When $65,000 a year for a drug is applauded

(CNN) Two new drugs were cleared to hit the market last week: an eczema drug that will cost $37,000 per year and one for multiple sclerosis that will cost $65,000.

The drugs drew both praise and criticism for their five-digit price tags.

Researchers and patient organizations applauded the prices, which were cheaper than similar drugs on the market. They hoped the prices would please insurers and make the drugs more widely available.

“We encourage other companies to follow suit, creating a drug pricing trend that keeps patients first,” said Cyndi Zagieboylo, president of the National Multiple Sclerosis Society, in a statement about the multiple sclerosis drug Ocrevus.

But the following day, a group of lawmakers introduced legislation to crack down on high drug prices, reflecting a growing public outrage over the cost of medicines.

“No one should have to choose between affording a lifesaving drug and putting food on the table,” said Sen. Al Franken, one of the lawmakers, speaking to the Senate on Thursday.

Users on social media also weighed in.

I have eczema. I find this drug price offensive. I will continue not using it. https://t.co/anLayaL3hw

— Nika B (@nika7k) March 28, 2017

New eczema wonder drug costs $37,000. Wrap your body in $100 bills: it's cheaper and feels better. pic.twitter.com/zIMnwEscRS

— Steve Lehto (@stevelehto) March 28, 2017

The public is becoming increasingly aware of soaring drug prices; a Kaiser Health Tracking Poll in October revealed that tackling high drug costs was the top health care priority for Americans leading up to election day. Rising deductibles and out-of-pocket payments could also mean that patients themselves are seeing more of these costs.

“The root of (the public’s negative opinion) is that there’s a huge problem that’s getting worse,” said Peter Maybarduk, who runs the Access to Medicines program for watchdog group Public Citizen. “But added on to that, you have scandals and … political leaders pointing out the changes that need to happen.”

The past few years have seen a number of high-profile price increases.

Pharmaceutical company Mylan upped the price of its EpiPen at least 15 times since 2009. Under “pharma bro” Martin Shkreli, the price of a drug called Daraprim surged 5,000%.

Meanwhile, lowering drug prices and health care spending became a major presidential campaign promise across party lines last year, and the failure to address it may have added to the recent public disapproval of the American Health Care Act.

“That was a big part of the election cycle,” Maybarduk said. “But I do feel it’s an area where pain and public opinion are driving the candidates.”

A conflict of interest?
The president of the National Eczema Association, Julie Block, said the new drug Dupixent “appears to be priced on the lower end of the cost of biologic therapies.” Her response mirrors that of multiple sclerosis advocate Zagieboylo.

But comparing drugs that are already on the market is a poor way of determining what’s fair, Maybarduk said.

“The other drugs on the market are sold under monopoly conditions,” he said, referring to tactics and policies that discourage price negotiation and prevent competition. “The entire architecture of the market is wacky.”

According to some advocates, $65,000 may also seem cheaper due to a conflict of interest.

“A lot of patient advocacy organizations do really good work, but they are not serving their members because they are funded by drug companies,” said Ben Wakana, executive director of the advocacy group Patients for Affordable Drugs, which launched in February.

A study last month showed that at least 83% of the largest patient groups in the US receive industry funding. The National Eczema Association and the National Multiple Sclerosis Association publicly disclose on their websites that they each receive funds from makers of Dupixent and Ocrevus.

Block said that her association is guided by a corporate relations policy and that it does not endorse products.
“Our focus is to help patients get access … to the medicines they need and deserve,” she said. “We will advocate on any avenue we can.”

A Genentech spokeswoman made a similar statement.

“We follow specific giving guidelines for patient groups to ensure that our financial contribution does not have undue influence over an organization,” said Susan Wilson, associate director of corporate relations for Genentech, which manufactures the multiple sclerosis drug Ocrevus.

Wilson added that Genentech’s contribution to the National Multiple Sclerosis Society is less than half a percent of the organization’s overall budget.
“We are pleased to make philanthropic donations to support this important work,” she said.
Wakana, however, said that corporate dollars shape the conversation. Neither his organization nor Public Citizen accepts industry funding, unlike the bulk of patient advocacy groups.
“So they don’t take these stances on pricing that we take,” he said.

Pills and dollar bills

“For years, drug corporations have put their profits ahead of the people they are supposed to serve, and Americans have taken notice,” Wakana said.

A 2016 Gallup poll revealed the pharmaceutical business to be the least popular private industry in the US, receiving its worst score in 16 years. The industry had netted a positive score only two years prior.

Pharmaceutical representatives say that this response stems from a misunderstanding of the health care system and how their industry works.

“The price that a person might see for a medicine in the news … is very unlikely to be the price that that person actually pays,” Wilson said.

In a release last week, Sanofi and Regeneron, the makers of Dupixent, echoed Wilson, saying that “actual costs to patients, payers and health systems are anticipated to be lower” than $37,000 for many patients who take advantage of discounts and a patient assistance program.

A Regeneron representative told CNN that it and Sanofi met payers, pharmacies and the Institute for Clinical and Economic Review — a nonprofit organization that analyzes the cost-effectiveness of medical treatments — before determining the list price of Dupixent.

Like Sanofi and Regeneron, Genentech has programs that help patients access medicines such as Ocrevus, even if they don’t have insurance coverage, Wilson added.

But Wakana, who worked for the US Department of Health and Human Services under the Obama administration, called these programs “smoke and mirrors.” He said people still mortgage their homes and dip into their kids’ college savings in order to buy prescription medicines.

Pharmaceutical companies “have created a convoluted system where people don’t exactly understand what money is going where,” Wakana said. “If a drug costs more, drug companies make more money, period.”

Without more regulation, policymakers worry that profit incentives will continue to drive up drug prices.
“Drug companies can essentially set whatever prices they want,” Franken said on the Senate floor.

In his speech, Franken called for transparency in how drugs are priced, a move that 86% of Americans support, according to another Kaiser poll. He also said that his legislation would allow Medicare to negotiate lower prices with drug manufacturers, which 82% of Americans support.

Franken’s proposals would also end “pay for delay,” when makers of brand-name drugs pay other companies to keep cheaper generic versions off the market.

A number of drug companies have defended their prices on the grounds that it is expensive to research and develop new drugs.
But in August, Harvard researchers found that the 10 largest pharmaceutical companies spent between 7% and 21% of total sales on research and development. The researchers concluded that there was “no evidence” of a relationship between how much companies charged for drugs and how much they spent on research and development; drug costs are based on “what the market will bear,” the authors wrote.

“The prices are literally whatever society will pay to care for our sick,” Maybarduk said.

One person among many

Ultimately, the varying reactions to drug prices could be because these experts are taking a “global approach,” Wakana said, while patients experience the high cost of prescriptions on a very personal level.

“If you had to mortgage your home to pay for a drug, you wouldn’t ask, ‘Well, was the drug priced appropriately for (other) people?’ ” he said.

But Maybarduk said that he is “more than optimistic” that swelling public disapproval will bring this issue to a head.
“Something has to change,” he said. “You don’t get to polling numbers like this without legislators feeling it.”