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The cost of pharmaceuticals


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Sunday on 60 minutes.

Rockford, Illinois, had enough. What pushed it over the edge was the high cost of a prescription drug that in 2001 cost about $40 a vial and today goes for more than $40,000 a vial. The city decided to challenge the health care system that created the 100,000 percent price increase in that one drug. Lesley Stahl reports on one city's quest to take on an industry that it says is shrouded in secrecy and puts its bottom line ahead of the best interests of its sick customers. Stahl's report will be broadcast on 60 Minutes, Sunday, May 6 at 7:00 p.m. ET/PT on CBS

https://www.cbsnews.com/news/why-does-your-prescription-cost-so-much/

Rockford, an old industrial city, still pays the health care costs for its 1,000 municipal workers and their dependents rather than using an insurance company. When it was faced with paying nearly half a million dollars for the 66-year-old drug used to treat infantile spasms in just two of its employees' children, the city's then-mayor, Larry Morrissey, wanted to know why. But his investigation hit a brick wall for two years. "It's absolute secrecy. There's an absolute opaque system of pricing for drugs in our country. That's part of the problem," Morrissey says.

Morrissey says because his city's drug bill was skyrocketing it was affecting his ability to fund basic services like fire and police. "Everybody's asking the question, 'Why is healthcare so expensive?' Because the fix is in…That's the short answer," he tells Stahl. Rockford is suing the drug's owner for price fixing, which the company denies.

The story of Rockford reveals how just about every player in the drug supply chain can make money when drug prices go up. For example, pharmacy benefit managers – firms that buy drugs for clients and promise them cheaper rates – can and do own businesses that earn money from packaging or delivering drugs. Under that scenario, Rockford's lawyer says, the company has a divided loyalty between its mission to keep drug prices low on one hand and to maximize profits on the other.

Dr. Peter Bach, of Memorial Sloan Kettering Cancer Center in New York, studies the cost and value of drugs. "The underlying problem we have with prescription drugs in this country is that every single actor has the potential to make money when drug prices go up," he tells Stahl. "[Doctors] make more money when they give expensive drugs than less expensive drugs. It's true of hospitals, too. It's true of pharmacies as well. " Says Morrissey, "As long as they can get away with the increase in price, they're going to do it. Until somebody pushes back."

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a little research:

http://www.childneurologyfoundation.org/disorders/infantile-spasms/

About 1,200 children in the US are diagnosed each year with IS - There are two in Rockford, IL among city workers kids?

Infantile spasms are so uncommon that most pediatricians will see only one or two IS cases during all the years of practice.  - And yet there are two in Rockford?

Seems like someone needs to figure out what the fuck is in the coffee at the Rockford city hall.    

https://en.wikipedia.org/wiki/Epileptic_spasms

Epileptic spasms, also known as infantile spasms, juvenile spasms, or West syndrome[1] is an uncommon-to-rare epileptic disorder in infants, children and adults.

As of 2017, data on optimal treatment was limited.[8] Therapies with hormones is the standard of care, namely adrenocorticotrophic hormone (ACTH), or oral corticosteroids such as prednisone.[8] Vigabatrin is also a common consideration, though there is a risk of visual field loss with long term use.[8] The high cost of ACTH leads doctors to avoid it in the US; higher dose prednisone appears to generate equivalent outcomes.[8]

Prednisone is pretty freaking cheap.   Are the city doctors prescribing Vigabatrin or something else?  

Incidence is around 1:3200 to 1:3500 of live births.  Rockford has a population of around 150,000.  And they have 2 city worker's kids with this?

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Oh, I agree.   I think that Big Pharma is full of shit.   I just don't understand how Rockford, IL has to kids related to government workers who have a disorder that requires a $40,000 per dose need?

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You just got to start sending these motherfuckers to jail. Or, preferably, the gallows.  There is also a whistleblower case and a case with insurers as plaintiffs against mallinkrodt over this shit. Barring some sort of major shortage in raw ingredients, a new complexity in manufacturer, or some other explanation, this is bullshit. Profit is one thing, but this looks like someone getting bent over.  Literally. 

 

 

HP Acthar chart price

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This problem is at least partially enabled by the FDA, if not entirely.  The FDA not only approves new drugs, but manufacturing facilities and processes for old ones.

If there's a drug like this, that rarely gets purchased, the holder of FDA approved manufacturing facilities/processes holds a monopoly in the production and sale of the drug in the US (Archer in Ana's chart).  And it isn't a monopoly that expires in 17-20 years as in the case of a patent, but until someone else is willing to invest the time and money to get their manufacturing FDA approved.  It isn't the multi-millions of a new drug application, but it ain't cheap or fast either.

