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Drug Price Increases That Exceed Inflation Are Costing Medicare Part D Billions

This AARP Public Policy Institute Spotlight finds that total Medicare Part D spending on 50 top brand-name drugs was $38 billion higher between 2015 and 2019 than it would have been if drug manufacturers had not increased their prices faster than the corresponding rate of inflation.

by Leigh Purvis, June 7, 2021

This AARP Public Policy Institute Spotlight finds that total Medicare Part D spending on 50 top brand-name drugs was $38 billion higher between 2015 and 2019 than it would have been if drug manufacturers had not increased their prices faster than the corresponding rate of inflation.

Our analysis also found that the vast majority of the top 50 sole-source brand-name drugs experienced annual price increases over the study period. On average, nearly 90 percent of the top 50 drugs had annual price increases that exceeded the corresponding rate of general inflation from the end of 2015 through 2019.

It is unclear whether the inflation-based rebates under consideration in Congress would lead to widespread changes in drug company pricing behavior. However, given the current prevalence and magnitude of annual brand name drug price changes, it is clear that even a small movement in the right direction will result in substantial savings over the status quo. 

The Health 202: Democrats seek to tack drug pricing onto an infrastructure package

The Biden administration hasn’t embraced various drug-price-lowering measures pushed by former president Donald Trump.

But the pharmaceutical industry has something else to worry about.

By Paige Winfield Cunningham for the Washington Post

House Democrats say they’ll make an effort to include H.R. 3 — the measure allowing the federal government to directly negotiate lower drug prices — in whatever infrastructure and jobs bill congressional leaders are trying to hammer out over the summer. 

House Energy and Commerce Chairman Frank Pallone Jr. (D-N.J.) told reporters yesterday that he’s aiming to get the measure attached to the package — a package that almost certainly represents Democrats’ best shot this year at turning their top priorities into law.

“This is a necessity,” Pallone said on a call hosted by the group Protect Our Care. “We definitely want to do it this year.”

H.R. 3’s only realistic hope lies in getting attached to the jobs and infrastructure package.

And it would only, possibly work if Democrats decide to bypass Republicans entirely by using the budget reconciliation process.

This week, President Biden is continuing negotiations with Republicans over the pending deal to improve the nation’s roads, bridges, pipes, ports and Internet connections — and it remains unclear how it all will unfold.

White House spokeswoman Jen Psaki laid out a number of possible paths toward passing infrastructure legislation on a bipartisan basis, although she has also said the clock is ticking on Democrats working with Republicans. The White House is leaving open the possibility of muscling the legislation through without the GOP.

If the effort at bipartisanship falters, all eyes will be on Sen. Joe Manchin III (D-W.Va). “Should Democrats and Republican fail to broker a deal, the White House will need every Democratic senator to rally behind the infrastructure bill on a party-line vote, making Manchin a pivotal figure capable of making or breaking a centerpiece of the Biden agenda,” our colleagues Mike DeBonis and Sean Sullivan write.

Manchin has sponsored legislation allowing the federal government to directly negotiate lower drug prices, so the thought is that he’d be fine with adding elements of H.R. 3 to a budget reconciliation bill, although he hasn’t explicitly said that. H.R. 3 also carries the benefit of being a net positive on federal spending, since the Congressional Budget Office has scored the direct negotiation piece as saving $456 billion over a decade.

Still, the future of H.R. 3 is far from certain.

President Biden and House Speaker Nancy Pelosi (D-Calif.) also say they want it passed, and two House committees held hearings on it in May. 

But enough House moderates have expressed hesitation that it could easily be derailed. In a recent letter led by Rep. Scott Peters (D-Calif.), 10 Democratic members of Congress told Pelosi they want “bipartisan, bicameral support, with buy-in from a majority of Americans and stakeholders in the public and private sectors.”

Peters and seven of the signers voted for H.R. 3 when the House passed it in late 2019. But Peters told Politico he only voted for the bill to “start a conversation” about lowering prescription drug prices, with the understanding that it wouldn’t ultimately be passed by the Senate.

Democrats currently hold the House majority by just eight seats, but Pallone brushed off the letter when asked about it yesterday, saying he has “no doubt” the chamber could once again pass H.R. 3.

