Why Prescriptions Cost So Much and What You Can Do About It
A couple of weeks ago the news was filled with stories about Martin Shkreli the CEO of Turing Pharmaceuticals, a relatively small drug manufacturer. Some media branded him with this headline because he raised the price for one pill of Daraprim, a 62 year old drug,
from $13.50 to $750. That’s about 5,000 percent. Now, he says he will lower the price, but there’s no indication of how much or, as of this writing, when (According to Web MD Daraprim is used with other medication (such as a sulfonamide) to treat a serious parasite infection (toxoplasmosis) of the body, brain, or eye or to prevent toxoplasmosis infection in people with HIV infection).
As it turns out, though, the “World’s Biggest A–Hole case is not in the least bit unusual, it happens with pharmaceutical companies with great regularity as a tactic to increase profits on older drugs, drugs that have long since paid for themselves.
The global market for pharmaceuticals topped $1 trillion in sales in 2014. The world’s 10 largest drug companies generated $429.4 billion of that revenue. Five of these companies are headquartered in the U.S. They are: Johnson & Johnson, Pfizer, Abbot Laboratories, Merck and Eli Lilly.
Johnson and Johnson, America’s biggest pharmaceutical manufacturer raised prices on over 130 brand name products this year alone. Merck & Co. raised the price of 38 drugs. The increases in the U.S. have added over a billion dollars of revenue in the last three years. So, while Mr. Shkreli may get the award for being the biggest you know what, he is in good company — only the others were smart enough not to brag about it.
Before I go on it is important to point out that my interest in the topic is both personal and professional. I am a senior citizen, who has had a heart transplant and who also has Chronic Obstructive Pulmonary Disease (COPD). I take a good number of prescription drugs and despite having Medicare Part D insurance I still pay thousands of dollars a year for my prescriptions. Most of the drugs I take have been around for quite a while, but not long enough to allow the sale of generics and because there are few if any pricing restrictions, most of my meds are outrageously high priced.
One of the drugs I take is called Foradil. It was approved by the FDA in February 2001 for the maintenance treatment of asthma and the prevention of bronchospasm in reversible obstructive airways disease. Despite being on the market that long, it still retails for about $250.00 for a 30 day supply. Spiriva is another COPD drug and is often taken with Foradil. It retails for about $350.00. I take about a dozen drugs and these two alone total over $600.00 a month. Insurance cuts that cost in half, but they are still expensive. Because of these prices I know of many seniors and others who have to choose between eating and paying for their prescription meds.
In Europe, Asia, Australia and anywhere else with some form of socialized medicine strict government regulation helps prevent those kinds of actions and subsequently keeps prices down. Things are a whole lot looser in the U.S.
In 2013 each of us spent over $1,000 on prescription drugs. That works out to $429 billion. In case that figure boggles your mind, let me boggle it more by showing you what it looks like in black and white — $429,000,000,000. By anyone’s measure that’s a lot of money. To put it all in perspective Prescription medications make up close to 10 percent of the $2.9 trillion annual total spent on healthcare in the U.S.
Americans spend more on drugs than any other country in the world and – we also pay more for them than any other country.
Before we go into detail on why prescription drugs cost more here than anywhere else, let’s look at the biggest drug and biotech companies in the world. They account for more than a third of the industry’s total market share according to the World Health Organization. We won’t go into detail but here’s the top ten and their 2014 revenue.
- Gilead Sciences $24.474 billion.
- Bayer $25.47 billion.
- AstraZeneca $26.095 billion.
- GlaxoSmithKline $37.96 billion.
- Merck’$42.237 billion.
- Sanofi $43.07 billion.
- Pfizer 49.605 billion.
- Roche $49.86 billion.
- Johnson & Johnson $74.331 billion.
If you were to ask any of those companies why prescription drugs cost so much they would likely tell you that the price reflects the immense costs of research and development. They would explain that it costs millions and millions of dollars to develop a new drug and then millions more to get through animal and human studies and FDA approval, and that’s partially true. Partially. Those costs are very high, but what big pharma won’t tell you is that you are also paying for the costs of marketing the drug to physicians and patients and those costs dwarf the research and development expense. http://tinyurl.com/pr23j3q
The world’s largest pharma company, Johnson & Johnson, spent $17.5 billion on sales and marketing in 2013, compared with $8.2 billion for R&D. Most of that marketing effort is aimed directly at physicians, the people who write the prescriptions, rather than customers like you and me. It should be noted that the U.S. and New Zealand are the only two countries that allow any form of advertising for prescription drugs.