And that approval gets arbitraged like Ana's chart shows by Questcor.  HP Acthar was Questcor's ONLY DRUG.  And then Questcor gets acquired by Mallinckrodt.  It is unethical as hell, but it stems from the FDA and "big pharma" aren't the usual practitioners.  It's assholes like Shkreli.

Edited by TwiceHorn
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Just now, TwiceHorn said:

This problem is at least partially enabled by the FDA, if not entirely.  The FDA not only approves new drugs, but manufacturing facilities and processes for old ones.

If there's a drug like this, that rarely gets purchased, the holder of FDA approved manufacturing facilities/processes holds a monopoly in the production and sale of the drug in the US.  And it isn't a monopoly that expires in 17-20 years as in the case of a patent, but until someone else is willing to invest the time and money to get their manufacturings FDA approved.  It isn't the multi-millions of a new drug application, but it ain't cheap or fast either.

And that approval gets arbitraged like Ana's chart shows.  It is unethical as hell, but it stems from the FDA.

This is a great post.  And provides the answer to "why doesn't another competitor set up shop and drive the price down." The barrier to entry for a competitor, especially when the market is so small, is too much to overcome.  And while the example of the OP is a relatively limited scale example, drug pricing and development trends in the broader sense are going in a bad direction.  Much of the groundbreaking medication treatments moving forward are going to be specialty products.  The system can absorb some high cost treatments for rare conditions, it can even absorb some high cost treatments that cure less rare conditions (e.g. Hep C, thanks baby boomers), but wait until we get a whole bunch of 10-20k a year treatments for cholesterol, cardiovascular disease, migraine prevention, etc. Some are already here, the others are in the pipeline.  Wait to see what happens to your premiums in that environment.  

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15 minutes ago, Hugo Stiglitz said:

The whole medical industry from the insurance companies, equipment, doctors, and pharmaceuticals is one of the biggest rackets in America.

 

You actually left off one of the major profit centers...hospitals.  Pharma, medical devices, and hospitals are the big profit centers in healthcare. 

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2 hours ago, Macanudo said:

Oh, I agree.   I think that Big Pharma is full of shit.   I just don't understand how Rockford, IL has to kids related to government workers who have a disorder that requires a $40,000 per dose need?

Your lack of understanding seems to go beyond this being a statistical oddity. Are you suggesting the city is lying?

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Science hinted that cancer patients could take less of a $148,000-a-year drug. Its maker tripled the price of a pill.
By Carolyn Y. Johnson April 18

A group of 
cancer doctors focused on bringing down the cost of treatments by testing whether lower — and cheaper — doses are effective thought they had found a prime candidate in a blood cancer drug called Imbruvica that typically costs $148,000 a year.

The science behind Imbruvica suggested that it could work at lower doses, and early clinical evidence indicated that patients with chronic lymphocytic leukemia might do just as well on one or two pills a day after completing an initial round of treatment at three pills per day.

The researchers at the Value in Cancer Care Consortium, a nonprofit focused on cutting treatment costs for some of the most expensive drugs, set out to test whether the lower dose was just as effective — and could save patients money.

Then they learned of a new pricing strategy by Janssen and Pharmacyclics, the companies that sell Imbruvica through a partnership. Within the next three months, the companies will stop making the original 140-milligram capsule, a spokeswoman confirmed. They will instead offer tablets in four strengths — each of which has the same flat price of about $400, or triple the original cost of the pill.

Just as scientific momentum was building to test the effectiveness of lower doses, the new pricing scheme ensures dose reductions won't save patients money or erode companies' revenue from selling the drug. In fact, patients who had been doing well on a low dose of the drug would now pay more for their treatment. Those who stay on the dose equivalent to three pills a day won't see a change in price.

“That got us kind of p---ed off,” said Mark J. Ratain, an oncologist at the University of Chicago Medicine who wrote about the issue in the Cancer Letter, a publication read by oncologists. “We were just in the early stages of planning [a clinical trial] and getting it organized, and thinking about sample size and funding, and we caught wind of what the company was doing.”

[This old drug was free. Now it’s $109,500 a year.]

Research and anecdotal experience of physicians suggests that co-pays can be a major barrier to people staying on their drugs. Stacie Dusetzina, an associate professor of cancer research at Vanderbilt University Medical Center, said that if a patient were taking one of the old capsules each day, their out-of-pocket costs under Medicare would be close to $5,000. Under the new pricing regimen, the patient's burden of the cost — for the same dosage — would roughly double. The difference in the cost to Medicare would be about $100,000. That does not reflect rebates paid by the drug company to Medicare.