“If you look at that letter, it didn’t really say they wouldn’t support it,” Pallone said. “There may be parts of it they might like to see changed, but the basic idea of having the government negotiate prices is the key.”

Meanwhile, Trump’s foray into lowering drug prices is fading into the background.

The former president spent his four years in office promising the American people he’d significantly lower the cost of prescription drugs. His administration did advance several policies to do so, including issuing several regulations late last year.

But those regulations have largely been blocked or delayed, and the Biden administration has shown little interest in advancing them.

  • In January, a federal court blocked Trump’s “most-favored-nations model,” which would have tested tying the prices of certain Medicare drugs to lower prices in other countries. The Biden administration would have to start over with the traditional rulemaking process, which the court said the Trump administration inappropriately skipped.
  • The Biden administration has also delayed a Trump-era rule banning drug rebates for manufacturers in the Medicare program. Now the rule isn’t slated to take effect until Jan. 1, 2023.
  • And in late May, the Biden administration indicated it has no timeline on whether it will allow states to import drugs from Canada. The Trump administration approved a rule allowing states to seek permission for drug importation, which the pharmaceutical industry is suing to block.

Biogen faces tough questions over $56K-a-year price of newly approved Alzheimer’s drug

Biogen on Tuesday faced tough questions from Wall Street analysts over the $56,000 annual cost of its newly approved Alzheimer’s drug, Aduhelm.

By Berkeley Lovelace Jr.

@BerkeleyJr (CNBC)

Biogen on Tuesday faced tough questions from Wall Street analysts over the $56,000 annual cost of its newly approved Alzheimer’s drug, Aduhelm – a price tag executives are calling “fair” and “responsible.”

Shares of Biogen surged 38% on Monday after the FDA announced it approved the company’s drug, scientifically known as aducanumab. It is the first medication cleared by U.S. regulators to slow cognitive decline in people living with Alzheimer’s and the first new medicine for the disease in nearly two decades.

The biotech company said it is charging $56,000 for an annual course of the new treatment, higher than the $10,000 to $25,000 price some Wall Street analysts were expecting. That’s the wholesale price, and the out-of-pocket cost patients will actually pay will depend on their health coverage.

Some analysts and advocacy groups immediately questioned how the company could justify the price — about five times higher than expected — especially as medical experts continue to debate whether there’s enough evidence that the drug actually works and the industry faces criticism over drug prices.

The FDA departed from the advice of its independent panel of outside experts, who unexpectedly declined to endorse the drug last fall, citing unconvincing data. 

“Our one concern here comes around the Aducanumab annual cost, and whether at $56K/year (we were at $10k) the sticker shock could further invigorate scrutiny on drug pricing,” Stifel analyst Jeff Preis told investors in a note Monday.

On a call with investors Tuesday morning, Evercore ISI analyst Umer Raffat congratulated the Massachusetts-based company on the drug’s U.S. approval before asking executives to explain its price.

“I do think there’s a disconnect between some of the words that you’ve shared in your press releases, like responsibility, access, health equity, versus the price point, especially given the primary care population,” he told executives.

J.P. Morgan analyst Cory Kasimov later asked executives how much federal health insurance program Medicare will be expected to pay for the drug and how concerned executives are about the “backlash” the industry will face over its pricing.

Biogen executives said the total price figure for the new treatment is “substantiated” by the value it is expected to bring to patients, caregivers and society. They insisted the price is “responsible,” noting the disease costs the U.S. billions each year.

More than 6 million Americans are living with the disease, according to estimates by the Alzheimer’s Association. The company said it currently has the capacity to provide 1 million patients with the drug annually, with more than 900 sites in the U.S. ready to implement the new medicine.

“We want to make sure Aduhelm is affordable for patients and sustainable for health-care systems,” one executive said.

The company has committed to not raising the price of the new drug over the next four years. That being said, executives said they are “open-minded” and suggested they could rethink the price as the company assesses demand over the next few years.

