlimid. The drug’s maker, Celgene, has raised the price of the drug by more than 50% since 2012 and it now costs about $600 per tablet. While companies will say these price increases are vital to keep money flowing into new drug development, in this case, as in many others, there’s little innovation involved. Revlimid is a derivative of thalidomide, the notorious birth defect-causing drug withdrawn in the early 1960s.
Mitchell’s group is unique–unencumbered by pharma’s money and hence able to speak truth to power. As he explained to me over the phone, there are many excellent patient groups who take money from pharma, and put it to good use.
As a patient himself who requires expensive treatments, he’s personally seen the good works of patient organizations. But too many groups won’t speak out on drug prices, he said.
“Many patient groups are not taking care of patients by remaining silent,” he said, essentially becoming “apologists” for the companies who strive to keep prices high. We saw this recently in a California ballot initiative aimed at reducing drug prices, which was opposed by some patient groups that are on Big Pharma’s payroll.
Drug companies typically insist that eye-widening prices on some drugs are rarely paid because pharmacy benefit managers (used by employers, insurers and the government) often get large discounts. But those discounts are almost always kept secret. This is also an irritant for the Big Pharma CEOs because they too feel they are getting gouged by the middlemen, and only get to keep a portion of the published prices.
Most admit that the “black box” of drug prices is a two-edged sword. It might be good for pharmaceutical benefit managers and insurers, who can try to keep prices down through this system of secret discounts. But as the Financial Times recently reported (subscription required), insiders say that many of the ultra-high-priced cancer drugs still end up being sold at or near the sticker price to the consumer. In other words, the pharma narrative that “nobody pays list price” doesn’t fly with cancer drugs, and so this price-gouging deserves every bit of criticism it has received. Here’s how FT frames the issue:
In the fierce battle over drug prices in the US, cancer is a special case. Drugmakers can charge such high prices for cancer pills because insurers find it hard to refuse medicines for patients suffering from such an emotionally charged disease, according to Ronny Gal, analyst at Bernstein. “They can’t really do much about cancer drugs, they can’t really say ‘no’, so the companies raise prices at will,” he says.
Mitchell is adamant that all the secrecy is just plain wrong. He believes that the pharmaceutical industry’s monopoly power, and the lack of transparency, doesn’t serve patients. He believes that Medicare should be able to negotiate lower costs for patients (something it is now prohibited from doing), and that the government should take a harder line on the games drugmakers play with patents to keep generic drugs out of the hands of consumers.
Lastly, he believes that giving the pharmaceutical industry the ultimate power to dictate prices (without disclosing how they come up with those prices) is an affront, and that the U.S. needs a new system that sets prescription drug prices fairly and transparently.
I asked Ben Wakana, the executive director of Patients for Drug Affordability, who journalists need to talk to when reporting on drug affordability. He was quite direct with me: “Start with the patients.”
“The stories we see are anger and frustration,” Wakana said. “Heartbreaking stories of saying ‘I can’t afford to contribute to my college education fund because of my drugs,’ or ‘I can’t afford to take my kids on vacation.’”
Mitchell adds “When we started this, we knew there was anger. But now the outpouring of stories has been remarkable even for us. We have 5,000 patient stories.”
Here’s one of them:
Since most of the larger patient organizations get some of their funding from the drug companies, Mitchell says they function as “pharma’s tentacles including academic groups, specialists and politicians” to defend the current system.
Then there’s the research and innovation card where the argument used is “if you don’t pay the price we require, we won’t be able to develop the drugs that will save your life,” which Mitchell calls “blatant extortion.” He adds, “The amount of money that drug companies spend on basic scientific research that results in new drugs is much less than what they spend on advertising and marketing.”
The bottom line for advocates like Mitchell and Wakana is that journalists need to “pull back the covers and don’t be swayed by the scare tactics. Instead debunk them.”
“Pharma says it needs to price [their new drug] at a certain level. Some people are dying. One guy died because he went into insulin shock. That is, the drug company priced insulin at 250 times what it should be,” Wakana said.
Call things as they are, says Mitchell. In this case, the U.S. pharmaceutical industry is basically a drug monopoly that is setting prices with few controls.
“There is no reason to exclude drugs that are such an integral part of healthcare, to exclude them from the overall system of fair and reasonable prices,” Mitchell said. “They [the drug manufacturers] essentially charge what the market will bear.”