American College of Physicians: Internal Medicine — Doctors for Adults ®

Monday, November 17, 2014

I'm confused and fuming about why drugs cost so much

Drug prices are a difficult issue to write about because real data about the workings of pharmaceutical companies is very difficult to uncover. Still, last week I came face to face with something that seemed extremely not right and so I feel I should at least make some comment. It started when I prescribed a patient sumatriptan for her recently more frequent migraines. Her cost exceeded my wildest expectations.

Sumatriptan is a nearly magical medicine which was FDA approved in 1991 for treatment of acute migraines. “Nearly magical “ is a bit of an overstatement. It does work pretty well compared to other pain relievers, but only about a third of patients taking it have relief of their headache in an hour, and only 1 in 5 is headache-free 24 hours later.

Sumatriptan is similar to the neurotransmitter serotonin and reduces inflammation of arteries in the brain which is associated with migraine headaches. It does other things as well, and may have a much more complex mechanism of action. Although it has some side effects, it works well for most people, can be given as an injection, pill or nasal spray and doesn't cause drowsiness, constipation or nausea like many other pain medications can. When sumatriptan was first released, under the brand name Imitrex, it was astoundingly expensive. I can't remember what it cost, but it was a bundle. People were willing to pay because it often saved them a trip to the emergency room or many hours of misery. Global sales of this drug top $1 billion yearly. It has been approved as a generic since 2008.

Back to the patient. I prescribed thirty 50 mg pills of sumatriptan, generic, via a national pharmacy chain, hoping that she would be able to treat her migraine at home, have leftover medications for future migraines and avoid a trip to the emergency department. The pharmacy told her it didn't take her insurance and that the prescription would cost her $550. She didn't have $550. I called the pharmacy, told them that I meant generic, not brand name, and they told me that they understood that and that the cost was $550. I called an independent pharmacist who I know well and asked if this drug was still ridiculously expensive or if there might have been some mistake. She said that her cost for 9 pills (they come in 9 packs for no particular reason) was $6.50. At her pharmacy she would charge an uninsured patient cost plus a dispensing fee. That would be about $30 for 30 pills.

I went online to see how Canada charges for this drug, and “Canada Drugs,” which sells medications at Canadian-ish prices to people in the U.S., charges about $40 for 9 50 mg pills. A physician blogger, Leslie Ramirez, MD, who is particularly interested in pharmaceutical costs, reported that Costco, an American wholesale warehouse club, had drug prices that were at pharmacy cost plus 14% dispensing fee. Costco's price for nine 50 mg sumatriptan pills was about $14. Although Costco requires a membership for most of their merchandise, anyone with a prescription can buy medications there. (Dr. Ramirez's website on cost comparison of drugs in the Chicago area disappeared around 2011 after this article was written about it in Forbes.)

So this person, my patient, with a raging headache, left her pharmacy empty handed because she was unable to afford a medication which had been marked up over $500 above cost, a medication which has been available as a generic for over half a decade.

I asked my pharmacist friend what this was all about, and she said that it had to do with “Average Wholesale Price,” which is a number created by pharmaceutical people and distributors, originally intended to represent the actual cost of medications, allowing the price paid by insurance companies to be standardized. Since large pharmacies base their prices on AWP, that $550 for 30 sumatriptan tablets was probably pretty well set among retail pharmacies. Hiking up the AWP has various benefits to the many players in the pharmaceutical industry. Pharmacies can benefit because their costs are usually much lower than the published price (on average 14% lower, but clearly much, much lower in some cases) meaning they make a handsome profit on some generic medications, wholesalers benefit since pharmacies want to buy drugs that they can sell at a substantial profit and pharmaceutical companies that produce brand name products benefit if generic drugs are kept artificially more expensive, since patients will often spring for the brand name original or be willing to pay high prices for new nearly identical brand name drugs.

It sounds like drugs are more expensive than they should be because there is collusion to overcharge for them. But it is not all based on Average Wholesale Price rigging. The cost of generic drugs to pharmacies has also gone up drastically. This article in the online version of the Wall Street Journal reports on rising costs of generic drugs, sometimes as much as 8,000% (in the case of the antibiotic doxycycline), at least some of which was associated with rising costs to pharmacies. I wasn't able to find the actual data, but apparently lawmakers are “probing staggering price hikes” and sending letters of inquiry to the drug manufacturers asking why prices were raised, how much money they are making off of the affected drugs, who is responsible for price hikes and how costs for these medications compare overseas. The letter I linked was sent earlier this month and I don't see any information yet about a response.

