An Explanation Of Soaring Drug Prices- And What Can Be Done About Them
July 06, 2016
By Geeta Minocha, W’19
Take this clarifying example: a patient needs 380 mg of Drug X per round of chemotherapy. Drug X is produced only in vials of 100 mg each. This means that a physician must utilize four vials of the drug, discarding 20 mg of the final vial. Despite not having used those 20 mg, the patient and/or his insurer is billed for the full 400 mg. Yet the price these entities pay is not simply the amount dictated by the pharmaceutical company who provided the drug, but also includes the additional mark-ups requested from intermediaries and medical practitioners that distribute it. It is believed that these intermediaries will earn almost $1 billion in 2016 .
This problem is more commonplace than one might first expect. Velcade, sold by Takeda Pharmaceuticals, is meant to treat individuals with multiple myeloma and lymphoma. It is sold in vials of 3.5 milligrams, a dose meant for a 6’6” male of 250 pounds . The typical Velcade user is forced to purchase this dose, set at $1,034 , despite needing much less. Federal safety regulations generally prevent medical practitioners from saving opened drugs for later, with only certain pharmacies able to use leftovers in other patients (though even these pharmacies are limited to the six hours within opening the drug in which to do so) . Wasted drugs are estimated to account for 30% of Takeda’s annual profits within the United States .
The pharmaceutical industry often claims that these accelerated drug costs are necessary to fund their medical research, yet financial statements reveal that some major companies put less than twenty percent of their sales towards it . The rest is typically divided between marketing and profit. What’s more, the Food and Drug Administration is forced to turn a blind eye to companies’ excessive dose packaging provided the drug has met all of its safety standards- by law, this agency is not able to consider cost in its deliberations .
It is interesting to note that patient expenses on wasted medication are considerably less in Europe, where there is much greater government oversight on the healthcare industry. Pharmaceutical companies generally distribute medication vials of multiple sizes, allowing for minimal waste and expense to insurers and patients. For example, Velcade is available in Britain in both 1 mg and 3.5 mg vials for the average dose and the maximum needed.
In their 2012 New York Times op-ed, “In Cancer Care, Cost Matters” , physicians Peter Bach and Leonard Saltz of Memorial Sloan Kettering Cancer Center compared Avastin, a drug treating colorectal cancer, with a new, similar drug. This drug, called Zaltrap, was twice as expensive but only half as efficient. Bach and Saltz then boldly declared their “no-brainer” decision to refuse to give Zaltrap to their patients. Regeneron Pharmaceuticals, the maker of the drug, then decreased its price soon after the publication of this article, leading the physicians to create DrugAbacus, a complex drug pricing calculator that reveals to patients exactly what their medications are worth: http://www.drugabacus.org.
But Bach and Saltz believe more can be done. They have proposed two intriguing solutions, both of which have been received with outrage from the pharmaceutical industry: that the government mandate companies distribute drugs in packages of varying dosage size, or that it mandate the companies refund the government the money Medicare spends on discarded medication . Other researchers at Memorial Sloan Kettering, in their British Medical Journal study , have advocated for clear, universal language across all medical agencies, as greater transparency of these federal vial sharing standards would either allow insurance dollars to be put to good use or provide a solid foundation of understanding for them to move forward in their lobby for drug pricing reform.
Change will happen slowly. Only recently did Senators Dick Durbin (D-IL), Barbara Mikulski (D-MD), Kirsten Gillibrand (D-NY), Sherrod Brown (D-OH), Bill Nelson (D-FL), Amy Klobuchar (D-MN), Al Franken (D-MN), Bernard Sanders (D-VT), Sheldon Whitehouse (D-RI), and Tammy Baldwin (D-WI) sign onto a letter requesting that Congress address the growing concerns over spiking medication prices. On June 9th, the Senate Appropriations Committee responded by approving a comprehensive study of the “one size fits all” vial issue . Hopefully, this small step will finally usher in the reforms needed in America’s pharmaceutical industry.
 Gardiner Harris, “Waste in Cancer Drugs Cost $3 Billion a Year, a Study Says,” The New York Times, March 1, 2016. [Online] Available: http://www.nytimes.com/2016/03/01/health/waste-in-cancer-drugs-costs-3-billion-a-year-a-study-says.html
 Peter B. Bach, Rena M. Conti, Raymond J. Muller, Geoffrey C. Schnorr, and Leonard B. Saltz, “Overspending driven by oversized single dose vials of cancer drugs,” The British Medical Journal 2016;352:i788. [Online] Available: http://www.bmj.com/content/352/bmj.i788
 Peter B. Bach and Leonard B. Saltz, “In Cancer Care, Cost Matters,” The New York Times, October 14, 2012. [Online] Available: http://www.nytimes.com/2012/10/15/opinion/a-hospital-says-no-to-an-11000-a-month-cancer-drug.html?_r=0
The United States Senate, 2016. [Online] Available: http://www.durbin.senate.gov/newsroom/press-releases/senators-ask-for-investigation-into-large-one-size-fits-all-cancers-medication-that-costs-patients-and-taxpayers-billions
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