“It's fascinating and disturbing,” Dusetzina said. “It appears to be a program being implemented, possibly to save some of the profits they'd be losing if dose reductions are really rapidly going to start coming down the pike.”

In a statement, Janssen and Pharmacyclics said the companies began to develop the new single-tablet dosing regimen in 2015 “as a new innovation to provide patients with a convenient one pill, once-a-day dosing regimen and improved packaging, with the intent to improve adherence to this important therapy.” They called the studies on lower dosing “highly exploratory in nature” and noted that patients who take a higher dose of the drug will save money.

But the new regimen could undermine patient safety, Ratain and colleagues argue. People on Imbruvica often need to have their doses adjusted, because it can interact with other drugs. Physicians also may try lower doses when people have trouble tolerating the drug because of side effects, such as extreme joint pain.

The companies said in their statement that a dose exchange program with rapid shipment would allow physicians to make those changes.

Under the old regimen, doctors could adjust the dose immediately by telling a patient to take one or two pills a day, instead of three, then return them to the higher dose when necessary. Under the new regimen, physicians will have to initiate a dose-switching protocol that requires paperwork. The phone number physicians have been given to call is only open Monday to Friday during business hours, several oncologists noted.

“I do share their concerns,” said Jennifer Brown, director of the Center for Chronic Lymphocytic Leukemia at the Dana-Farber Cancer Institute, who was not an author of the Cancer Letter paper. “We frequently change the dose of this drug, in relation to drug interactions in particular, and usually we need to do that basically instantaneously.”

[Many Medicare cancer patients hit by high out-of-pocket costs]

The companies noted that the program allows physicians to make changes to dosing while following the label approved by the Food and Drug Administration. Sandy Walsh, a spokeswoman for the FDA, said the agency was aware of these concerns and is looking into them.

Complicated regimens can deter patients from sticking to their drugs — something physicians refer to as “pill burden.” But facing exorbitant prices for medication is also a barrier to a patient's adherence.

Brown said that the affordability of medication is a concern for her patients. Despite efforts to connect patients with resources to help them afford co-pays, some will request a drug that is cheaper but maybe less effective — or even push to discontinue the medicine. Ratain said that colleagues who prescribe the drug have reported that their patients do not complain about the complexity of taking three pills each day, but they have complained about the price.

“Pill-splitting is done all the time in the developing world, where these drugs are not that affordable,” Ratain said. “We're not that far from these drugs being unaffordable in the U.S.”

 

https://www.washingtonpost.com/news/wonk/wp/2018/04/18/science-hinted-that-cancer-patients-could-take-less-of-a-148000-a-year-drug-the-company-tripled-the-price-of-a-pill/?utm_term=.2ba5d263162e

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8 minutes ago, blackmarketbaby said:

Yes Dan

That'd be a pretty fucking bizarre lie since those pharmaceutical costs and diagnoses will certainly be part of discovery in their lawsuit against the pharmaceutical company. Are you suggesting the doctors are also in on the lie and the city has been spending hundreds of thousands of dollars per year for drugs their employees' children don't actually need in order to bring this lawsuit?

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I did some more looking at Questcor, the arbitrageur of HP Acthar.  Apparently, it was "invented" in 1952.  Its primary use was for endocrinological disorders, as it is a hormone secreted by the pituitary gland.  By the time Questcor got hold of it, it had apparently become part of the standard of care for MS and these infantile spasms.  But that use was "off label," meaning not within the scope of the original prescribing guidelines of the FDA, so not illegal, but unmarketable for those indications (marketing for off label use is illegal).

So Questcor sought a new drug application for this stuff used for MS and infantile spasms so it could be marketed that way.  But unlike the usual staggeringly expensive NDA, they simply relied on the fact that it had become the standard of care for these ailments.  That NDA failed, so they sought a new one, this time relying on the published studies, many 20 years old and none performed by or for Questcor, and received FDA approval for these new uses, which gave them a period of exclusivity of three years I believe, 2006-2009.  And there's still the manufacturing de facto exclusivity granted by the FDA (same thing Shkreli used/abused).

So they marketed the shit out of it.  And in the MS space and its traditional space of endocrinological disorders, there were some of these hyper-expensive new patented drugs with the funky-ass names that it competed with, giving them some more freedom to raise prices.

