Drug pricing

by L

‘Pharma bro’ Martin Shkreli gets ‘schooled by a real f*cking doctor’ during disastrous Reddit interview

What do Totebaggers think of Martin Shkreli? Drug pricing regulations? Should we require price caps on life-saving drugs? Which Totebaggers would remove regulations on the market entirely?

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45 thoughts on “Drug pricing

  1. There has been all kinds of pricing manipulation and trickery for all of the years I have been practicing. I think it is slowly becoming more evident – perhaps with the Internet there is greater transparency. At one hospital I worked at, levofloxacin was sold to the hospital for pennies a pill. It retails for tens of dollars per pill. Ciprofloxacin, which, at the time was a generic, was sold to the hospital for dollars per pill, though it could be bought at the local pharmacy for pennies per pill. The hospital made the rational decision to only stock levofloxacin and not ciprofloxacin. This meant that all hospital patients were started on levofloxacin, and typically doctors discharge them on the same medication. They would spend hundreds of dollars to fill their prescriptions. Of course, the doctors could’ve given them a pill of levofloxacin and sent them home with a prescription for ciprofloxacin (in most cases) but many of the physicians didn’t know or didn’t care. It is hard to know, among 1 million other drug minutiae, what pricing theatrics are going on and how to help patients with it. More than once, I saw a patient who had been treated in the emergency department with levofloxacin, and left the hospital and did not fill the prescription. $1200 of ER care later, I was able to send them on their way for a prescription they can bill for four dollars and how to help patients with it. More than once, I saw a patient who had been treated in the emergency department with levofloxacin, and left the hospital and did not fill that prescription , and got worse. $1200 of ER care later, I was able to write them a prescription for ciprofloxacin which they could fill for four dollars.

    I don’t have any great insight into the economics. My answer is of course more regulation, but I’m not naïve enough to think that wouldn’t have unintended consequences.

  2. I think it’s helpful to distinguish between pharmaceuticals that are manufactured chemically (like aspirin and most other generic drugs) and drugs that are biologically intensive to manufacture or that are derived from animal products. (Premarin, follicle stimulating hormone, and vaccines are examples) We had a local horse glut when the horses that made the urine from which Premarin was synthesized were sold off. (Clydesdales make lots of urine, according to my farmer-tech. I never knew that, but it makes sense of a draft horse.) FSH was/is expensive to manufacture because it is manufactured by genetically modified hamster ovary cells, or some such. The number of vaccine manufacturers has dropped from ~20 to ~5 since Hillary supported rule changes back in the ’90’s. I worry about the safety/reliability of vaccine manufacturing, because it is a very touchy process that requires high levels of technical expertise, and Johnson and Johnson was laying off the engineers to maintain their profit margins. I think the FDA shut one Johnson and Johnson plant down, but things have to get pretty bad for that to happen, because then the FDA knows there will be a shortage of the pharmaceutical.

    I think computer systems that make suggestions to doctors, by showing inexpensive generics as the default option, are one positive step.

  3. This gets to be a nightmare for people who do not have the resources to pay unlimited amounts for drugs. Some doctors are very diligent about helping patients figure out drug costs as are some pharmacists. We were at the doctor last week. She specifically said that she checked off could be filled with a generic and if either med was expensive to NOT fill it, call her back and she’d find a more reasonable alternative.

    Doctors often are changing meds for older and sicker patients to find the right mix. Many also only write 30 day prescriptions. If you ask, how long until we know if this works, the answer is 1-2 weeks. I’ve started asking to 2 prescriptions – one for 2 weeks and then one for the 30 day supplies. Before that I don’t know how many drugs we threw out partial bottles of.

    I understand drug companies need to pay for R&D costs, but there has to be some sort of balance that people can get the medicines they need. I understand that some drugs are only pennies to produce and to sell them just above cost is also pennies and not so profitable and the capitalism says then don’t make it or charge more to make it profitable for your business. However, if you get into the argument of what profit is reasonable, you are opening up a whole regulatory scheme. I am not sure you can get away from it when you hear that a company is selling a drug in the US for multiples of what it sells the same drug for in other countries.

