Tagged Prescription Drugs

In An Effort To Curb Drug Costs, States Advance Bills To Prod Feds On Importation

Norm Thurston is a “free-market guy” — a conservative health economist in Republican-run Utah who rarely sees the government’s involvement in anything as beneficial.

But in a twist, the state lawmaker is now pushing for Utah to flex its muscle to spur federal action on ever-climbing prescription drug prices.

“This is something that a red state like Utah could do. I don’t think this is a partisan issue,” Thurston said. “Those outrageous cost increases are not the result of the free market.”

The approach: Let the state contract with wholesalers in Canada, importing cheaper prescriptions from up north and distributing them to the state’s health care system.

Other states — Vermont, West Virginia and Oklahoma, among them — are following similar paths, pushing legislation that would seek permission from the Trump administration to launch their own plans to import drugs from Canada.

For years, American consumers have tried to buy cheaper drugs from their northern neighbor, sometimes packing into buses for day trips to Canadian pharmacies, or patronizing American stores that help them order drugs from abroad. But the practice is illegal.

The states want to change that, and set up a formal process that nets broader savings. The idea is for the state health department to set up a wholesale program that buys drugs from Canada and resells them to local pharmacies and hospitals. Individual states would be responsible for ensuring that the medications are safe and that importing them does save money.

“This statute is putting pressure on the federal government to take a harder look at these questions,” said Rachel Sachs, an associate law professor at Washington University of St. Louis, who researches drug price regulations. “The state legislatures can say, ‘Look, we’re doing everything we can, but we do need the federal government to help us out on this.’”

The federal government has been slow to act on this issue, and skeptics say a 30-page Trump administration memo on drug pricing released late last week would likely have only limited impact.

But states, whose budgets for Medicaid and state employee health programs are squeezed by these costs, are moving forward.

In Vermont alone, drug spending has gone up by 35 percent from 2010 to 2015, the most recent year for which data are available.

Backers of the state plans say the strategy is a no-brainer that could save hundreds of millions of dollars. They discount concerns about drug safety, arguing that drugs from Canada are made by reputable companies, often in the same facilities and by the same firms that sell them in the U.S. — but at much higher prices.

“We would be bringing in drugs intended for the Canadian market, and therefore at Canadian pricing,” Thurston said. “One would assume if we could come up with a program that meets the recommendations of federal law, what justification would the [Health and Human Services] secretary have for saying no?”

The state measures follow model legislation developed by the National Academy for State Health Policy that uses a framework put in place by the 2003 federal law that created the Medicare Part D program. That law says the U.S. Department of Health and Human Services can approve drug importation plans if it is convinced the plans will save money and will not create any public health concerns.

Once passed, these laws task state health departments with overseeing the development of these programs. After the health department settles on the specifics, state officials must negotiate implementation with HHS. That could take years.

It is also likely to be an uphill battle.

In 15 years, HHS has never acted upon the 2003 law by approving any drug importation program.

Last spring, when members of Congress pushed a national bill, a bipartisan group of former Food and Drug Administration commissioners came out in opposition, arguing it would be impossible to verify drug safety absolutely. That bill ultimately failed to garner a majority vote.

It’s unclear where the current administration stands on this issue.

Alex Azar, the newly confirmed HHS secretary, has been coy on the subject — though in a confirmation hearing last fall, he said importing drugs from Canada could create safety concerns. Despite multiple requests, HHS did not provide comment for this story by the publication deadline.

The pharmaceutical industry echoed the cautions about safety.

“The proposals we are seeing in states across the country threaten the safety of patients and families and will not deliver the savings they promise,” said Priscilla VanderVeer, a spokeswoman for the trade group Pharmaceutical Research and Manufacturers of America (PhRMA).

In the states, though, backers say their bills address that concern.

And other analysts argued that, regardless, safety of Canadian drugs isn’t a real issue.

“A lot of the drugs used in the United States and in Canada are made in the same plants, in countries like India or Europe,” said Michael Law, a pharmaceutical policy expert and associate professor at the University of British Columbia’s Center for Health Services and Policy Research. “The U.S. FDA and other regulatory agencies rely on other agencies’ inspections — the idea that Canadian drugs are these dangerous drugs is a red herring.”

