Lancaster Physician Spring 2017 - 23

SPRING 2017

The Rising Cost of Prescription Medications

T

he rising cost of medications in the
United States is receiving considerable
attention, not only in the news but also
from physicians who prescribe medications and patients who need to pay for them.
The recent surge in the price of Epipen® to
$600 is one dramatic and distinctive example
that has drawn considerable attention, but
in fact the costs of medications in general
are increasing, and the trend will continue.
As health care providers, it is important that
we understand not only what is driving those
increases but also their impact on patients
and health care organizations.
Total spending on drugs in the United
States reached $310 billion in 2015.1 This
trend of price increases is expected to continue through 2020, as both the cost and
utilization of medications continue to rise.2
The accelerating inflation in drug prices is
driven by a multitude of complex variables.
Diseases that could only be managed a few
years ago are now being cured, and patients
with advanced cancer diagnoses are having
their lives extended. However, these advances
come with an expensive price tag.

DRIVERS OF THE COST OF MEDICATIONS
IN THE UNITED STATES
A detailed review of some specific drugs
that experienced price increases will illustrate
the factors driving these increases.

THE UNAPPROVED DRUG INITIATIVE:
COLCHICINE
The rigorous FDA drug approval process
in effect since 1962 is based on the Federal
Food, Drug, and Cosmetic Act of 1938,
which requires evidence of safety and efficacy
as the two key elements for approval of a
medication.2 Some medications in current
use did not go through the formal FDA
approval process, in most cases because
they came to market prior to 1962. In
2006, the FDA embarked on a concerted
effort to address that gap by requiring that
unapproved medications go through a formal
approval process that involves clinical trials
of safety and efficacy. Due to this initiative,
several old, established, and previously

unapproved medications that traditionally
had stable prices are now abruptly being
priced like new branded products.
One example is colchicine, a drug that
has been used since the ancient Greeks
and costed no more than $0.25/day before
2010.3 By using the FDA's program for
review of unapproved medications, a small
pharmaceutical company was able to obtain
FDA approval and exclusive rights to the
product and then sold those rights to a
larger company for $800 million. The price
rose dramatically to over $6/pill from the
historical price of 10-25 cents.

MERGERS AND PRICE HIKES:
PYRIMETHAMINE EXAMPLE
Another cost driver is a business model in
which a company identifies a pharmaceutical
company that has a product or products felt
to have a suboptimal pricing strategy. After
acquiring the company and its portfolio of
pharmaceutical products, the new owner
raises prices significantly.
One of the most notorious examples of
this practice, mainly driven by the media
attention given to the company's CEO, is
Daraprim® (pyrimethamine). When this
product was purchased by Turing Pharmaceuticals in August 2015, the price increased
by over 5,500 percent, from $13.50 to $750/
tablet. The medication also shifted from
general distribution through wholesalers
to closed distribution requiring pharmacies
and hospitals to purchase it directly from the
company; this gave Turing Pharmaceuticals
more control of the supply and cost. While
pyrimethamine is an anti-malarial medication, it is often used to treat toxoplasmosis
in AIDS and other immunocompromised
patients, for whom it can be life-saving. It is
included in the World Health Organizations'
List of Essential Medications.8
These types of changes occur swiftly
and without much visibility, often before
insurance companies and health systems can
adjust practices to deal with the sudden and
significant price increases.

NEW MEDICATIONS: NIVOLUMAB AND
PCSK9 INHIBITORS
In addition to the new business strategies
discussed above, there is also a more traditional driver of drug costs: new medications.
These have long been a driver of increasing
costs, but their impact lately has been drastic, especially in the treatment of cancer.
Specifically, the average cost per month of
a branded oncology drug has more than
doubled in the last 10 years.4
An illustrative example is provided by
the recently approved anti-cancer drug
nivolumab (Opdivo®), a human monoclonal
antibody that enhances the immune system's
response to cancer by blocking the activity
of PD-1, a protein that prevents T cells
from recognizing and attacking malignant
cells.5 The 18-month overall survival rate
was 28 percent for nivolumab, compared
to 13 percent for docetaxel.6 However, the
medication can cost over $100,000 for a
year of treatment.
There are other categories of new medications beyond oncology. Two new injectable
cholesterol-lowering PCSK9 inhibitors
(proprotein convertase subtilisin/kexin type
9) recently have been released to the market.
Their mean cost is around $14,000/year,
compared with a cost of less than $100/year
for most statin medications. Based upon
the outcomes in clinical trials that preceded
FDA approval, it has been estimated that
these medications could reduce the cost of
cardiovascular care by $29 billion over five
years, but they would increase drug costs
by $592 billion.7

SPECIALTY PHARMACEUTICALS:
THE HEP C EXAMPLE
The rise in the availability and utilization
of specialty pharmaceuticals, defined in Table
1, is another primary driver of increased
drug costs. Specialty pharmaceuticals are
often distributed through a narrow supply
chain (i.e., only by a few pharmacies) and
have specific programs for reimbursement,
patient education, and patient monitoring.
Continued on page 28
Continued on page 24

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