  4. The real scandal in some of the recent purchases by investor/speculators is that the formulae were purchased from non profit entities to whom the original for profit drug companies (or private-university partnerships) had donated the patents. A drug that is not widely used or prescribed because of the rarity of the condition it treats may, and I stress, may, not be cost efficient to produce and stock. (Rarely is a non biologic drug expensive to manufacture and store.) It is a business decision for a drug company no different than Procter and Gamble discontinuing the distribution of Joy.

    Ada is right about pricing manipulation for common drugs. Colchicine, which has been around since the 19th century and therefore antedates the FDA rules, remains the treatment of choice for gout attacks (it had other uses which have largely been supplanted by more modern medicines). Because it was grandfathered, no one had ever performed elaborate efficacy tests on it, or at least on a refined modern manufactured version thereof. Some company did so a few years ago, and under a loophole for “modernizing and retesting” was allowed to have a two year mini patent on the drug. The price rose from a few cents a pill to 5 dollars a pill. Albuterol (brochodilator used for asthma and some other conditions) given via an inhaler (the usual way for adults) is branded and ten times the price of albuterol for nebulizers. The drug itself is long past patent. But when aerosol CFC’s were banned (ozone layer), there was going to an exception for inhalers since the medical use trumped the negligible environmental impact. The pharma companies lobbied against the exception so that they could patent new inhalers and reprice the drug.

  5. Of all the horrific expenses we faced when my kid was being treated, this one wre were largely protected from. Why? Because the pharmaceuticals have absolutely no interest in developing new drugs for pediatric cancer – the numbers, while not inconsequential, are not big enough to support a blockbuster drug, and there are a lot of risks in developing pediatric drugs. So kids get treated using fairly old drugs that aren’t wildly expensive. And the immunotherapy agents, which are really new, have been created in medical research centers and are administered on clinical trials, so we didn’t see that expense either.

  6. I think we should also question hospitals and their huge mark ups of standard supplies and services. Yuck.

  7. Houston, I am not as familiar with hospitals, but my understanding is the mark up is so they aren’t charging you for nursing services, social services, etc. For example, the xray costs have to cover machines – purchase price, maintenance, and supplies, technicians who take the xray, and higher level professionals who read the xrays. You are often billed for physician services directly, but the other people tend to be embedded in the cost of the “goods/services” they are providing. The question is transparency. You expect all those costs to be rolled into an xray, but what if you saw nursing services (24 hours a day at $35 an hour plus some surcharge for nurse supervision)?

    Drugs in hospitals seem more like the xray to me as they also have to cover the operating costs – pharmacists to process the daily meds sent to the floors, the cost of the disposable cups or suringes, etc. to deliver the meds to the patients, the cost of space for the pharmacy, its inventory to have things on hand, etc.

  8. He seems like a guy who is truly convinced that he’s smarter than the rest of the world, which led him to overreach.

  9. He just looks like such an asshat, doesn’t he? It’s like, Central Casting, send me a douchebag. Perfect!

  10. Right now DH is home from work again with an injury because our insurance deductible is so high that he is trying to avoid going for treatment. (Our individual deductible is $4k and family $11k.) It’s been 5 days with no real improvement, though.

    We got surprised by a $250 prescription for DS’s reflux, for a drug that we later learned has a $6/month generic. I asked the pharmacist to fill two weeks of the prescription so I would have time to call the doctor and get alternatives.

    I want more transparency, and would rather see the bill for the nurses, the bed, etc. than be surprised that each Tylenol was $15.

  11. Shkreli looks like a d-bag, talks like a d-bag, and should be punched in the face.

    On the broader topic – I agree about transparency. On the whole, I’m OK with my bills from providers, but I’d love to know why it costs so damn much for one pill, or a half hour with one specialist.

    I do have to give credit to my fertility clinic. They did a great job of keeping all the bills transparent. I knew exactly what was billed to the insurance, the status of the claim, and my portion of each charge. That makes sense though, because so many people don’t have insurance to cover fertility treatments, customers want to know exactly what they are paying for.