A bigger question, he said, is the amount of savings these bills would generate.

Thurston pointed to Utah state analyses that suggest the state could save $70 million in the private sector, and another $20 million to $30 million in state-funded insurance programs. If approved, he said, the state would target 15 to 20 drugs to import — insulin, for instance, because it is bought in large quantities, or expensive drugs that treat hepatitis C or HIV.

Others expressed skepticism.

For one thing, the true price of prescription drugs isn’t always clear. There’s the list price — and generally, those are much higher in the United States. But insurance plans often negotiate rebates, or discounts, from the drug company — meaning they can end up paying far less than what’s advertised. Those discounts aren’t public, making it much harder to compare prices between the two countries.

The drug industry would also likely employ strategies to counter importation.

Pharmaceutical companies, Law noted, stand to lose if American states are importing cheaper drugs. That could motivate them to tamp down how many prescriptions they sell in Canada, or find other ways to discourage Canadian wholesalers from participating.

“My guess is any Canadian distributor to engage in that would find their [medication] supply dwindle quickly, because the drug companies would stop supplying,” he said. “The supplier systems in the United States would probably find it hard to get a [Canadian drug] supply in the long term.”

That’s certainly a real concern, said Claire Ayer, a Vermont state senator and Democrat who chairs her legislature’s Health and Welfare Committee.

“We can’t tell drug companies or wholesalers what to do in Canada,” she added.

VanderVeer said PhRMA could not speculate on how individual drug companies may react to importation.

Still, these state efforts could spur the federal government to take action, Sachs suggested — even if it’s unclear how large an impact importation would have.

“Importation will not solve all the problems — and I don’t think states see it as such,” she said. “But it could be a useful way to put pressure on a federal government and White House that has thus far largely been inactive on this topic.”

FDA Head Vows To Tackle High Drug Prices And Drugmakers ‘Gaming The System’

Food and Drug Administration Commissioner Scott Gottlieb said he will do everything “within my lane” to combat high drug prices and that he sees drug companies “gaming the system to try to block competition” in a multitude of ways in the marketplace.

In a wide-ranging interview with Kaiser Health News on Thursday, Gottlieb also said that he wants to speed up the U.S. approval process for generic and “biosimilar” versions of biologic drugs, which are drugs comprised of living organisms, such as plant or animal cells.

“Where we see things that we can address, we’re going to take action,” Gottlieb said, adding that he is most bothered when brand-name companies use tactics to block makers of generics and biosimilars from developing drugs. He deflected questions about whether the FDA approves drugs of questionable value that carry exorbitant prices.

“I think we should have a free market for how products are priced,” Gottlieb said. A free market “provides proper incentives for entrepreneurs who are going to make the big investments needed to innovate. But that system is predicated on a premise that when patents have lapsed you’ll have vigorous competition from generic drugs.”

The FDA, Gottlieb said, worked with the White House on a proposal to bring generics to market faster by ensuring that a 180-day exclusivity period isn’t used by drugmakers to block competition. He said there are “situations where you see deals cut” in which a drugmaker will get the 180-day exclusivity and then be persuaded to sit on it without ever selling the drug — essentially delaying the brand drug from facing generic competition.

Currently, generics makers must buy large quantities of the brand-name product in the U.S. to run their own clinical trials. But the companies that make brand-name medicines, in some cases, are making it very difficult for makers of generics to purchase their drugs, he said.

“They are adopting all kinds of commercial restrictions with specialty pharma distributors and wholesalers” to prevent sales to generic companies, Gottlieb said, adding that not every branded company is using the tactic, but it is “going on across the board.”

To come up with a generic, a drugmaker needs 2,000 to 5,000 doses for testing, Gottlieb said. He said the companies were willing to pay sticker price but are being blocked in other ways.

The FDA is now exploring whether generics makers could buy the drugs they need in the less-expensive European market without having to do additional work to prove the biologics from Europe are the same — even though the American and European versions are often manufactured in the same plants. Gottlieb wants to get rid of such tests, known as “bridging” studies.

“I have lawyers now looking at this,” Gottlieb said. The FDA has been exploring the issue for a couple of months, he said, and he thinks it may be “hard for us to get there without legislation, but we’re not done yet looking at this; we’re still pressing on this.”

