More details of pharmaceutical companies shenanigans.
OAKLAND, Calif. — The kitchen counter in the home of the Hayes family is
scattered with the inhalers, sprays and bottles of pills that have
allowed Hannah, 13, and her sister, Abby, 10, to excel at dance and
gymnastics despite a horrific pollen season that has set off asthma
attacks, leaving the girls struggling to breathe.
Asthma — the most common chronic disease that affects Americans of all
ages, about 40 million people — can usually be well controlled with
drugs. But being able to afford prescription medications in the United
States often requires top-notch insurance or plenty of disposable
income, and time to hunt for deals and bargains.
The arsenal of medicines in the Hayeses’ kitchen helps explain why.
Pulmicort, a steroid inhaler, generally retails for over $175 in the
United States, while pharmacists in Britain buy the identical product
for about $20 and dispense it free of charge to asthma patients.
Albuterol, one of the oldest asthma medicines, typically costs $50 to
$100 per inhaler in the United States, but it was less than $15 a decade
ago, before it was repatented.
“The one that really blew my mind was the nasal spray,” said Robin Levi,
Hannah and Abby’s mother, referring to her $80 co-payment for Rhinocort
Aqua, a prescription drug that was selling for more than $250 a month
in Oakland pharmacies last year but costs under $7 in Europe, where it
is available over the counter.
The Centers for Disease Control and Prevention puts the annual cost of
asthma in the United States at more than $56 billion, including millions
of potentially avoidable hospital visits and more than 3,300 deaths,
many involving patients who skimped on medicines or did without.
“The thing is that asthma is so fixable,” said Dr. Elaine Davenport, who
works in Oakland’s Breathmobile, a mobile asthma clinic whose patients
often cannot afford high prescription costs. “All people need is
medicine and education.”
With its high prescription prices, the United States spends far more per
capita on medicines than other developed countries. Drugs account for
10 percent of the country’s $2.7 trillion annual health bill, even
though the average American takes fewer prescription medicines than
people in France or Canada, said Gerard Anderson, who studies medical
pricing at the Bloomberg School of Public Health at Johns Hopkins
University.
Americans also use more generic medications than patients in any other
developed country. The growth of generics has led to cheap pharmacy
specials — under $7 a month — for some treatments for high cholesterol
and high blood pressure, as well as the popular sleeping pill Ambien.
But many generics are still expensive, even if insurers are paying the
bulk of the bill. Generic Augmentin, one of the most common antibiotics,
retails for $80 to $120 for a 10-day prescription ($400 for the
brand-name version). Generic Concerta, a mainstay of treating attention
deficit disorder, retails for $75 to $150 per month, even with pharmacy
discount coupons. For some conditions, including asthma, there are few
generics available.
While the United States is famous for break-the-bank cancer drugs, the
high price of many commonly used medications contributes heavily to
health care costs and certainly causes more widespread anguish, since
many insurance policies offer only partial coverage for medicines.
In 2012, generics increased in price an average of 5.3 percent, and brand-name medicines by more than 25 percent, according to
a recent study by the Health Care Cost Institute, reflecting the sky-high prices of some newer drugs for cancer and immune diseases.
While prescription drug spending fell slightly last year, in part
because of the recession, it is expected to rise sharply as the economy
recovers and as millions of Americans become insured under the
Affordable Care Act, said Murray Aitken, the executive director of IMS
Health, a leading tracker of pharmaceutical trends.
Unlike other countries, where the government directly or indirectly sets
an allowed national wholesale price for each drug, the United States
leaves prices to market competition among pharmaceutical companies,
including generic drug makers. But competition is often a mirage in
today’s health care arena — a surprising number of lifesaving drugs are
made by only one manufacturer — and businesses often successfully blunt
market forces.
Asthma inhalers, for example, are protected by strings of patents — for
pumps, delivery systems and production processes — that are hard to
skirt to make generic alternatives, even when the medicines they contain
are old, as they almost all are.
The repatenting of older drugs like some birth control pills, insulin
and colchicine, the primary treatment for gout, has rendered medicines
that once cost pennies many times more expensive.
“The increases are stunning, and it’s very injurious to patients,” said
Dr. Robert Morrow, a family practitioner in the Bronx. “Colchicine is a
drug you could find in Egyptian mummies.”
Thanks in part to the $250 million last year spent on lobbying for
pharmaceutical and health products — more than even the defense industry
— the government allows such practices. Lawmakers in Washington have
forbidden
Medicare,
the largest government purchaser of health care, to negotiate drug
prices. Unlike its counterparts in other countries, the United States
Patient-Centered Outcomes Research Institute, which evaluates treatments
for coverage by federal programs, is not allowed to consider cost
comparisons or cost-effectiveness in its recommendations. And
importation of prescription medicines from abroad is illegal, even
personal purchases from mail-order pharmacies.