 

So yeah, some serious "entrepreneurship" going on with HP Acthar not related to the traditional, very expensive and risky drug development that big pharma does that at least partially accounts for those drugs' cost.  Nasty shit.  But again, the FDA had a big role in the market distortions that permitted this to happen. 

I can't quibble with the basic mission of the FDA.  I even happen to agree that it must be a federal agency because it is a national issue and uniformity is necessary.  But any fix for this is going to require some fairly major changes with the FDA and the Food & Drug Act, and those changes may sacrifice some elements of drug safety.

Edited by TwiceHorn
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12 hours ago, Macanudo said:

Oh, I agree.   I think that Big Pharma is full of shit.   I just don't understand how Rockford, IL has to kids related to government workers who have a disorder that requires a $40,000 per dose need?

We had three seperate "500 year storm" rain events in Houston in a 2 year span.

Some other communities will never see the infantile spasm diagnosis.  The stats don't make for geographic or timeline dispersement.

Yeah, 2 is a bit unusual.  It ain't that weird though.

Edited by slorch
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I pay $300 a month for a drug that was essentially developed at a publicly funded university. The pharma company added an immaterial variation, patented everything, and now has a monopoly.

The people running some of these companies are psychopaths.

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13 minutes ago, ndawg said:

I pay $300 a month for a drug that was essentially developed at a publicly funded university. The pharma company added an immaterial variation, patented everything, and now has a monopoly.

The people running some of these companies are psychopaths.

Try a drug that costs at least $230K per year.  Cinryze.  Talk to Ms. Macallan about that. Or two of my siblings. 

https://www.fool.com/investing/general/2014/10/26/the-5-most-expensive-drugs-in-the-world.aspx

Edited by Judge Roybeanbag
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2 minutes ago, Judge Roybeanbag said:

Try a drug that costs at least $230K per year.  Cinryze.  Talk to Ms. Macallan about that. Or two of my siblings. 

https://www.fool.com/investing/general/2014/10/26/the-5-most-expensive-drugs-in-the-world.aspx

Oh yeah, my situation is "fortunate" compared to the most absurd and egregious examples.

Still, these kinds of people that can happily exploit the sick are the kryptonite of any civilized society. Socialism, capitalism, it don't make a shit. They'll rise to the top and steal from the bottom.

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I understand, and I am really sorry for your situation.

Ugh. How sick is it that there's such a broad range of degrees of getting fucked over by them. The thing that infuriates me about the drug I take is that it's "discovery" came from publicly funded research. Our taxpayer dollars funded a private monopoly. This is the kind of thing that taught me in my early 20s that the America we learn about in schools doesn't actually exist. It's a fairy tale designed to delude people into thinking that if they're getting screwed, it's their own damned fault, because after all, America is great.

Edited by ndawg
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Just now, Sawbonz said:

I guess this bill went nowhere

https://www.pbs.org/newshour/health/u-s-make-easier-import-prescription-drugs

 

and Medicare is prohibited by law from negotiating prices for covered meds

  

everything I prescribe is a generic, but even some of the genetics are showing ridiculous increases

Medicare doesn't negotiate pricing, but the PBMs that manage the Part D plans do.  There are pros and cons to this arrangement. 

And you are absolutely right that generics are going nuts. One price fixing investigation underway: https://www.bloomberg.com/news/articles/2018-04-24/generic-drug-companies-said-to-face-first-charges-in-u-s-probe 

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No big deal. Even though I’m not taking the prescribed meds, if I should have an episode of my throat swelling shut, or brain swelling, then I can just get this at5K a pop. https://www.fool.com/investing/general/2014/10/26/the-5-most-expensive-drugs-in-the-world.aspx

 

fuck pharma. Fuck insurance and fuck trump. 

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8 minutes ago, ndawg said:

I understand completely, I am really sorry for your situation.

How sick is it that there's such a broad range of degrees of getting fucked over by them. The thing that infuriates me about the drug I take is that it's "discovery" came from publicly funded research. Our taxpayer dollars funded a private monopoly. This is the kind of thing that taught me in my early 20s that the America we learn about in schools doesn't actually exist. It's a fairy tale designed to delude people into thinking that if they're getting screwed, it's their own damned fault, because after all, America is great.

I agree completely, but don't leave the research universities out.  They take the federal research grants, convert the knowledge gained into patents, license those patents to pharma, and reap the benefits.

Case example: enzalutamide for prostate cancer

 Developed at UCLA by research funded by NIH and DOD. 

UCLA patents enzalutamide and licenses it to medivation.

