Pharma, Payers

VICE documentary shows new frontier in drug pricing debate: DIY drugs

Experts discuss the multitude of factors feeding high drug prices and some of the solutions that policymakers have proposed.

VICE correspondent Hamilton Morris writes out the molecular structure of the pharmaceutical drug Daraprim

From the perspective of patients, the high costs of drugs are not an abstract issue, but a life-and-death one. That’s a major theme in a new VICE documentary set to air on HBO Friday evening. While it’s not news that drug prices have gotten out of control, the issue also is a lot more complex than the knee-jerk reaction that pharmaceutical companies overcharging.

In the documentary, reporter Hamilton Morris talks about the financial hardships that patients face, such as a woman with multiple myeloma who has blown through her and her husband’s life savings to pay for Celgene’s drug Revlimid. In response, some people resort to radical measures like DIY drugs – one scientist shows Morris how to create a knockoff version of Daraprim, the drug that made now-jailed Turing Pharma CEO Martin Shkreli infamous when he increased its price from $18 to $750 per pill. Morris then travels to a pharmaceutical trade show in China, where he obtains as a free sample for testing of Revlimid’s active ingredient, lenalidomide, sufficient to make $3 million worth of the drug. HBO provided MedCity News with an advance screening of the documentary for review. The documentary will be available on HBO Now and HBO Go on Friday evening at 7:30.

Although it shows how dire things are for patients, it’s not clear how sound the idea is to make DIY drugs or accessing active ingredients from overseas.

In an email, Merck & Co. Associate Vice President Patrick Davish said it “doesn’t sound particularly safe or legal, so I would warn consumers off of them to the extent they are actually real, and I’m not assuming they are.” He added that obtaining the key ingredient from China or India would not be particularly useful given that consumers lack the necessary manufacturing expertise and advanced facilities needed to actually do anything with it. [Davish will be a speaker on a panel on drug pricing at MedCity’s CONVERGE, taking place July 11-12 in Philadelphia.]

Nevertheless, the documentary comes at a time when drug pricing has become one of the most contentious topics in healthcare, with regular horror stories about companies charging huge sums for medications. The Trump administration has taken some steps to address the issue, but while the FDA has named and shamed drugmakers that thwart generic competition, it will likely be some time before the administration’s proposals are implemented.

Although the administration released a white paper last month detailing several proposals for bringing down drug prices, it is too early to tell what it will all mean and what effect the proposals will have, said Rick Judy, a partner at PwC. Some of the ideas have merit, such as shifting some of the expenses under Medicare Part B to Part D and allowing individual plans to negotiate with manufacturers and distributors, said Peter Hilsenrath, a professor of economics at the University of the Pacific in Stockton, California. However, when those changes will occur is uncertain, as they may need congressional approval, he added.

On Wednesday, PwC published its medical cost trend report for 2019, finding that next year’s trend will be 6 percent, flat compared with the one for 2018. For Judy, this means that the cost trend has plateaued, but still outpaces general inflation and the consumer price index. However, there are some pieces in place that could help reduce the trend, such as care advocacy that drives patients toward more efficient and lower-cost care.

At the same time, concordant with the FDA effort, branded drugs are mostly responsible for driving high drug costs, said Peter Hilsenrath, a professor of economics at the University of the Pacific in Stockton, California. More than 80 percent of prescriptions by volume are generic, he said, but the low cost of generics is part of the problem because prices for some are so low that producers are not interested in making them.

Payers have a role to play also as Deductibles, copayments, coinsurance or simply not covering a drug are all means that payers use to shift costs to beneficiaries, he said. Inconvenience is another approach, with payers adding time and other non-monetary expenses to curb utilization.

Indeed, some experts consider utilization an even more important component of drug spending than pricing. Drug industry consultant Adam Fein pointed out that the report avoided the fashionable proposals of allowing drug importation and having government payers directly negotiate drug prices, which prompted political opponents to dismiss the report. Yet, spending on specialty drugs has increased by double digits, he wrote, and almost two-thirds of that growth can be attributed to growth in the number of people treated and prescriptions dispensed. On the utilization front, physicians bear some of the blame, Hilsenrath said, adding that he had read a study on direct-to-consumer advertising indicating that when a patient asks for a medication, the physician usually gives it.

It’s worth noting that Revlimid, discussed in the VICE documentary, is one of those specialty drugs, and also one with a restrictive risk evaluation and mitigation strategy (REMS) that has been included on the aforementioned FDA list for stopping generic competition.

Photo: VICE, HBO