“Our regulatory and approval system seems constructed to achieve
high-priced outcomes,” said Dr. Peter Bach, the director of the Center
for Health Policy and Outcomes at Memorial Sloan-Kettering Cancer
Center. “We don’t give any reason for drug makers to charge less.”
And taxpayers and patients bear the consequences.
California’s
Medicaid
program spent $61 million on asthma medicines last year, paying more
than $200 — not far from full retail price — for many inhalers. At the
Breathmobile clinic in Oakland, the parents of Bella Buyanurt, 7,
fretted about how they would buy her medications since the family lost
Medicaid coverage. Barbara Wolf, 73, a retired Oakland school
administrator covered by Medicare, said she used her inhaler sparingly,
adding, “I minimize puffs to minimize cost.”
‘A Frustrating Saga’
Hannah and Abby Hayes were admitted to the hospital on separate
occasions in 2005 with severe shortness of breath. Oakland, a city
subject to pollution from its freeways and a busy seaport, has four
times the hospital admission rate for asthma as elsewhere in California.
The asthma rate nationwide among African-Americans and people of mixed
racial backgrounds is about 20 percent higher than the average.
Robin Levi, a Stanford-trained lawyer who works for Students Rising
Above, a group that helps low-income students attend college, is black.
Her husband, John Hayes, an economist, is white. Their daughters have
allergic asthma that is set off by animals, grass and weeds, but they
also get wheezy when they have a cold.
“That first year, I had to take a lot of time from my job to deal with
the asthma drugs, the prices, arguing with insurers — it was a
frustrating saga,” Ms. Levi said.
For decades, the backbone of treatment for asthma has centered on
inhaled medicines. The first step is a bronchodilator, which relaxes the
muscles surrounding small airways to open them. For people who use this
type of rescue inhaler frequently, doctors add an inhaled steroid as a
maintenance drug to prevent inflammation and ward off attacks. The two
medicines are often mixed in a single combination inhaler for adults,
and these products are especially pricey. In addition, many patients,
particularly children, take pills as well as nasal sprays that calm
allergies that set off the condition.
While on medication, neither Hayes girl has been in the hospital since
her initial diagnosis. Their mother tweaks dosing, adding extra medicine
if they have a cold or plan to ride horses.
For most patients, asthma medicines are life-changing. In economic
terms, that means demand for the medicines is inelastic. Unlike a
treatment for acne that a patient might drop if the price became too
high, asthma patients will go to great lengths to obtain their drugs.
For pharmaceutical companies, that has made these respiratory medicines
blockbusters: the two best-selling combination inhalers, Advair and
Symbicort, had global sales of $8 billion and $3 billion last year. Each
inhaler, typically lasting a month, retails for $250 to $350 in the
United States.
Asked to explain the high price of inhalers, the two major manufacturers say the calculus is complicated.
“Our pricing is competitive with other asthma treatments currently on
the market,” Michele Meixell, the United States spokeswoman for
AstraZeneca, which makes Symbicort and other asthma drugs, said in an
e-mail. She added that low-income patients without insurance could apply
for free drugs from the company.
Juan Carlos Molina, the director of external communication for
GlaxoSmithKline, which makes Advair, said in an e-mail that the price of
medicines was “closely linked to this country’s model for delivery of
care,” which assumes that health insurance will pick up a significant
part of the cost. An average co-payment for Advair for commercially
insured patients is $30 to $45 a month, he added.
Even with good insurance, the Hayeses expect to spend nearly $1,000 this
year on their daughters’ asthma medicines; their insurer spent much
more than that. The total would have been more than $4,000 if the
insurer had paid retail prices in Oakland, but the final tally is not
clear because the insurer contracts with Medco, a prescription benefits
company that negotiates with drug makers for undisclosed discounts.
Patent Plays
Dr. Dana Goldman, the director of the Leonard D. Schaeffer Center for
Health Policy and Economics at the University of Southern California,
said: “Producing these drugs is cheap. And yet we are paying very high
prices.” He added that because inhalers were so effective at keeping
patients out of hospitals, most national health systems made sure they
were free or inexpensive.
But in the United States, even people with insurance coverage struggle.
Lisa Solod, 57, a freelance writer in Georgia, uses her inhaler once a
day, instead of twice, as usually prescribed, since her insurance does
not cover her asthma medicines. John Aravosis, 49, a political blogger
in Washington, buys a few Advair inhalers at $45 each during vacations
in Paris, since his insurance caps prescription coverage at $1,500 per
year. Sharon Bondroff, 68, an antiques dealer in Maine on Medicare,
scrounges samples of Advair from local doctors. Ms. Bondroff remembers a
time, not so long ago, when inhalers “were really cheap.” The sticker
shock for asthma patients began several years back when the federal
government announced that it would require manufacturers of spray
products to remove chlorofluorocarbon propellants because they harmed
the environment. That meant new inhaler designs. And new patents. And
skyrocketing prices.