Last fall, Gottlieb said that he wanted to “end the shenanigans” that interfere with competition in the marketplace. Since then, the FDA has released a steady stream of action plans and new guidance that tinkers with the drug development system.

“All of these steps are going to have an impact, and I don’t think there’s one silver bullet,” Gottlieb said. “If anyone [thinks] there is one thing you can do with policy intervention that is going to dramatically change drug prices, that’s not true.”

Instead, he said, there are “layers of things that we can do to try to make sure the system is working.”

The agency has been approving drugs at a fast clip: The FDA’s Center for Drug Evaluation and Research approved a record 46 new drugs in 2017, including treatments for sickle cell disease and Batten disease and new cancer therapies. The list doesn’t include landmark gene and cellular therapies and vaccines that are regulated as biologics.

That rate of approvals has raised concerns about the value and quality of drugs being approved. Specifically, criticism of the FDA’s handling of cancer drugs has increased in recent years.

Although some patient advocates want the FDA to approve new drugs more quickly, others charge that the agency greenlights mediocre cancer drugs that do little to prolong survival or improve quality of life. A 2014 study found that the cancer drugs approved from 2002 to 2014 extended survival by an average of just 2.1 months. For many cancer drugs, there is no evidence showing they prolong life.

Once drugs are on the market, companies can charge whatever the market will bear; prices for cancer therapies now routinely top $100,000 a year.

But Gottlieb said it’s not his job to help insurance companies or government programs decide which drugs to cover. Health systems and insurers “have a difficult time saying no,” Gottlieb said, “so they want to put the regulator in the position of saying no.”

Gottlieb acknowledged that it can be difficult for insurance plans to decide which drugs they should include on their drug list. But insurance plans “ought to have the confidence to make [such decisions] and not say, ‘Well, it’s the job of the federal government to make those decisions for us.’”

Gottlieb defended his agency’s approval of drugs that help the average cancer patient live just two or three extra months, noting that some patients do much better than average on cancer drugs — perhaps living months or even years longer than expected. He also said it would be wrong to make cancer patients wait years to try a drug that has a chance to help them.

“We’re ultimately going to learn why some patients respond really well and some don’t,” he said. If you “try to have all that information upfront when you approve a drug, [you’ll] end up having a development process that is very long and very costly and a lot fewer products will be developed.”

Gottlieb maintains that the FDA sets a high standard for approving drugs.

“It is important that we have a rigorous bar” for approval, he said, “but a bar that doesn’t impede these products from coming to the market.”

Trump’s Budget Proposal Swings At Drug Prices With A Glancing Blow

President Donald Trump’s new budget proposal flirts with combating high prescription drug prices, but industry watchers say the tweaks to Medicare and Medicaid do little more than dance around the edges of lowering the actual prices of drugs.

The White House’s proposal, which comes after Congress passed a two-year spending deal last week, though, sets the tone for the administration’s focus on prescription drugs.

“Drug costs are a populist issue for the president,” and he’s made it clear to his staff that progress needs to be made this year, said Dan Mendelson, president of Avalere Health, a health care consulting firm.

The proposal targets billions of drug spending cuts in the federal Medicare program, which provides health care for about 60 million people age 65 and older or younger patients with disabilities, and alters drug spending in Medicaid’s safety-net program for nearly 70 million Americans.

And the sheer size of the federal government’s Medicare and Medicaid programs means any drug pricing tweaks that do get made are meaningful — just not necessarily groundbreaking.

“The main question is, how far are they actually going to go in dealing with the underlying problem?” said Paul Van de Water, who spent nearly two decades in the Congressional Budget Office and is now a senior fellow at the Center on Budget and Policy Priorities. Most of the proposals for Medicare, for example, move money around rather than force decreased prices, Van de Water said.

Alex Azar, the newly appointed secretary of Health and Human Services, said the proposed budget supports the work his agency is already doing to reduce the high cost of prescriptions, “especially for America’s seniors.”

Just last month, the former Eli Lilly executive told Congress during his confirmation hearings that “all drug prices are too high in this country.”

