Drug price hikes sometimes have catastrophic effects on patients

When I found out my patient was in the hospital again for the third time in six months, I wondered why her asthma had flared. Was the cold weather bothering her? Was her treatment regimen inadequate? When I spoke with her, I discovered the heartbreaking truth: she had been limiting her albuterol inhaler use because she simply could not afford to take it as much as she needed.

For many of the over 600,000 Massachusetts residents who suffer from asthma, albuterol is a necessity. Albuterol inhalers allow asthmatics to go about their lives without worrying about the threat of debilitating respiratory attacks. Unfortunately, this necessary drug is slowly becoming out-of-reach for too many. In the past ten years, albuterol, despite being approved by the FDA over 25 years ago, has gone from costing less than $15 to over $100 per inhaler. Price hikes like these are not just statistics – they have real, sometimes catastrophic effects on patients like ours.

Our representatives in the Massachusetts State House now face an opportunity to prevent unnecessary suffering and increase the affordability of needed drugs – if they’re willing to step up to the plate.

The Massachusetts State Senate is considering a sweeping healthcare cost containment and reform proposal released last week, and part of this bill aims to increase drug price transparency by asking pharmaceutical manufacturers and pharmacy benefit managers to disclose cost information. While this is an important step and may seem impactful on the surface, a closer analysis reveals that the provisions are largely toothless – we expect they will fall short of creating the level of transparency we need to protect patients from drug price gouging.

Pharmaceutical companies would need to report changes in “net expenditures” on subsets of brand-name and generic drugs. The problem with net expenditures is that this information fails to shed light on the costs of production, research and development (R&D), marketing, and other expenses and would obscure the true costs of these drugs. Further, the bill requires the disclosure of “aggregate, company-level research and development expenditures.” Aggregated R&D costs would certainly fascinate researchers studying the pharmaceutical industry, but knowing how much a company is spending across all drugs will not help policymakers or payers negotiate better rates or lower costs. We need a detailed picture of R&D and manufacturing costs for each drug, particularly for those with large proposed price hikes, to improve bargaining power and harness the force of public scrutiny to lower prices. The bill’s most serious weakness is that it does not empower policymakers to do anything with the information collected.

Real drug price transparency requires more specific and comprehensive reporting requirements and a clear path for action. While we applaud the Senate for their attention to escalating drug costs, we strongly urge them to strengthen these provisions. A bill introduced this year by Senator Mark Montigny (S. 652) provides a roadmap for how to do that.

Senator Montigny’s legislation requires detailed reporting for the ten most expensive drugs in Massachusetts and drugs that have seen significant price hikes (>50 percent hike within the past five years or >15 percent within the past year). Information collected would include the actual cost of drug production, the R&D costs for individual drugs (clinical trials and other regulatory requirements), advertising costs, lobbying expenses, prices for foreign purchasers, and profit margins for each drug. In addition, the bill empowers the attorney general to use this information to file lawsuits and designate drugs as having “excessively higher than justified” cost – the equivalent of a scarlet letter that can be used to draw the attention of policymakers, providers, and payers, and concentrate scrutiny on pharmaceutical companies, fueling public backlashes like the one that brought down the price of the EpiPen.

Legislation like this can bring a level of transparency to drug prices that our patients sorely need. Last month, my patient stopped taking his blood thinner after he had a stent placed in his heart because the medication was too expensive. A few weeks later, he suffered a cardiac arrest and died. As physicians, we did our part, but the system failed our patient. His tragic death was preventable – it’s now up to our state legislators to do their part.

Zoe Tseng is an internal medicine physician and co-chair, Health and Public Policy Committee, Massachusetts Chapter of American College of Physicians. Suhas Gondi is a medical student.

Image credit: Shutterstock.com

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