No sane person can object to a company making a profit, it’s part of the American way, but the drug industry’s profits are excessive. At the risk of being accused of repetitiveness I must say again. We pay significantly more than any other country for the exact same drugs. United States spends more than $1,000 per person per year on pharmaceuticals. Per capita drug spending in the U.S. is about 40 percent higher than Canada, 75 percent greater than in Japan and nearly triple the amount spent in Denmark. So why is that?
Well, first the U.S. is a very rich and therefore lucrative market because we use more medicine than any other developed country. We account for 35 percent of the world market for pharmaceuticals. Americans have become quite accustomed to leaving their doctor’s office with a handful of prescriptions.
Due to our ill health and our wealth, companies often choose the U.S. in which to launch new products. And, because the US market is so big and profitable, investments in research and development have long been steered towards meeting clinical needs.
But if we Americans take more prescription drugs, we also pay an arm and a leg more for them. Why? Because other countries have tough regulations about pharmaceutical prices and they set reimbursement limits. Another smart thing they do is to agree to pay for a drug only if the price is justified by the medical benefits. In the U.S., Medicare which is the world’s largest buyer of prescription drugs is prohibited from negotiating prices with drug companies. If the company says that a pill is $100, Medicare has no choice, but to pay it if the patient needs it. They have no wiggle room and that costs taxpayers billions of dollars a year in a direct giveaway to the pharmaceutical behemoths and speaks to the power of their lobbyists.
Speaking of lobbyists, here’s the real rub. The pharmacy industry views congress as a place to invest against future price controls and this is what really adds to the price of your prescriptions.
Big Pharma Spends More on Lobbying Than Anyone
Since 1998, the industry spent more than $5 billion on lobbying in Washington, according to the Center for Responsive Politics. To put that in context, that’s more than the $1.53 billion spent by the defense industry and more than the $1.3 billion forked out by Big Oil.
From 1998 to 2013, Big Pharma spent nearly $2.7 billion on lobbying expenses — more than any other industry and 42 percent more than the second highest paying industry: insurance. And since 1990, individuals, lobbyists and political action committees affiliated with the industry have doled out $150 million in campaign contributions.
Now here’s how it works for you and me. In the U.S. insurers only accept the price set by the drug makers. If the drug is exclusive, meaning there is no competing medication from other companies. Insurers then cover the total cost by forcing a higher co-pay on patients. Unlike Medicare, insurers have bargaining power when there are competing drugs and therefore can reduce the co-pays.
Then, there is the Generic drug market, those are drugs in which the patent has run out and other manufacturers are allowed to produce the product. As an example the antidepressant Remeron is also known by its generic name Mirtazapine. Remeron is the brand name given it by the original manufacturer, but Mirtazapine can be made and distributed by any pharma company and sold for a much lower price.
Competition in that area is fierce and generic drug prices are usually low. Today generics account for about 85 percent of drugs dispensed in the U.S.
Despite generics and their low prices, there are still many Americans who daily make the choice between food or drugs, between paying the rent and drugs or giving up some other type of health care in order to afford the drugs that keep them going. Many Americans don’t take their recommended prescriptions because they can’t afford them. One recent survey showed that about one in five U.S. adults did not fill their prescription or skipped doses due to cost as opposed to Australia and some other countries where the ratio is one in ten. http://tinyurl.com/pejvoyn
Some people have turned to foreign sources for their prescriptions and there are many with some of the more popular ones thriving in Canada. Here’s an example of the savings that can be had. If you want a three month supply of the popular asthma inhaler Advair it will likely cost you somewhere in the neighborhood of $600 to purchase it from one of your local pharmacies. If you select one of the Canadian pharmacies you can import the same three month supply of the same medication, Advair, for about $150, with shipping included. That amount may not mean much to the Donald Trump tax bracket, but to average Americans it’s a whole lot of money. Advair is just the tip of the iceberg. ABC news reports the following price comparisons:
- Mirapex, for Parkinson’s disease: $157 in Canada vs. $263 in the United States.
- Celexa, for depression: $149 in Canada vs. $253 in the United States.
- Diovan, for high blood pressure: $149 in Canada vs. $253 in the United States.
- Oxazepam, for insomnia: $13 in Canada vs. $70 in the United States.
- Seroquel, for insomnia: $33 in Canada vs. $124 in the United States.
Tufts University in Boston released a study in the year 2000 that placed the cost of approval for a single drug at $802 million, and that was fifteen years ago. To be fair it must be revealed that the dollar amount adds in each successful drug’s prorated share of failures (only one out of fifty drugs eventually reaches the market), but that still does not explain why the retail price is higher here than anywhere else.
The only logical explanation I can come up after some a fair amount of research is that pharmaceutical companies can get away with much higher prices in the U.S. and they can’t elsewhere. Period!