Biogen CEO Michel Vounatsos joined CNBC on Monday and said the drug’s price will allow the company to further invest in its pipeline of medicines for other diseases. He added the company is working closely with Medicare as well as private insurers.

https://player.cnbc.com/p/gZWlPC/cnbc_global?playertype=synd&byGuid=7000194465

Rep. Katie Porter Presses AbbVie CEO About Increased Drug Prices

Rep. Katie Porter of Orange County is a champion for patients across America, and a huge advocate for affordable prescriptions. Here, she asks a Pharma CEO the tough questions on behalf of consumers.

“Big Pharma says they need to charge astronomical prices to pay for research and development. Yet, the amount they spend on manipulating the market to enrich shareholders completely eclipses what’s spent on R&D. Today, I confronted a CEO about the industry’s lies, with visuals.” -Rep. Porter (see the original tweet here: https://twitter.com/i/status/1394724627566391297)

It’s Simple: Medications Don’t Work if People Can’t Afford Them

Albuquerque resident Jeanne Hamrick explains how out-of-pocket expenses for her medication have impacted her life. With so many New Mexicans experiencing serious hardships due to the cost of their essential prescriptions, there has never been a better time for drug pricing reform.

Jeanne has Multiple Sclerosis and is struggling to pay the prescription costs for her essential medication. Watch the full story below.

Do you or someone you know have a story like Jeanne’s? Share your story with us or join our coalition to help make prescriptions more affordable for all New Mexicans! See https://newmexicocap.org/join-us/ for more.

‘There are no alternatives’: As Pfizer discontinues an old glaucoma drug, a small group of patients struggles to cope

Next month, an eye drop that Carol Vaghar has taken for the past few years to manage a rare form of glaucoma will no longer be available, leaving her little choice but to consider potentially risky surgery to maintain the pressure in her eyes. Pfizer says this drug is too hard for them to manufacture.

By Ed Silverman

The 62-year-old real estate agent developed cataracts in both eyes many years ago and after surgery, developed aphakic glaucoma, which causes intraocular pressure to rise dramatically. Vaghar tried various medications, but only one — a decades-old eye drop called Phospholine Iodide — has been effective. But Pfizer (PFE), which is the only supplier, will soon stop distributing the product.

“I don’t have a natural lens in either eye, so I wear contacts to function and need this medicine,” said Vaghar, who lives in Newton, Mass. “I’ve tried many glaucoma drugs, but it’s the only one that seems to work for people who don’t have a lens in their eye and must keep the pressure down. And for those people who need it, they really need it. There are no alternatives. But Pfizer won’t budge.”

Aphakic glaucoma is an uncommon condition that can occur after the natural lens in the eye is removed as a result of cataract surgery, although very few people develop the problem. But for those who do, lowering the pressure in the eye is crucial, or patients are likely to lose their eyesight. Unfortunately, other glaucoma treatments on the market are often ineffective for this condition, according to ophthalmologists.

Vaghar and several other patients – in addition to parents of children who use the drops – have tried to convince Pfizer to reverse course, but so far their efforts have failed. Until recently, Pfizer declined to provide names of any manufacturing partners. Meanwhile, the patients enlisted physicians in hopes of locating another company willing to make the drops. But such a step would require regulatory approval, a challenging and time-consuming process. And time is not on their side.

“If this goes off the market, we’ll probably have to do surgery for some patients to control their pressure. This medicine is uniquely beneficial for this kind of glaucoma,” said David Walton, a Boston ophthalmologist who treats between 40 and 50 people with aphakic glaucoma, including children for whom it is a common cause of blindness.

“They’re scared and anxious and desperate. It’s a very intense concern. And you have a big, multi-national, multibillion-dollar company that arbitrarily says it won’t make it anymore. I think it’s understandable from a Pfizer perspective. But there are things Pfizer could do to look good – make more drug or fund research to prevent the disease from recurring.”

A Pfizer spokesperson said that the drops are being discontinued due to “a complex chain of external partners” that is “increasingly unstable,” which has led to multiple shortages in recent years. Other companies supply many of the components, including active and inactive ingredients, sterilized packaging materials, technologies, and final formulation. The active ingredient in the drops is also toxic, he added, which means it requires special handling and transportation.

Moreover, Pfizer estimated there are only about 100 patients in the U.S. based on prescription data, which is another way of saying this is a small market that is fairly static and, therefore, sales are highly unlikely to increase. Pfizer does not break out sales for the eye drops and the spokesperson declined to say whether the product is profitable.

