US Senate committee launches investigation into drug pricing

Changes in Drug List Prices and Amounts Paid by Patients and Insurers

IMPORTANCE

High out-of-pocket drug costs can cause patients to skip treatment and worsen outcomes, and high insurer drug payments could increase premiums. Drug wholesale list prices have doubled in recent years. However, because of manufacturer discounts and rebates, the extent to which increases in wholesale list prices are associated with amounts paid by patients and insurers is poorly characterized.

OBJECTIVE

To determine whether increases in wholesale list prices are associated with increases in amounts paid by patients and insurers for branded medications.

DESIGN, SETTING, AND PARTICIPANTS

Cross-sectional retrospective study analyzing pharmacy claims for patients younger than 65 years in the IBM MarketScan Commercial Database and pricing data from SSR Health, LLC, between January 1, 2010, and December 31, 2016. Pharmacy claims analyzed represent claims of employees and dependents participating in employer health benefit programs belonging to large employers. Rebate data were estimated from sales data from publicly traded companies. Analysis focused on the top 5 patent-protected specialty and 9 traditional brand-name medications with the highest total drug expenditures by commercial insurers nationwide in 2014. Data were analyzed from July 2017 to July 2020.

EXPOSURES

Calendar year.

MAIN OUTCOMES AND MEASURES

Changes in inflation-adjusted amounts paid by patients and insurers for branded medications.

RESULTS

In this analysis of 14.4 million pharmacy claims made by 1.8 million patients from 2010-2016, median drug wholesale list price increased by 129% (interquartile range [IQR], 78%-133%), while median insurance payments increased by 64% (IQR, 28%-120%) and out-of-pocket costs increased by 53% (IQR, 42%-82%). The mean percentage of wholesale list price accounted for by discounts increased from 17% in 2010 to 21% in 2016, and the mean percentage of wholesale list price accounted for by rebates increased from 22% in 2010 to 24% in 2016. For specialty medications, median patient out-of-pocket costs increased by 85% (IQR, 73%-88%) from 2010 to 2016 after adjustment for inflation and 42% (IQR, 25%-53%) for nonspecialty medications. During that same period, insurer payments increased by 116% for specialty medications (IQR, 100%-127%) and 28% for nonspecialty medications (IQR, 5%-34%).

CONCLUSIONS AND RELEVANCE

This study's findings suggest that drug list prices more than doubled over a 7-year study period. Despite rising manufacturer discounts and rebates, these price increases were associated with large increases in patient out-of-pocket costs and insurer payments.

Comparing Generic Drug Markets in Europe and the United States: Prices, Volumes, and Spending

Policy Points: Our study indicates that there are opportunities for cost savings in generic drug markets in Europe and the United States. Regulators should make it easier for generic drugs to reach the market. Regulators and payers should apply measures to stimulate price competition among generic drugmakers and to increase generic drug use. To meaningfully evaluate policy options, it is important to analyze historical context and understand why similar initiatives failed previously.

CONTEXT

Rising drug prices are putting pressure on health care budgets. Policymakers are assessing how they can save money through generic drugs.

METHODS

We compared generic drug prices and market shares in 13 European countries, using data from 2013, to assess the amount of variation that exists between countries. To place these results in context, we reviewed evidence from recent studies on the prices and use of generics in Europe and the United States. We also surveyed peer-reviewed studies, gray literature, and books published since 2000 to (1) outline existing generic drug policies in European countries and the United States; (2) identify ways to increase generic drug use and to promote price competition among generic drug companies; and (3) explore barriers to implementing reform of generic drug policies, using a historical example from the United States as a case study.

FINDINGS

The prices and market shares of generics vary widely across Europe. For example, prices charged by manufacturers in Switzerland are, on average, more than 2.5 times those in Germany and more than 6 times those in the United Kingdom, based on the results of a commonly used price index. The proportion of prescriptions filled with generics ranges from 17% in Switzerland to 83% in the United Kingdom. By comparison, the United States has historically had low generic drug prices and high rates of generic drug use (84% in 2013), but has in recent years experienced sharp price increases for some off-patent products. There are policy solutions to address issues in Europe and the United States, such as streamlining the generic drug approval process and requiring generic prescribing and substitution where such policies are not yet in place. The history of substitution laws in the United States provides insights into the economic, political, and cultural issues influencing the adoption of generic drug policies.

CONCLUSIONS

Governments should apply coherent supply- and demand-side policies in generic drug markets. An immediate priority is to convince more physicians, pharmacists, and patients that generic drugs are bioequivalent to branded products. Special-interest groups continue to obstruct reform in Europe and the United States.

Drug Pricing Evolution in Hepatitis C

Objective

We aimed to determine the association between the stepwise increase in the sustained viral response (SVR) and Swiss and United States (US) market prices of drug regimens for treatment-naive, genotype 1 chronic hepatitis C virus (HCV) infection in the last 25 years. We identified the following five steps in the development of HCV treatment regimens: 1) interferon (IFN)-α monotherapy in the early '90s, 2) IFN-α in combination with ribavirin (RBV), 3) pegylated (peg) IFN-α in combination with RBV, 4) the first direct acting antivirals (DAAs) (telaprevir and boceprevir) in combination with pegIFN-α and RBV, and 5) newer DAA-based regimens, such as sofosbuvir (which is or is not combined with ledipasvir) and fixed-dose combination of ritonavir-boosted paritaprevir and ombitasvir in combination with dasabuvir.

Design

We performed a linear regression and mean cost analysis to test for an association between SVRs and HCV regimen prices. We conducted a sensitivity analysis using US prices at the time of US drug licensing. We selected randomized clinical trials of drugs approved for use in Switzerland from 1997 to July 2015 including treatment-naïve patients with HCV genotype 1 infection.

Results

We identified a statistically significant positive relationship between the proportion of patients achieving SVRs and the costs of HCV regimens in Switzerland (with a bivariate ordinary least square regression yielding an R2 measure of 0.96) and the US (R2 = 0.95). The incremental cost per additional percentage of SVR was 597.14 USD in Switzerland and 1,063.81 USD in the US.

Conclusion

The pricing of drugs for HCV regimens follows a value-based model, which has a stable ratio of costs per achieved SVR over 25 years. Health care systems are struggling with the high resource use of these new agents despite their obvious long-term advantages for the overall health of the population. Therefore, the pharmaceutical industry, health care payers and other stakeholders are challenged with finding new drug pricing schemes to treat the entire population infected with HCV.

Upstream solutions for price-gouging on critical generic medicines

Exorbitant price increases for critical off-patent medicines have received considerable media attention in recent months, leading to an investigation by the U.S. Senate. However, much of this attention has focused upon the companies that initiated the price increases, all of whom had recently acquired the drugs in question. Overlooked are upstream interventions with the originators of these drugs to prevent generics trolling in the first place. Using the particular example of Eli Lilly and Company’s efforts to divest itself of cycloserine, a flawed process that paved the way for the recent price hike by Rodelis Therapeutics, this article highlights the responsibilities of drug originators, and safeguards to ensure similar rights transfers do not affect ongoing affordable access.