Insurers, hospitals form new campaign to fight drug price spikes

Washington – The nation’s health insurers are getting a boost from a new coalition that has taken up one of their key causes: halting big increases in drug prices and the cost of medicine.

Insurers are joining hospitals, Walmart, AARP, nurses, doctors and others in the Campaign for Sustainable Rx Pricing. Their goal: to press drug price increases and the high cost of many new medicines as an issue in the presidential campaign with hopes of winning support for policy changes in next year’s Congress.

“We have a broken pharmaceutical industry,” said Clare Krusing, spokeswoman for America’s Heath Insurance Plans. “Prices for drugs are whatever the market will bear.”

The drug pricing issue has simmered under the political surface for the last few years, surfacing only recently with scandals concerning dramatic price hikes and consumer complaints. The cost of prescription drugs bought by American consumers rose by 14 percent in 2014 and 12 percent in 2015.

The issue has also hit the Connecticut government hard. As it struggles to balance the budget, Connecticut is facing steep increases in the cost of medicine provided through the state health plan.

The Connecticut State Medical Society and state comptroller Kevin Lembo will hold an issues conference on May 17 to tackle the “skyrocketing cost of prescription drugs (that) has created hardship for families, employers, and state.”

Still, a solution to the problem may be hard to find.

John Rother, who heads the Campaign for Sustainable Rx Pricing, said his coalition has come up with a series of consensus initiatives that include seeking a reduction in the 12-year exclusivity period for biological drugs and more funding for the Food and Drug Administration to clear a backlog of generic-drug applications.

The coalition is also seeking more transparency in pricing, including “an explanation of how the manufacturer came to price the drug,” Rother said.

He also said new drugs should be tested for effectiveness against cheaper, existing drugs, instead of being compared to placebos.

Krusing also said health insurers are seeking more answers from the drug industry. “Right now pharmaceutical pricing is in a black box,” she said.

On Monday, the nation’s pharmaceutical industry hit back against the coalition’s efforts, saying they would undermine a competitive market for medicine and harm patients and innovation.

“These so-called market-based proposals are nothing more than a litany of new government regulations and mandates that would undermine the competitive market and empower government bureaucrats and insurance companies to make one-size-fits-all treatment decisions for patients,” said Pharmaceutical Research and Manufacturers of America spokesman Robert Zirkelbach.

He said the coalition’s proposals “only apply to the small share of health care spending that goes toward life-saving medicines, while exempting the largest health care cost drivers, such as hospital charges, which include significant markups for prescription medicines.”

Zirklebach also slammed health insurers for denying coverage for certain prescription drugs that result in “discrimination against patients with chronic health conditions, such as cancer, diabetes and rheumatoid arthritis.”

But the scandal that engulfed former Turing Pharmaceuticals CEO Martin Shkreli, who raised the price of cancer-fighting Daraprim by 5,000 percent, has also ensnared Valeant Pharmaceuticals International, which will come under scrutiny at a Senate Aging Committee hearing this week for its big hikes in drug prices.

Sen. Richard Blumenthal, D-Conn., a member of the panel, said he planned to question Valeant executives about their business practices.

“Many essential‎ drugs are egregiously and excessively high priced – and the FDA must have resources needed to protect consumers from price gouging and other abuses,” Blumenthal said.

He said in visits to state hospitals, “I have heard shocking stories about short supply and skyrocketing costs of vital medications. “

But Blumenthal also said pharmaceutical research “needs to be encouraged even as drug prices are made more affordable and accessible.”

Prices and the road to the White House

The growing crisis in the affordability of life-saving drugs has made its way into the campaigns of  most of the major presidential candidates.

“It’s a very hot issue in the campaigns, and it’s often the first question the candidates will be asked,” Rother said.

Former Secretary of State Hillary Clinton would tax “direct-to-consumer” advertising that permeates television and magazines and is thought to drive up the price of drugs because patients demand them of their doctors, even if cheaper ones are more effective.

Clinton would also cap out-of-pocket costs for drugs at $250 a month for people with chronic health problems. Both she and her Democratic rival, Sen. Bernie Sanders of Vermont, would allow Medicare to negotiate drug prices and allow Americans to re-import drugs from other countries, where they are often sold at much lower prices.

Texas Sen. Ted Cruz backs making changes to the FDA drug approval process that would speed the marketing of new drugs, while Ohio Gov. John Kasich wants to investigate who is actually paying for research and development of new drugs – taxpayer money spent by federal agencies or the pharmaceuticals.

Henry Jacobs, a gynecologist who heads the Connecticut State Medical Society, criticized the proposals put forth by the  Campaign for Sustainable Rx Pricing and said coalition members “sound like they don’t get it.”

To Jacobs, cutting the time pharmaceuticals have to exclusively market an expensive drug will prompt them to double its price.

He also said generics are boosting their prices and that moving toward them more aggressively would offer little relief.

“What is going on is total unrestrained greed on the part of drug companies,” he said. “The fact is that people cannot afford their prescription drugs.”

The result, Jacobs said, is that people are dying when they don’t have to and others who forgo their medicines because of the prices end up hospitalized and boosting the nation’s health care costs by tens of billions of dollars.

Rother said his coalition did not endorse some proposals, including allowing Medicare to negotiate drug prices with pharmaceuticals, because the ideas it put forward were only ones all coalition members could agree on.

He is hopeful that when the smoke from the presidential race clears, and a new president is inaugurated and a new Congress gavelled in next year, policy changes will occur.

“We’re laying the work for what we hope will be action next year,” Rother said.

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