Well, there are several steps you can take. Among them are:
- Contact state and federal legislators and ask them to allow Medicare to negotiate the price of prescription drugs
- Also ask them to allow importing of essential drugs from foreign companies through approved pharmacies.
- Ask big pharma companies to see if you qualify for their reduced prices for people who have trouble affording them.
- Read the Consumers Report story on the issue. It will give you the information you need to identify trustworthy pharmacies. http://tinyurl.com/qbflucm
But, if you are like me you want even more detail. Ok. Here’s the best I can do.
You can shop for the best price and because of the internet that’s become a whole lot easier. You can look up a specific drug and find the best price at a pharmacy near you. Here are two resources. I’m sure you can find a lot more https://www.lowestmed.com/Search#/ orhttp://www.goodrx.com/ All you have to do is type in the drug you need and your zip code and it will find the price of that drug in pharmacies near you.
Transplant recipients might be interested in the cost of anti-rejection drugs. The price is hard to stomach but easy to find. In my zip code 32244 100 Mg Cyclosporine capsules range in price from $526.00 at Wall Mart to $584 at Target. If you are a heart patient and take Carvedilol in my neighborhood it ranges from $4.00 at Wal Mart to $9.54 at Kmart. Lisinopril also has a wide range. At the Publix Supermarket pharmacy near me it is FREE…that’s right FREE. But at CVS it is $12.00. Those price variations might make it worth a little longer drive to get a better bargain.
You can also get help with coupons which are an obvious choice to savemoney when grocery or clothes shopping, but they’re often overlooked as a way to cut costs of over-the-counter and prescription drugs. Manufactures frequently offer one time and repeat coupons that can save consumers hundreds of dollars on their medicines. “For our family it has been incredibly effective [in saving money] for a number of regular prescriptions,” says Stephanie Nelson, founder of the coupon website CouponMom.com.
The costs of prescription drugs and over-the-counter medications have been steadily rising and patients facing tight budgets are often forced to make hard decisions when it comes to what they can afford.
The savings vary by manufacturer, but many companies offer discounts at each prescription refill while others offer discount cards that take $20 off co-pays. Others offer one-time coupons to cover the first use of a drug.
- Consumer Reports Magazine says that there are other ways to save money, too. Whichever drugstore or pharmacy you use, choosing generics over brand-name drugs will save you money. Talk to your doctor, who may be able to prescribe lower-cost alternatives in the same class of drug. In addition, follow these CR tips.
- Request the lowest price. Our analysis showed that shoppers didn’t always receive the lowest
available price when they called the pharmacy. Sometimes they were given a discounted price, and other times they were quoted the list price. Be sure to explain—whether you have insurance or not—that you want the lowest possible price. Our shoppers found that student and senior discounts may also apply, but again, you have to ask.
- Leave the city. Grocery-store pharmacies and independent drugstores sometimes charge higher prices in urban areas than in rural areas. For example, our shoppers found that for a 30-day supply of generic Actos, an independent pharmacy in the city of Raleigh, N.C., charged $203. A store in a rural area of the state sold it for $37.
- Get a refill for 90 days, not 30 days. Most pharmacies offer discounts on a three-month supply.
- Consider paying retail. At Costco, the drugstore websites, and a few independents, the retail prices were lower for certain drugs than many insurance copays.
- Look for additional discounts. All chain and big-box drugstores offer discount generic-drug programs, with some selling hundreds of generic drugs for $4 a month or $10 for a three-month supply. Other programs require you to join to get the discount. (Restrictions apply and certain programs charge annual fees.)
- Experts say that although the low costs could entice you to get your prescriptions filled at multiple pharmacies, research indicates that it’s best to use a single pharmacy. That keeps all of the drugs you take in one system, which can help you avoid dangerous drug interactions.”
Finally, what do you do if you’ve done the shopping, used coupons, followed all of the Consumer Report Tips and are still unable to pay for your prescriptions? Well, there is some limited assistance. Here are some resources.
Bob Aronson of Bob’s Newheart is a 2007 heart transplant recipient, the founder of Facebook’s over 4,200 member Organ Transplant Initiative (OTI) and the author of most of these donation/transplantation blogs. You may comment in the space provided or email your thoughts to me at email@example.com. And – please spread the word about the immediate need for more organ donors. There is nothing you can do that is of greater importance. If you convince one person to be an organ and tissue donor you may save or positively affect over 60 lives. Some of those lives may be people you know and love. You can register to be a donor at http://www.donatelife.net. It only takes a few minutes. Then, when registered, tell your family about your decision so there is no confusion when the time comes.
Posted on October 4, 2015, in Health care costs and tagged Big Pharma, brand name, coupons, drugs, Expensive, Generic, high cost of drugs, Medicare, medications, pharmacies, prescriptions, profits. Bookmark the permalink. Leave a comment.