“That decision bumped out the generics,” said Dr. Peter Norman, a
pharmaceutical consultant based in Britain who specializes in
respiratory drugs. “Suddenly sales of the branded products went right
back up, and since then it has not been a very competitive market.”
The chlorofluorocarbon ban even eliminated Primatene Mist inhalers, a
cheap over-the-counter spray of epinephrine that had many unpleasant
side effects but was at least an effective remedy for those who could
not afford prescription treatments.
As drugs age and lose patent protection, the costs of treatment can fall
significantly because of generic competition — particularly if a pill
has only one active ingredient and is simple to replicate. When
Singulair, a pill the Hayes girls take daily to block allergic reactions
in the lungs, lost its patent protection last year, generics rapidly
entered the market. The price of the drug has already dropped from $180
per month to as low as $15 to $20 with pharmacy coupons.
But sprays, creams, patches, gels and combination medicines are more
difficult to copy exactly to make a generic that meets Food and Drug
Administration standards. Each time a molecule is put in a new inhaler
or combined with another medicine, the amount delivered into the lungs
or through the skin may change, even though that often has an
imperceptible effect on patients.
“Drug companies can switch devices and use different combinations, and
it becomes quite difficult to demonstrate equivalence,” Dr. Norman said,
adding that inhaler makers have exploited such barriers to increase
sales of medicines long after the scientific novelty has passed.
Obstacles for Generics
A result is that there are no generic asthma inhalers available in the
United States. But they are available in Europe, where health regulators
have been more flexible about mixing drugs and devices and where courts
have been quicker to overturn drug patent protection.
“The high prices in the U.S. are because the F.D.A. has set the bar so
high that there is no clear pathway for generics,” said Lisa Urquhart of
EvaluatePharma, a consulting firm based in London that provides drug
and biotech analysis. “I’m sure the brands are thrilled.”
The F.D.A. acknowledges that the lack of inhaled generic medicines, as
well as topical creams, has been costly for patients, but it attributes
that to “difficult, longstanding scientific challenges,” since measuring
drug activity deep into the lung is complicated, said Sandy Walsh, a
spokeswoman for the agency. Dr. Robert Lionberger, the agency’s acting
deputy director in the office of generic drugs, said that research into
the development of generic inhaled medicines was the agency’s highest
priority but that the effort had been stalled because of budget cuts
imposed by Congress.
Even so, experts say, a significant problem is that none of the agencies
that determine whether medicines come to market in the United States
are required to consider patient access, affordability or need.
The Food and Drug Administration has handed out patents to reward drug
makers for conducting formal safety and efficacy studies on old drugs
that had not been so scrutinized. That transformed cheap mainstays of
treatment like colchicine for gout and intravenous hydroxyprogesterone
for preterm labor into high-priced branded products, costing $5 a pill
and $1,500 per dose.
For its part, the United States patent office grants new protections for
tweaks to drugs without weighing the financial impact on patients.
For example, with the patent for the older oral contraceptive Loestrin
24Fe about to expire, the company Warner Chilcott stopped making the
pill this year and introduced a chewable version — with a new patent and
an expensive promotional campaign urging patients and doctors to
switch. While many insurance plans covered the popular older drug with
little or no co-payment, they often exclude the new pills, leaving
patients covering the full monthly cost of about $100. Patients
complained that the new pills tasted awful and were confused about
whether they could just be swallowed.
“Drug patents are easy to get, and the patent office is deluged,” said
Dr. Aaron Kesselheim, a pharmaceutical policy expert at Harvard Medical
School. “The F.D.A. approves based on safety and efficacy. It doesn’t
see its role as policing this process.”
For asthma patients in the United States, the best the market has
yielded are a few faux generics that are often only marginally cheaper
than the brand-name versions. AstraZeneca, for example, has an agreement
with Teva Pharmaceuticals, a generic manufacturer, to make an approved
generic version of its Pulmicort Respules, an asthma medicine for home
inhalation treatments. Teva paid AstraZeneca more than $250 million last
year in royalties to make a generic, which sells for about $200 for a
typical monthly dose, compared with close to $300 for the branded
product.
Research vs. Marketing
There are good reasons drug companies are feeling threatened. In the last several years, some best-selling medicines, like
Lipitor
for high cholesterol and Plavix for blood thinning, have been largely
replaced by cheap generics in a very competitive market. In 2012, that
led to $29 billion in savings for patients, said Mr. Aitken of IMS, or
$29 billion in lost revenues for drug makers. Eighty-four percent of
prescriptions dispensed last year were for generic medications.
