Overcharging for drugs

As you may have seen on 60 Minutes (October 2014), the drug company, Regeneron, introduced a new anti-cancer drug, called Zaltrap, which costs a patient $11,000 a month. (It performs the same as an older drug, which costs $5000 a month; both extend the median survival rate by 42 days.) A Medicare patient taking this drug would face an out-of-pocket co-pay of $2,000 a month —the typical monthly income of a person on Medicare.

Dr. Peter Bach, Sloan-Kettering’s expert on cancer drug prices commented, “We have a pricing system for drugs which is completely dictated by the people who are making the drugs.” In other words, the cost is what the traffic will bear, not the often-touted “cost of R and D.” Because oncologists buy the drugs wholesale from the pharmaceutical companies and sell them retail to their patients, the conflict of interest is obvious. The docs make more on the new drug than the old one (and the insurers are billed for the retail price).

Interestingly, Dr. Bach and two colleagues wrote an op-ed piece in the New York Times castigating the company’s price-setting practices. Right after the editorial was published, the drug's manufacturer, Sanofi, cut the price of Zaltrap by more than half--irrefutable evidence that the price was a fiction. "Oh, okay, we'll charge a different price." As doctor Bach commented, “It was like we were in a Turkish bazaar.” Even though the company cut the price, they still made the same amount of money on the drug, thanks to shenanigans having to do with insurance. (To get the whole story click here. To see the op-ed piece, click here.)

Similarly, a new pill for hepatitis C, called Sovaldi, was introduced by Gilead Sciences. Each pill costs the patient $1,000 or $84,000 to $150,000 for a course of treatment. Again, Gilead Sciences, which bought the company that created the drug, charges what it thinks the market will bear. This drug will earn Gilead $10 billion this year alone.

In Switzerland, the cost of an anti-cancer drug called Gleevac is $3,633 per dose; in the US, the cost is $6,214.

Even the costs of generic drugs are rising precipitously. For example, the price of the drug digoxin, which is used to treat rhythm disturbances of the heart, tripled from October 2013 to June 2014. Instead of paying pennies per pill, as in the past, patients are now making copayments of up to $200 a month for the drug. Why? There was no drug shortage, no new patent or new formulation. Digoxin is not hard to make. What had changed most were the financial rewards of selling an ancient, lifesaving drug.  Many more manufacturers are following suit and the prices of generic drugs are rising across the board—again, for no good reason except for corporate profits.  In the case of digoxin, Lannet, the major supplier in the US, the company’s reported sales for cardiovascular products (mainly digoxin) rose to $16.9 million from $4.5 million in just a few months.

I could go on…..in fact, here is some more damning information aired on two NPR programs, one about the high cost of MS drugs and the other about insulin. 

Next week, rewarding doctors to promote drugs.

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