    Oddly, despite the inordinate amount of time I’ve spent in and out of doctor’s offices and hospitals, we’ve only been surprised once. I received a $500 bill for a weekly procedure. I found out it was a billing mistake (for a hospital which couldn’t keep my primary insurance information saved in the computer, they were sure good at billing them *after* I no longer carried that insurance).

  12. Much like living on a tight food budget, this is an area where you need good executive function to navigate.

    All prescriptions (at least in the 4 states I have practiced in) have two signature lines at the bottom – one for “dispense as written” and one for “substitution allowed”. Never in my career have I signed “dispense as written” on purpose. I have heard (and am not sure if I am convinced) that D.A.W. may be appropriate for certain thyroid, seizure and birth control meds. Otherwise, it should never be signed.

    “Substitution allowed” means that you can have the exact same medication in a generic form, if available. So, if you have a prescription for omeprazole, you can have omeprazole or Priolosec. You cannot have esomperazole (the purified enantomer, for the chemists) unless you have a prescription for Nexium, aka esomeprazole. So, you cannot have a cheaper drug in the same class, even if it is virtually identical. Other examples of this would be Diltiazem SR (sustained release) cannot be substituted for Diltiazem LA (long acting).

    There are usually multiple drugs in a class. Some are better known, better marketed, better tolerated – but more expensive. If you are prescribed an ACE inhibitor for blood pressure such as captopril, it may be appropriate for you to have lisinopril. The prescriber would need to make this change. I commonly see people prescribed Famcyclovir for shingles – it is three time a day and costs $150-200 for a 10 day course. Acyclovir is just as good and costs $5-30 for a 10 day course – but you must take it every 4 hours while awake (5x per day). Famcyclovir is prescribed because it is easier to take and patients are more likely to be compliant. Ask your prescriber, “Is there a cheaper medication in the same class?”

    Many combo pills cost more than the single pills . Diclegis is a new prescription for nausea in pregnancy. It costs $570 for 100 tablets. It is a simple combination of Unisom and Vit B6, with an extended release component. The same meds are available OTC for about $10/100 doses, albeit without extended release. I blows my mind that there is a market for this.

    While a pharmacist can’t change prescriptions, they can be a good source of information and may be able to suggest a substitute. (Not all pharmacists, but the good ones). I have been called before on antibiotics and asked to make changes simply for affordability – usually I am happy to do that. More often, I just find out that the patient didn’t fill the prescription. Ask the pharmacist, “Do you think there is a less expensive drug my doctor could prescribe for this?”

    There is tremendous variation between pharmacies, especially paying out of pocket. Chains which operate 24 hour pharmacies over-charge for most rx ($30 for cephalexin vs $4 at Target). Costco is usually cheapest and no membership is required to use the pharmacy. Call around and ask!

    In general, doctors don’t know these things – partly because they are fluid, because they vary between insurance plans, and partly because there are enough other things we have to worry about. Know how to get your formulary – it should be available online. It will tell you what your co-pay is for various medications, and if you have that handy, most docs are happy to find things in the bottom tier.

    Know your allergies. Patients are often placed on very expensive antibiotics because they think they might be allergic to penicillin. Or because their mother is. 90+% of people with reported penicillin allergy tolerate penicillin without problems.

  13. Here is a provocative situation that came up recently – a patient asked to not be treated (for a life- threatening condition) with drugs containing pork products due to a religious belief. Surprisingly, the well-used, common three drugs for this problem contained pork. A new med, costing $500/month does not – but is not covered by her health plan. Should the HMO approve an exception for “inability to tolerate standard treatment”?

    If it matters, the patient needed 10 days of the pork containing product (at an out-of-pocket cost of $10). Additionally, the patient did not exhibit external signs of adherence to a form of the religion that would require extraordinary dietary compliance. Also, it made me realize I had been prescribing pork containing products to people who did not likely want them for ages. Should I be consenting people for that?

  14. Ada, because I am the kind of person who reads all the details about my drugs, I remember noticing that fertility drugs also contained pork products.