Medivation sells the drug for 100k+ per year. UCLA of course gets their cut, ultimately selling off their royalties for over $1B, monetizing the results of federal and private research grants. 

Utimately, the people who's tax dollars subsidized the development also get to subsidize its costs through their premiums and cost-sharing. 

Awesome system. Pharma gets there's, the university gets there's, tax payers and consumers hold the bag. 

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12 hours ago, Hugo Stiglitz said:

The whole medical industry from the insurance companies, equipment, doctors, and pharmaceuticals is one of the biggest rackets in America.

 

How much do you pay for your Risperdal?

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11 hours ago, ndawg said:

I pay $300 a month for a drug that was essentially developed at a publicly funded university. The pharma company added an immaterial variation, patented everything, and now has a monopoly.

The people running some of these companies are psychopaths.

I'd like to know more about this.  Yes, a lot of basic biomolecular and pharmacological research occurs at universities.  But making a molecule discovered by scientists into a useful medication is not a trivial endeavor.  Nor are the design, implementation, and carrying out of clinical trials necessary to obtain FDA approval.  These typically cost hundreds of millions of dollars.  And these things are things that universities are not any good at, and, in fact, are usually incapable of.

Universities always license their patents "out" because they don't do business, and if they have made a substantial contribution, they make a shit ton of money off these things.

Where pharmas get up to fuckery, usually, on drug patents is by patenting trivial variations on the initial compound or substance (time-release, combinations with other drugs) in order to extend the original patent term by a few years.  Changes in the patent law more than 15 years ago have made that increasingly difficult.

Edited by TwiceHorn
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Wife told me that she was informed by her school that health insurance was expected to increase 65% in Virginia (where she works) next year.  I believe health insurance is a benefit that counts as a salary increase is the way it's structured but I'd have to verify.  I'm on her plan because it's far better than what most businesses offer.  However, I have to pay several hundred a month for mine through her plan.  If insurance goes up in places like WVA and OK as dramatically, then what the teachers fought to get salary wise just took a tremendous hit.    

Edited by Mdhorn
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On 5/4/2018 at 8:24 PM, Message Board User said:

Doctors] make more money when they give expensive drugs than less expensive drugs. 

This simply isn’t true for a vast majority of doctors. This is only true if a doctor owns the practice and then buys the medicine at a cheap rate then bills the patient/insurance at a higher rate. You can see this in cancer treatments.

Otherwise, we usually break even or lose money on in-office medications (i.e. vaccines, antibiotics, steroids, joint fluid replacement).

Usually we lose money when we write a prescription for an expensive drug because we will spend an hour of staff time trying to get it approved.

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5 hours ago, Mdhorn said:

Wife told me that she was informed by her school that health insurance was expected to increase 65% in Virginia (where she works) next year.  I believe health insurance is a benefit that counts as a salary increase is the way it's structured but I'd have to verify.  I'm on her plan because it's far better than what most businesses offer.  However, I have to pay several hundred a month for mine through her plan.  If insurance goes up in places like WVA and OK as dramatically, then what the teachers fought to get salary wise just took a tremendous hit.    

The current system and cost increases are unsustainable.  If the democrats gain control by 2020, we will have single payer.  I don’t trust our government to do a good job of implementing it.

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28 minutes ago, Newdoc said:

This simply isn’t true for a vast majority of doctors. This is only true if a doctor owns the practice and then buys the medicine at a cheap rate then bills the patient/insurance at a higher rate. You can see this in cancer treatments.

Otherwise, we usually break even or lose money on in-office medications (i.e. vaccines, antibiotics, steroids, joint fluid replacement).

Usually we lose money when we write a prescription for an expensive drug because we will spend an hour of staff time trying to get it approved.

I agree with this.

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25 minutes ago, Newdoc said:

The current system and cost increases are unsustainable.  If the democrats gain control by 2020, we will have single payer.  I don’t trust our government to do a good job of implementing it.

Not so sure about this.   We have to do something and the current status quo sucks fucking ass.  

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Quote

 "The underlying problem we have with prescription drugs in this country is that every single actor has the potential to make money when drug prices go up," he tells Stahl

its like we need an entity out there to ensure this is understood and accounted for

anyone got any ideas?

well, when you do please send a note to your congressman and let em know what you are thinking

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The healthcare racket has to be the most fucked up thing about America. Pharma bribes congress to pass a law that makes it illegal to bring in cheaper medicines from other countries. Doctors and hospitals charge different people vastly different amounts for the same service. And they generally refuse to post their prices. That’s fucking illegal.

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