“We understand that some patients, caregivers, and ophthalmology scientific organizations are disappointed about Pfizer’s decision to discontinue Phospholine Iodide,” the spokesperson wrote us. “We did not come to this decision lightly and made every effort to inform those impacted as soon as the decision was made to allow time to seek the best alternative treatment options.”

A month’s supply may cost about $75 to $100 for patients with insurance. “But if they increased the price by a factor of 10, we would still pay it,” said Elizabeth Kinder, a TV commercial producer whose son uses the drops. “Without these eye drops, the next step is surgery, which is not curative. It’s just a form of management. It doesn’t last forever and doesn’t always work. It’s the last thing we want to do.”

The decision reflects an ongoing dilemma facing drug makers, physicians and patients. Older medicines used by a small number of people may generate little to modest revenue, sometimes forcing drug makers to coldly calculate the return on the investment made to continue production or, in this case, contracting with other companies to manufacture a product.

From a financial perspective, discontinuing such a product may make sense. At the same time, a company runs a risk of enduring bad publicity, especially when companywide sales are in the billions of dollars and goodwill can be generated by maintaining supplies. Consequently, such situations point to a need for policymakers to address such scenarios on a societal level, according to one expert.

“It sounds like a story we’ve heard before and it’s a challenging story,” explained Aaron Kesselheim, a Harvard Medical School professor, who also heads the program on regulation, therapeutics, and law at Brigham and Women’s Hospital. “It may be a rare problem, but these are the kinds of circumstances where we may need to think about alternatives for manufacturing and supplying the product.

“Sometimes, manufacturers have been encouraged to continue the supply based on public outcry. But if they’re not going to produce the product anymore as a for profit company, that’s their prerogative. But this is really a societal problem. We should be trying to develop a way of dealing with these issues so it doesn’t fall on shoulders of individual patients to bang on Pfizer’s door.”

Pfizer did acknowledge that Emergent BioSolutions (EBS) performs all of the fill and finish, which refers to filling the eye solution into bottles and then final packaging before distribution. But Emergent, which last year won contracts to help produce Covid-19 vaccines, is now embroiled in a scandal over contamination of millions of doses of the shots at its Baltimore plant and was harshly criticized by the Food and Drug Administration after an inspection last week.

Whether Emergent would be in a position to maintain its involvement with this medication is unclear. We asked the company for comment and will pass along any reply. Also unclear is whether a compounding pharmacy could step in, given the manufacturing challenges. Meanwhile, Pfizer declined to identify the company that supplies the active pharmaceutical ingredient, although AMRI confirmed that it previously filed documentation with the Food and Drug Administration to supply the ingredient in the U.S.

“Unfortunately, I don’t think anybody is going to produce the drug. There’s only a select group of people for whom this works great and they may have problems, because they will need surgical intervention,” said Alan Robin, executive vice president of the American Glaucoma Society and an associate professor of ophthalmology and international health at Johns Hopkins University.

“In the old days, pharmaceutical companies would make loss leaders out of a product as a service to both doctors and patients as a goodwill effort. But nowadays, Pfizer is out of the eye care business, so there’s no incentive to produce this. I wonder whether they would be different if this was a profitable drug. Then they might find some way to minimize the manufacturing and API issues.”

Pfizer eyes higher prices for COVID-19 vaccine after the pandemic wanes: exec, analyst

Amid the high-stakes fight against COVID-19, a company at the forefront of the vaccine effort is laying plans to hike prices after the crisis. A top Pfizer exec said the drugmaker aims to charge more after the "pandemic pricing environment," and an influential analyst says the company could be eying prices 3 to 4 times higher.

by Eric Sagonowsky | Feb 23, 2021 12:09pm

On an earnings call earlier this month, Chief Financial Officer Frank D’Amelio said that “obviously,” the company is “going to get more on price” after the “pandemic pricing environment.” He was speaking in response to Bank of America Merrill Lynch analyst Jason Zemansky, who asked the management team about how profit margins for the program could change over time.