Highlights from the proposals include:

— Passing on the discounts and rebates negotiated by pharmacy benefit managers, the financial middlemen between insurers and drugmakers, to seniors who buy drugs through Medicare Part D. The seniors would pay less out-of-pocket when buying their drugs but the proposal could potentially raise premiums because insurers wouldn’t be getting the discounts.

— Ensuring that low-income seniors in Medicare don’t pay for generics and capping out-of-pocket costs for beneficiaries who pass through the so-called doughnut hole, or coverage gap, and hit the catastrophic stage. Beneficiaries typically pay a 5 percent coinsurance in the catastrophic phase, but under the plan it would be decreased to zero.

— Moving some of the drugs paid for under Medicare Part B, which covers drugs administered in the doctor’s office such as chemotherapy and rheumatoid arthritis infusions, into the Part D part of the program to foster price negotiations. While the government pays sticker price for drugs under the Part B program, the Part D program allows insurers and pharmacy benefit managers to negotiate formularies.

— Creating a five-state pilot project to allow state Medicaid programs to negotiate prices with manufacturers and create their own drug formularies.

Trump entered office with blustering promises to bring drug prices “way down.” But critics have charged that the White House has failed to engage Congress on cost-cutting ideas, and that a leaked draft of an executive order last summer read like a wish list for the industry.

With the new budget, the administration is trying to recast that narrative at a time when Republicans in Congress may be willing to compromise.

“Americans want Washington to lower prescription drug prices, and our paper provides policy options that would make drugs more accessible to Americans, today and in the future,” wrote D.J. Nordquist, chief of staff for the president’s Council of Economic Advisers, in an email late Friday after the council released a 28-page report on reforming drug prices.

The CEA paper and the president’s budget come on the heels of Congress passing a spending pact Friday that includes a big benefit to Medicare enrollees at the expense of the pharmaceutical industry. The budget proposes closing the doughnut hole in 2019, a year earlier than expected.

Republicans “just showed a propensity to sort of take on the industry,” said Jayson Slotnik, a policy consultant and partner at Health Policy Strategies. And there is political upside for doing more since Republicans are concerned about this year’s November midterm elections approaching, Slotnik said: “They can run and [say] it’s something they have accomplished.”

Yet James Love, director of the nonprofit Knowledge Ecology International, said Trump’s proposals are not “insightful or original” and, referring to the council’s report, said it “could have been written by PhRMA,” the powerful D.C. lobbying firm for pharmaceutical manufacturers.

PhRMA released a statement late Monday applauding the provision to pass on rebates to Medicare beneficiaries but also raising concerns about other elements of the budget proposal, saying they would “limit access to innovative medicines.”

Experts from the academic and think-tank world said the district has seen several of these policies before. For example, the rebate and discount pass-through proposal has been a topic of discussion within the Centers for Medicare & Medicaid Services for more than a year and is already in the rulemaking process.

Another proposal that lowers reimbursement for Medicare Part B drugs that are new to the program is reminiscent of an Obama-era pilot that never got off the ground.

Tara O’Neill Hayes, who focuses on health policy at the conservative American Action Forum, said several Medicare proposals were also similar to those found in a June 2016 report by the Medicare Payment Advisory Commission. If all the Medicare proposals took effect — including one that calls for more flexibility in drug formularies — O’Neill Hayes said overall premiums could go up slightly for all Part D beneficiaries, but that would be offset by lowering out-of-pocket payments for the beneficiaries with the highest drug costs.

“You’re going to have winners and losers,” she said. “The real winners here are going to be the incredibly high-cost patients.”

Trump’s budget requires hospitals to provide a minimum level of charity care to get an additional payment adjustment under the 340B program, which requires pharmaceutical manufacturers to provide drugs at steep discounts to hospitals and clinics with a high ratio of low-income patients.

The administration lowered reimbursement amounts for hospitals earlier this year, and Mendelson at Avalere said he expects more changes.

In reviewing Trump’s budget and the council report, Allan Coukell, senior director of health programs at the Pew Charitable Trusts, said several of the proposals “have the potential to reduce out-of-pocket costs, several have the potential to increase competition within the programs and/or move people toward lower cost drugs. None of it changes the overall trajectory” of rising sticker prices.