    I think if your religion requires you to avoid pork products, the added cost is on you. Pharmacists/doctors should be obliged to glance and see if any alternative drugs are kosher, but no one should pay extra for you to comply with your religious beliefs.

    We were memorable to my fertility specialist (and we annoyed his nurse practitioner) because we made choices that allowed us to avoid the possibility of selective reduction, even when the cost was much higher. He was professionally very neutral about people’s choices, but he observed to me that few people follow their religious beliefs when it costs a lot more.

  15. Ada, I’d say you’re kinder to keep them in blissful ignorance! That way they are not knowingly ingesting pork, but don’t have to wrestle with the question of whether to spend hundreds of extra dollars to stay pure. (This assumes that the avoidance of pork is for ethical or religious reasons rather than due to allergy.)

  16. “Ask the pharmacist, “Do you think there is a less expensive drug my doctor could prescribe for this?”
    I did this when I was stunned that the cream prescribed for my son’s acne was $500. The cheaper cream the pharmacist suggested I ask for worked fine and was $10.

  17. There are some people that just don’t believe in, or understand generics. I have huge bottles of ibuprofen and acetominophin in my house from Costco. All of the allergy medicines are now generic too. Brand names such as Zyrtec, Tylenol, Advil etc. are gone from the shelves of my house. Same for many other medicines that used to be prescription, but are now OTC. It is so much cheaper than buying the name brands, but I know plenty of people that will insist that ibuprofen is different than Advil. Ada is right about thyroid medicine. My endocrinologist, and even the pharmacist recommend sticking with one brand or one generic. Thyroid medicine has been around forever so it is fairly cheap compared to new drugs.

    I really wish that there was transparent pricing on prescription drugs. It is like a guessing game when you are sick, and you are standing at the CVS counter waiting to hear the good or bad news.

    On another, but related note – hide drugs when people work in your home.
    My contractor finally finished today. As long as everything continues to work, I am done! The only thing missing after 6 months is an old bottle of prescription pain killers from a tooth extraction. It is creepy too because we had to move everything out of our master bath since it was demolished. Those prescriptions were in our basement bathroom. jewelry, cash and credit cards – items that were left in upstairs closets, and all over the basement were untouched and nothing of any monetary value was missing.

  18. “Many combo pills cost more than the single pills . Diclegis is a new prescription for nausea in pregnancy. It costs $570 for 100 tablets. It is a simple combination of Unisom and Vit B6, with an extended release component. The same meds are available OTC for about $10/100 doses, albeit without extended release. I blows my mind that there is a market for this.”

    Actually, they are not identical…it is easier (admittedly slightly) to take one pill instead of two. And you don’t have to think about figuring out the dosage. And, if someone had a copay like mine, it only costs $5 more per 100 doses to take the Diclegis. So, for $5 why not take the easier, one pill medicine?

  19. Ada – this is where religious exemptions are tricky. And while I’m starting to believe that we should have an all or nothing rule when it comes to them. In theory, in a country where we claim to tolerate all religions, we should have the exemption. But one bad apple spoils the rest. And then we get to situations like Hobby Lobby and Kim Davis.

    I don’t really have a solution. But I see the slippery slope between an exemption on drugs or vaccines, and then being exempt from following federal law or doing your job. Except we seem to be going in reverse… exempt the big things and argue the little things.

    I have a question about prescribing drugs – Ada, when you prescribe drugs for a certain condition, what is your decision making paradigm? Let’s assume the condition could be treated successfully with one of several drugs. How do you pick? Familiarity? Cost?

  20. The past few years I’ve been familiar with the Specialty Pharmacy. This is a whole other pain in the butt medical department that is a huge time suck. Every six months I have to get reapproved for the medicine, which involves me having to work with my doctor, my insurance, and the drug manufacturer. The co-pay is significant, as is the cost of the drugs. Ordering the monthly prescription is a time consuming phone call. For those not informed, lack of understanding, or lack of time to deal with these issues, they are really at a loss.