In short, D’Amelio explained that Pfizer expects its COVID vaccine margins to improve. Under one pandemic supply deal, Pfizer is charging the U.S. $19.50 per dose, D’Amelio said, which is “not a normal price like we typically get for a vaccine—$150, $175 per dose. So, pandemic pricing.”

As a specific for-instance, a dose of Pfizer’s pneumococcal vaccine Prevnar 13 costs more than $200 on the private market in the U.S., according to Centers for Disease Control and Prevention data.

Pfizer has said it expects $15 billion from its COVID-19 vaccine this year, but if the company charges higher prices after the pandemic, it could continue to reap significant sales from the product in the years to come, particularly if routine boosters are needed as variants arise. 

Even as Pfizer uses “pandemic pricing” during the crisis, the company is also paying for materials, labor, factory overhead, shipping, distribution costs and more to deliver doses, D’Amelio said. With all of its costs, “you come out with the high 20s in terms of that as a percentage of revenue,” the CFO said.

Moving into the future, after the pandemic period, Pfizer is “going to get more on price,” and will increase output at its factories, driving production costs per unit lower, the CFO said. In all, D’Amelio said there’s a “significant opportunity for those margins to improve once we get beyond the pandemic environment that we’re in.” 

Bernstein analyst Ronny Gal picked up on the comments and highlighted a recent report in Germany’s Sueddeutsche Zeitung in a Monday note to clients. The publication reports that Pfizer and BioNTech approached European officials seeking €54 per dose, or €27 billion for 500 million doses, last summer.

While officials negotiated the price down to €15.50 per dose, Gal suspects that all of the developments indicate a “first hint” of Pfizer’s thoughts on “post-epidemic pricing.” The deal, in addition to other European supply pacts, was large enough to be “at least partially … for post-pandemic use,” Gal figured.

A Pfizer representative said in a statement these are “extraordinary times, and our pricing reflects that.”

“During the pandemic, we priced our vaccine consistent with the urgent global health emergency we are facing to ensure widespread vaccination for all countries,” he added. During government supply negotiations, the company considers volume and equitable distribution aims, he said, and has a “tiered pricing approach that enables poorer countries to pay less.”

“Moving forward, we will continue to take a thoughtful approach to pricing, balancing a number of factors—including the value of the vaccine based on the growing evidence base, and access, affordability, and sustainability considerations,” he added.

In initial deals with the U.S. government, Pfizer and BioNTech’s vaccine costs $19.50 per dose, compared with $15 for Moderna’s shot, $16 for Novavax’s program, $10 for Johnson & Johnson’s vaccine and $4 for AstraZeneca’s. Pfizer didn’t take any government development funds for its shot, while other players received various amounts of assistance, and Pfizer was the first to reach the market. 

The drugmaker isn’t alone in viewing vaccine pricing differently during the pandemic and afterward. Johnson & Johnson and AstraZeneca have each pledged to sell their vaccines on not-for-profit basis during the pandemic.

Editor’s note: This story was updated with a statement from Pfizer.

HB 154 will help lower prescription drug costs

HB 154 is a must for NM consumers and community members.

"New Mexico can do better. The state regulates the cost of health insurance, electricity and other critical utilities, and it ought to look out for consumers of prescription medications as well." - Jeanne Hamrick, Albuquerque resident

By Jeanne Hamrick / Albuquerque Resident


During the last N.M. legislative session, several bills became law that will begin to rein in the high costs of prescription drugs. Those efforts continue this year with the introduction of House Bill 154, the Prescription Drug Affordability Act.

Prescription drug companies are the only businesses in the health care industry whose rates are not regulated. It is time to hold them to the same standard as all other health care providers. The Affordability Board, known as a PDAB, would serve as an independent body with the authority to evaluate high cost drugs and set reasonable rates for consumers to pay.

I know how difficult paying for much-needed medication can be. In 1995, I was diagnosed with multiple sclerosis. In addition to managing a chronic condition, I face insurmountable prescription drugs costs. The main drug I take to manage my disease costs nearly $100,000 a year. I am fortunate to have insurance, but still my out-of-pocket costs are often $10,000 annually.

Something has to give. That is why AARP New Mexico is supporting HB 154, sponsored by Rep. Angelica Rubio and Sen. Jeff Steinborn, both D-Las Cruces. New Mexicans, like all Americans, should not be paying the highest prescription drug costs in the world.