KHN On NPR: The Uniquely American Problem Of High Prescription Drug Costs

Kaiser Health News Editor-in-Chief Elisabeth Rosenthal discussed drug costs with Scott Simon, the host of NPR’s Weekend Edition on Saturday, Feb. 10. This is a transcript of that conversation.

SCOTT SIMON, NPR: The new budget passed by Congress last week includes changes for Medicare patients. It will require drug companies to give deeper discounts to Medicare on expensive prescriptions. That should reduce the cost of drugs for patients. The skyrocketing cost of prescription drugs is something followed closely by Elisabeth Rosenthal, a veteran healthcare reporter and editor-in-chief of Kaiser Health News, who joins us from her offices. Thanks so much for being with us.

ELISABETH ROSENTHAL: Thanks for having me.

SIMON: Will this and other features you see in the budget help reduce the cost of prescription drugs?

ROSENTHAL: Well, to a small number of people, it will. I mean, this really targets the Medicare-age population and Medicare plans. And for people who have very high drug costs within Medicare, it will definitely help them. But it, of course, doesn’t solve the much larger problem of the very high prescription drug prices that everyone pays in this country. And P.S., what we’re talking about for Medicare patients, even, are discounts on these very high initial prices. So, you know, a discount of a really high price still isn’t a very good deal.

SIMON: Why do we have a problem with this in the United States?

ROSENTHAL: Well, we’re the only country that doesn’t in some way directly negotiate prescription drug prices with manufacturers – the only developed country, that is. I mean, most other countries in some form either evaluate the cost-benefit ratio of a new drug and decide what they’re willing to pay or, you know, very aggressively negotiate with drug manufacturers, particularly for older drugs, as they age.

SIMON: Insulin in one form or another has been saving lives for – what? – 80 years.


SIMON: Why has the price gone up in recent years?

ROSENTHAL: Prices will rise to whatever the market will bear, right? We see that uniquely in the U.S. One vial of insulin in the U.S. costs seven times what it does in Germany. So there’s a huge disparity there. Some of the reasons have to do with reformulations of insulin that are, in fact, better than some of the older ones. Although, when I’m talking about that 1 in 7 price comparison, that’s the same exact insulin.

In the U.S., what’s happened – and this is something that I know the Trump administration is looking at and many experts in the field have decried – the slow arrival of biosimilars or generic insulins onto the market, which are on the market in other countries. The problem in this country is the lowering of prices of insulin. And insulin patents have been held up in the courts for years now in suits and countersuits between the three big insulin drug makers, including by Eli Lilly, which is the former employer of our new HHS Secretary.

SIMON: That’s Alex Azar – has been appointed Secretary of Health and Human Services.


SIMON: Is he the kind of choice that gives you optimism that prescription drug prices will come down?

ROSENTHAL: Well, there’s a certain argument to be made that Alex Azar of all people on Earth understands how the games are played and how these suits and countersuits about making generics or making biosimilars have held up the arrival on the U.S. market and have raised prices for everyone. On the other hand, there’s ongoing concern about the revolving door between government and pharmaceutical companies such that you wonder, is their loyalty to the American people, or is their loyalty to the pharmaceutical world from which they came?

SIMON: I don’t think I can think of any politician who says, and if you elect me, I promise prescription drugs will cost more.

ROSENTHAL: (Laughter).

SIMON: I mean, on the contrary, every politician says, elect me, and I’ll do something to bring down the cost of prescription drugs. Why doesn’t that get done?

ROSENTHAL: Yeah. Everyone agrees that our prescription drug costs are too high – both right and left – you know, Democrat, Republican. It’s one of the few points of information, points of fact that everyone agrees on. The problem is everyone disagrees on how best to tackle that. And there are a lot of forces that are resisting any change at all.

The bipartisan solution which Senator Klobuchar and Senator John McCain have proposed is allowing prescription drug imports from other countries, so we allow for a global competition in the sense of, you know, if everyone else is getting a better deal than us, why can’t we buy our prescription drugs from there the same way we buy our, you know, refrigerators and cars?

SIMON: Elisabeth Rosenthal, editor-in-chief of Kaiser Health News and author of “An American Sickness: How Health Care Became Big Business And How You Can Take It Back.” Thanks so much for being with us.

ROSENTHAL: Thanks for having me.