Drug pricing debate is sharpening

Will formularies become a consumer's concern for healthcare provision?


The continuing saga of Gilead Sciences’ Sovaldi and Harvoni drugs, for treating hepatitis C, together with the more recently approved drugs like AbbVie’s Viekira Pak (and more to come), keeps creating ripples that wash through many debates about the US pharma industry, healthcare in the US, and how healthcare insurance works (or doesn’t). Complaining about drug pricing is not new; it has flared up on a regular basis as new therapies came to market for decades.

What seems to be changing, though, is the process by which patients and, to a greater extent, prescribers, are aware of the formularies, prices and incentives that control what drugs get prescribed. Express Scripts’ much-publicized decision to offer AbbVie’s product alone to a key portion of its client base was followed by CVS Caremark’s decision to do the opposite. And, make no mistake, pricing (and the unpublicized discounts offered to both of those, and other PBMs) drove the decision. While Sovaldi has been out for over a year, AbbVie’s product just entered the market in December. (A private company, AdverseEvents, Inc., that tracks FDA and other reporting on adverse events, issued a report showing a relatively small number of adverse events for Sovaldi, and a somewhat longer list of potential risks for Viekira Pak, concluding that “Both Harvoni and Sovaldi appear to be safer options compared to Viekira Pak, but only close post-marketing monitoring will determine the true safety profile of these medications.”)

The difference in risk profiles is speculative, but it is the rare drug pair that doesn’t show some differentiation among patients. The PBMs have stated that, given sufficient medical justification, they will make any of the products available to patients. But that presupposes that patients and their prescribers can go through some or all of the therapy regime for one drug before being switched to the other. And, the bigger picture here is relevant: the PBMs, and other drug buyers, harp on the value of having competing therapies as a way of controlling drug costs. Think about how, in the near future, the debate between branded biologics and biosimilars (or, as some manufacturers like to stress, “biobetters”) will be conducted. Too, the US government, while it has limitations on what it can dictate to the pharma industry, does have some tools, and government pricing programs are a science unto themselves.

As this issue went to press, an Op-Ed column in the New York Times (“Why Drugs Cost So Much,” Jan. 14, 2015) by Dr. Peter Bach, physician and director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, reiterated the point about the value of competition in controlling drug costs. Citing well-known statistics, he wrote, “The industry can argue that drug spending is only 10 percent of all health care spending, but that 10 percent equals around $300 billion per year.” But what his comments elided is that overall healthcare costs (for 2014) will come in around $3.1 trillion. Where does the other 90% go, and are patients and the US taxpayer getting fair value for that $2.8 trillion? More to the point, are the other elements of healthcare, including physician pay and hospital and insurer overheads, subject to the same cost containment pressure as the pharma industry is receiving? Yet another twist to this subject is that the Indian courts have invalidated Gilead Sciences’ patents on Sovaldi, opening the door to generic versions one year into the life of the product. We haven’t heard, by a long shot, the end of the drug pricing debate.