While drug companies generally remain highly profitable, recent trends
have meant tough times for some companies, including Merck, whose
profits crashed 50 percent this year primarily because the patent
expired on its best-selling asthma pill, Singulair.
So AstraZeneca has recently spent millions of dollars in court pursuing
several small drug companies for patent infringement after they
announced a plan to make a true cheap generic version of Pulmicort
Respules. Though a New Jersey judge sided with the generic manufacturers
this spring, legal appeals by AstraZeneca will keep the generics off
the market for the near future.
As insurance policies require patients to contribute more out of pocket
for medicines, public pressure to curb prices has grown. This year, more
than 100 top cancer specialists protested the rising prices of cancer
treatments.
Drug companies have long argued that pharmaceutical pricing reflects the
cost of developing and testing innovative new drugs, many of which do
not pan out or make it to market.
“When there’s a really innovative product, you might be able to justify
the price,” Dr. Kesselheim said. “But this is not generally the case.”
Critics counter that drug companies spend far more on marketing and
sales than the 15 percent and 20 percent of their revenues that they
devote to research and development.
In the United States, one of the few Western countries that allows
advertising of prescription drugs to consumers, GlaxoSmithKline spent
$99 million in advertising for Advair in 2012. Despite its financial
woes, Merck spent $46.3 million to advertise its steroid spray, Nasonex,
according to
fiercepharma.com, a Web site that tracks the industry’s advertising.
Also, the focus of much pharmaceutical research in recent years has
shifted from simple drugs for common diseases that would have widespread
use to complicated molecules that would most likely benefit fewer
patients but carry far higher price tags, in the realm of tens of
thousands of dollars.
The newest offering for asthma is Novartis’s Xolair, which is given by
injection in a doctor’s office every two weeks at a cost of up to
$1,500, depending on the dose. Because the drug is so expensive and was
deemed to have little or no benefit over inhalers for a vast majority of
patients, the British government last year announced that it would not
make it available through the National Health Service. It relented this
year, agreeing to stock it for limited use, after the manufacturer
offered a confidential discount.
In all other developed countries, governments similarly use a variety of
tools to make sure that drug manufacturers sell their products at
affordable prices. In Germany, regulators set drug wholesale and retail
prices. Across Europe, national health authorities refuse to pay more
than their neighbors for any drug. In Japan, the price of a drug must go
down every two years.
Drug prices in the United States are instead set in hundreds of
negotiations by hospitals, insurers and pharmacies with drug
manufacturers, with deals often brokered by powerful middlemen called
group purchasing organizations and pharmacy benefit managers, who
leverage their huge size to demand discounts. The process can get nasty;
if mediators offer too little for a given product, manufacturers may
decide not to produce it or permanently drop out of the market, reducing
competition.
With such jockeying determining supply, products can simply disappear
and prices for vital medicines can fluctuate far more than they do for a
carton of milk. After the price of Abby Hayes’s Rhinocort Aqua nasal
spray rose abruptly, it was unavailable for many months. That sent her
family scrambling to find other prescription sprays, each with a price
tag over $150.
This year the price of Advair dropped 10 percent in France, but in
pharmacies in the Bronx, it has doubled in the last two years.
In Georgia, Ms. Solod, the freelance writer, found the same thing.
“Every time I get Advair, the price is different,” she said. “And the
price always goes up. It never comes down.”
Twenty years ago, drugs that could safely be sold directly to patients
typically moved off the prescription model as their patent life ended.
That brought valuable medicines like nondrowsy antihistamines and acid
reducers to drugstore shelves. But with profitable prescription products
now selling for $100 per tiny bottle, there is little incentive to make
the switch, since over-the-counter drugs rarely succeed if they cost
more than $20.
As a result, a number of products that are sold directly to patients in
other countries remain available only by prescription in the United
States. That includes a version of the popular but expensive steroid
nasal spray used by Abby Hayes, which is available over the counter in
London for under $15 at the Boots pharmacy chain.
“Not only is the cost cheaper, but it doesn’t require a doctor’s visit
to get it,” said Dr. Jan Lotvall, a professor of allergy and immunology
at the University of Gothenburg in Sweden, where steroid nasal sprays
are also available over the counter.
During this high pollen season, Abby had to cut short a gymnastics
practice, and her sister, Hannah, missed one day of school because of
breathing problems, the first time in many years. But with parents who
can afford to get the medicine they require, both are now doing fine.
That is not true of two other sisters from Oakland whom their mother
mentors. With treatment hard to access and drug prices high, Kemonni and
Donzahnya Pitre, 19 and 17, simply suffer and struggle to breathe.
As Donzahnya, a high school senior, looked through the Fiske Guide to
Colleges at the Hayeses’ kitchen table one day, she had an unusual
selection criterion: “I worry about going to a college that’s surrounded
by a lot of grass.”