  21. And, on the flip side to Ada’s DAW comment, if you have an allergy to a drug or taking another drug that negatively interacts with the new one, but not another one in that class make sure they sign the DAW line. Also, have them note it in your medical record. My former insurance had a provision that they paid for the least expensive drug, but if you chose the name brand, you paid the difference. However, if you had medical evidence that you could not take the cheaper drug, they would not charge you the difference. Thankfully, it wasn’t for a chronic condition, but still the difference was more than $100.

  22. @Lauren – what kind of transparency do you want? If you have a prescription, you can call any pharmacy and ask the price. Some have that information on line (Costco does). There are search engines that will give you a ball park cash figure, and your insurance can tell you what tier of pricing it belongs to. I think the bigger issue is that very few people (especially those paying cash for prescriptions) know that there is significant variation in prices for the exact same medicine.

  23. My most common judgment call for prescribing is antibiotics. I don’t worry so much about price these days – I am working for the feds or an HMO – there is typically little direct cost to my patients.

    In general, I will look up what is the first-line therapy – this varies for everything. (Female with UTI, without fever, boy child with UTI + fever, etc.). For very common things, I know my top three choices without checking. Sometimes I check an antibiogram (a local chart showing which bugs had resistance last year in our lab – every major system uses these). So, even if Cipro is a first-line choice for UTI in a 52 year woman (according to my national reference), I may see that e.coli (the #1 cause of UTI) has a 24% resistance rate to Cipro (this is highly local), so I look and see what is more susceptible. Then I decide if I care if it penetrates the kidney – depending on whether the patient seems truly ill, or if urine penetration is adequate. Then I cross check it with allergies/other meds (the thing I find the computer most useful for). Sometimes I look at a historical culture in the patient – most people tend to get infected with the same bugs, so what worked before will work again. In certain circumstances, I will then think about price. Occasionally, I will offer a patient – “I think this drug has an 85% chance of working well, and it will cost you $4, this other drug has a 98% chance and will cost $60 – which do you prefer?”

    This is a very different calculus from starting an anti-depressant, birth control pill or blood pressure med. I don’t do those kinds of things (usually). My main prescriptions are for symptom relief or antimicrobial effect.

  24. Ada – I’m thoroughly impressed. I was not expecting that level of detailed thinking. Probably because I have the run of the mill stuff you mention and you can whip out your pad and send me on my way.

  25. Diclegis- a nurse at my OB office scolded me for taking Unisom and B6 for nausea- and then immediately offered to get me a prescription for Diclegis from the Doctor. My copay was pretty low for the drug (though still more than my DIY OTC remedy) but I still wasn’t ok with the insurance company paying so much extra. I tried Diclegis for 1 month just to make sure it wouldn’t work any better for me (it didn’t) and then switched back to my DIY solution. For just a tiny bit of effort doctors could do a lot to reign in healthcare costs. Why prescribe people expensive meds for no reason when virtually identical cheaper products exist?

  26. I think the biggest problem with the system as a whole is the fact that the pricing is hidden. Literally NO ONE can tell you what your MRI will cost before you come in. The doctors don’t know how much the drugs cost so it is hard for them to manage on their end. To add insult to injury then you also have doctors billing separately from the hospital who may or may not be in your network. So you have to really be on top of things and it is impossible to budget for or manage. It is the only thing that we purchase that we do blind. Maddening.

  27. I’d like to see a stronger role for government in balancing drug development costs with safety and efficacy. The FDA is charged with “safety” but there are enormous costs to ensuring that level of safety. If it’s safe in other countries, it’s probably safe in the US without a multi-hundred million dollar trial.

    The federal government already pays for many pharmaceutical costs (by NIH grants for basic research and either directly paying for pharmaceuticals or by subsidizing employer-provided health insurance). I’d like to see government control the whole drug pipeline, which would mean government rather than pharmaceutical companies would do the cost-risk-benefit analysis on expensive new drug trials. The government would also have to implement tort reform for hospitals, physicians, pharmaceuticals and medical device companies. If standard-of-care guidelines were updated to whatever QALY cost guidelines the government adopts and practitioners/companies follow those guidelines, then no financial compensation for harms will take place, though compensation for additional medical costs and lost wages/caregivers might be in order.