For too long, prescription drug companies have added to their profits while consumers struggle to afford the vital medications they need. We need the Legislature to step up to ensure all New Mexicans have access to affordable medications.

New Mexico can do better. The state regulates the cost of health insurance, electricity and other critical utilities, and it ought to look out for consumers of prescription medications as well.

Rep. Katie Porter Outlines Why Competition is Critical in the Pharmaceutical Industry

Competition is critical for the pharmaceutical industry...Rep. Katie Porter of California explains why.

Rep. Porter: “Our scientists and biotech researchers are incredibly talented, so it’s essential we foster cultures that harness their potential—not destroy it. Our office released a report on how critical competition is to the pharma industry, and I chatted with @PodSaveAmerica about it.”

Consumer and health advocates call for fast passage of Prescription Drug Affordability Act

ALBUQUERQUE, NM – Citing data that big drug companies have taken advantage of the COVID-19 pandemic to raise prices on hundreds of medications, AARP New Mexico, Health Action New Mexico and a statewide coalition of health experts, patient advocates and consumers today lauded the introduction of the Prescription Drug Affordability Act (House Bill 154) and called on legislators to act quickly to ensure all New Mexicans have access to affordable drugs.

NEWS RELEASE
January 27, 2021
FOR IMMEDIATE RELEASE

CONTACT: Barbara Webber, Executive Director, Health Action New Mexico
505-508-6531 (cell) barbara@healthactionnm.org

ALBUQUERQUE, NM – Citing data that big drug companies have taken advantage of the COVID-19 pandemic to raise prices on hundreds of medications, AARP New Mexico, Health Action New Mexico and a statewide coalition of health experts, patient advocates and consumers today lauded the introduction of the Prescription Drug Affordability Act (House Bill 154) and called on legislators to act quickly to ensure all New Mexicans have access to affordable drugs.

“New Mexicans continue to struggle to afford the medications they need,” said Barbara Webber, Executive Director of Health Action New Mexico. “The Prescription Drug Affordability Act will hold drug companies accountable and set reasonable rates for consumers to pay. I want to thank Representative Angelica Rubio for her leadership bringing this important bill forward.”

A Prescription Drug Affordability Board (PDAB) would regulate prescription drugs with costs that greatly impact New Mexicans, including high-cost, brand name medications. High costs can prevent patients from accessing the prescription drugs they need, cause significant affordability issues for the state and threaten public health.

The Board would consider a broad range of economic factors when setting appropriate payment rates for reviewed drugs, allowing pharmaceutical manufacturers the opportunity to justify existing drug costs. Once a fair payment rate is determined, the Board sets an upper payment limit that applies to all purchasers and payor reimbursements in New Mexico, ensuring that lower costs benefit consumers. Staffing the Board would be funded by a fee on pharmaceutical manufacturers.

“Enough is enough,” said Joseph P. Sanchez, AARP New Mexico State Director. “Even before COVID-19, Americans were paying the highest drug prices in the world. New Mexico needs an independent body that can evaluate drug costs and set reasonable rates for consumers to pay. With the establishment of the Prescription Drug Affordability Board, New Mexicans will have an advocate to ensure they are not being taken advantage of by drug companies.”

According to the data firm, Analysource, pharmaceutical companies have taken advantage of the pandemic to raise prices on 645 brands almost six percent in the first eight months of 2020.

  • On average, Americans pay four times as much for the same medicines as people in other countries.
  • The Journal of the American Medical Association reports 35 big drug companies raked in $8.6 billion in profits between 2000 and 2018.
  • Nine of the top ten companies spend more money on marketing and advertising than they do on researching new drugs.
  • Nearly half of New Mexicans have skipped taking medication or not filled a prescription because of cost concerns.

Advocates have launched a website, www.newmexicocap.org, with information about drug pricing and state policy options to reduce drug costs.

“Prescription drug companies are the only businesses in the health care industry whose rates are not regulated. It’s time to hold them to the same standard as all other health care providers. Creating a Prescription Drug Affordability Board is a commonsense solution to hold big drug companies accountable and drive down the cost of prescription drugs,” Webber said.