COMMENTARY

Fighting Rising Drug Costs: How Can Docs Help?

F. Perry Wilson, MD, MSCE

Disclosures

March 04, 2020

This transcript has been edited for clarity.

Welcome to Impact Factor, your weekly dose of commentary on a new medical study. I'm Dr F. Perry Wilson.

When I was a resident rotating in the ICU, a 25-year-old man came in after a v-fib arrest in the setting of diabetic ketoacidosis. A known diabetic, he had been rationing his insulin because of the high price of the medication—taking half doses, skipping doses, or sometimes going without for days at a time. We restored circulation, but the damage was done. He lived for another 7 days.

This is not an unusual story. The price of drugs is a hot-button issue for physicians, patients, politicians, and insurance companies—everyone, really, except perhaps the one industry that seems to think everything is fine.

Part of the problem in addressing the rise in prices is that we've had limited data. Most studies use list prices for drugs, and as physicians, we all know that the list price ain't the price.

Enter this study appearing in JAMA, which uses an interesting technique to figure out what's really going on. Using data from publicly traded pharmaceutical companies, researchers compared the total sales of a given drug with the total revenue generated from the drug.

Revenue divided by sales. That gives you a good metric for how much pharma is really charging for the drug after discounts, rebates, coupons, and all of the other reasons no one pays the list price.

It's possible that although list prices have risen steadily, the net price of a drug has remained steady because of increasing discounts for various payers. It's possible, but you didn't really think that was the case, did you?

From 2007 to 2018, net pricing for drugs increased 4.5% per year, for a total of 60% overall, even after adjusting for inflation.


 

With increased scrutiny on drug pricing, there is one encouraging stat: Net prices were more or less stable over the past 3 years of that period, reflecting higher discounts in the face of increasing list prices.

Of course, some people actually are paying the list price. Those without insurance or with high-deductible plans may pay those crazy rates before discounts cut into them.

There's a simple explanation for these price increases, and it has nothing to do with R&D or marketing. Pharmaceutical companies increase the prices of drugs because they can.


 

This is highlighted in this graphic, showing the difference in price increases when drugs are single-source versus when there is a generic competitor on the market.

Another article in this week's JAMA demonstrates that this pricing strategy—for pharma, at least—is successful. Profit margins after all expenses for the 35 largest publicly traded pharmaceutical companies averaged 13%, making them essentially the most profitable companies in the United States.


 

We don't want to overread those data, of course; there is a bit of survivor bias at play. And profit margins integrate revenue and expenses; maybe pharma is great at keeping expenses low. But I doubt that's the full explanation. And if a drug is priced out of reach for a patient who may benefit, that's a problem, regardless of who is to blame.

What can we as physicians do about the problem? Most of us aren't pharmaceutical executives or politicians. But we're not totally powerless. I polled some folks in this area, and we came up with a few things that regular docs like us can actually do:

  • Don't prescribe the new, expensive drug when an older drug will work just fine;

  • Use generics whenever possible; and

  • Ask our health systems to integrate drug price information into the electronic health record. Many of us have no idea what the drug will cost the patient until we get a call from the pharmacy telling us that they can't afford it.

And finally, and probably most important, speak up. Patient advocates have been sounding the alarm for years now. Messages coming from physicians may have a higher impact. It's time to get on board.

F. Perry Wilson, MD, MSCE, is an associate professor of medicine and director of Yale's Program of Applied Translational Research. His science communication work can be found in the Huffington Post, on NPR, and here on Medscape. He tweets @methodsmanmd and hosts a repository of his communication work at www.methodsman.com.

Follow Medscape on Facebook, Twitter, Instagram, and YouTube

Comments

3090D553-9492-4563-8681-AD288FA52ACE
Comments on Medscape are moderated and should be professional in tone and on topic. You must declare any conflicts of interest related to your comments and responses. Please see our Commenting Guide for further information. We reserve the right to remove posts at our sole discretion.
Post as:

processing....