    Tort reform should also include better policing of doctors with addictions, etc. If you are a quadriplegic because your surgeon botched your operation and had issues with alcoholism, you’re not going to be a fan of tort reform.

    Like Rio, I’ve been underwhelmed by the competence of the nurses I deal with in understanding drug choices and mechanisms.

  28. @WCE – Do you think there is inadequate policing of physicians with addictions? That has not been my experience at all. I pay a hefty fee yearly (as part of my licensing) to provide myself and my colleagues with all kinds of oversight. I have not personally witnessed incompetence in the workplace due to substance abuse.

  29. I am surprised how many people don’t know that many drug manufacturers put coupons on their webpages offering substantial copy’s discounts for people with insurance. I save over $175 per month using these coupons. I have a coworker who was complaining last week about her $360 asthma medicine. The mfr has a coupon capping the company at something like $30.

  30. Compared to attorneys, I would say physicians (and associated providers) do a poor job of policing themselves. I probably shouldn’t have implied the incompetence is limited to substance abuse. Google Jayant Patel for articles I remember reading when I was understanding how the Oregon law system would work in my baby’s lethal abnormality case. (My case was potentially legally complex because parents don’t have the ability to decline care under the Born Alive Infants Act.)

    In this case, I think the system worked properly. http://blog.oregonlive.com/portlandcityhall/2012/01/oregon_medical_board_sheds_new.html

  31. Oh – I’ll agree that there is substandard quality policing among physicians – though that is an near impossible task. That is not limited to the US, though (your example is from Australia). Poor doctoring is not often related to substance abuse. I have seen more examples related to aging.

    I liken it to policing chefs on quality food preparation. When creating a meal out of chicken, there are many right ways to do it that most of us can agree on. There are some wrong ways to do it that all of us can agree on. There are many ways in between that some of will think are inadequate. It is very difficult to come up with objective standards that show that a doctor is practicing good or bad medicine.

  32. Jayant Patel had practiced in Oregon before Australia. He had 25 years of documented incompetent practice.

  33. Off-topic, but has anybody else seen what allegedly happened at the Dartmouth library the other day? It might surprise many of you to find out that I’m actually very sympathetic to BlackLivesMatter and support most of their goals. But the way some of these over-privileged students are acting is going to turn public opinion against their cause big time.

    http://www.dartreview.com/eyes-wide-open-at-the-protest/

  34. As further evidence that online doctor reviews are utterly worthless, I send you to visit Dr. Soraya Abbassian on vitals.com

    http://www.vitals.com/doctors/Dr_Ray_Abbassian/credentials

    This is from the link WCE shared – she plead no contest to negligent homicide in 2013 when she accidentally killed her friend/nurse trying to do a tummy tuck after hours (which she wasn’t qualified to do). Part of her sentence was that she could never practice again

    In 2014, on vitasl.com she was awarded “Patient Choice Award” and “Compassionate Physician Award” by the website. No mention of the fact that she doesn’t practice anymore and the negligent homicide. Clearly, the awards are computer generated and the sites don’t ever try to verify credentials.

  35. but what if you saw nursing services (24 hours a day at $35 an hour plus some surcharge for nurse supervision)?

    Speaking as a nurse, this would he freaking awesome. Move nursing from the expense side to the income side would be the best thing that could happen for the profession.

  36. DD – I understand your point. My question is do you think patients would flip out? For example, I go to my PCP and I get an EOB showing my cost – doctor visit $95, copay $20, amount you owe $0. But, if it were really transparent, there would be a whole laundry list of costs – physician, nurse, administrative records, etc. Does it become the information overload that came with both phone and electric utility deregulation?

  37. AustinMom, My bet is that small business owners would look at the bill, decide if it was reasonable or not. Employees would freakout.

  38. Austin, I don’t think patients would even notice. The EOB doesn’t break out the charges into that level of detail, and the full bill shows so much detail that nobody would care that there are a few more charges.

  39. Baby WCE, along with the rest of my children, successfully cpnsented to a complex agreement allowing me to serve as her healthcare proxy.

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