Price hikes would seem to negatively affect patients, of course, but also insurance companies which pay at least some of these costs. In my review of the Affordable Care Act I haven't come across any provision that controls how much drug companies charge for their products. Old laws against price fixing do seem to apply to this sort of thing, but there is nothing new that says that Mylan, for instance, can't make a drug that cost $11 a bottle one month increase in cost to $400 a bottle a few months later. The insurance industry, though, is powerful enough that I would think they would balk at these price hikes. Medicare itself is not allowed to negotiate prices with drug companies but private insurance companies can. I'm not quite seeing what dynamic is at work here to keep them from refusing to pay for overpriced drugs.

Another thing I don't quite understand is why, when Costco charges cost plus 14% for medications consumers and insurance companies don't avail themselves of this option. I do love my corner drugstore, and realize that they survive partly by selling inexpensive drugs to insured patients for inflated prices, but I wonder why this continues to happen. It is truly valuable to have an independent pharmacist dispense medications and maintain a relationship with physician prescribers and patients, as happens in locally owned pharmacies, but we should find some way of paying for this service that is not arbitrary and subject to whimsical fluctuations.

The explanation that makes the most sense regarding drug prices is that the producers and purveyors of pharmaceuticals will charge as much for their wares as anyone will pay. Doctors cannot help because they are not aware, at the time of a patient encounter, what of their many drug options for a given condition is the best value. Unless lawmakers have the stomach to regulate the profits of big pharmaceutical companies, their most powerful lobbying entity, or enact legislation to allow market forces to reduce drug costs, prices of medications will continue to be subject to staggering increases.

Janice Boughton, MD, ACP Member, practiced in the Seattle area for four years and in rural Idaho for 17 years before deciding to take a few years off to see more places, learn more about medicine and increase her knowledge base and perspective by practicing hospital and primary care medicine as a locum tenens physician. She lives in Idaho when not traveling. Disturbed by various aspects of the practice of medicine that make no sense and concerned about the cost of providing health care to every American, she blogs at Why is American Health Care So Expensive?, where this post originally appeared.

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Members of the American College of Physicians contribute posts from their own sites to ACP Internistand ACP Hospitalist. Contributors include:

Albert Fuchs, MD
Albert Fuchs, MD, FACP, graduated from the University of California, Los Angeles School of Medicine, where he also did his internal medicine training. Certified by the American Board of Internal Medicine, Dr. Fuchs spent three years as a full-time faculty member at UCLA School of Medicine before opening his private practice in Beverly Hills in 2000.

And Thus, It Begins
Amanda Xi, ACP Medical Student Member, is a first-year medical student at the OUWB School of Medicine, charter class of 2015, in Rochester, Mich., from which she which chronicles her journey through medical training from day 1 of medical school.

Ira S. Nash, MD, FACP, is the senior vice president and executive director of the North Shore-LIJ Medical Group, and a professor of Cardiology and Population Health at Hofstra North Shore-LIJ School of Medicine. He is Board Certified in Internal Medicine and Cardiovascular Diseases and was in the private practice of cardiology before joining the full-time faculty of Massachusetts General Hospital.

Zackary Berger
Zackary Berger, MD, ACP Member, is a primary care doctor and general internist in the Division of General Internal Medicine at Johns Hopkins. His research interests include doctor-patient communication, bioethics, and systematic reviews.

Controversies in Hospital Infection Prevention
Run by three ACP Fellows, this blog ponders vexing issues in infection prevention and control, inside and outside the hospital. Daniel J Diekema, MD, FACP, practices infectious diseases, clinical microbiology, and hospital epidemiology in Iowa City, Iowa, splitting time between seeing patients with infectious diseases, diagnosing infections in the microbiology laboratory, and trying to prevent infections in the hospital. Michael B. Edmond, MD, FACP, is a hospital epidemiologist in Iowa City, IA, with a focus on understanding why infections occur in the hospital and ways to prevent these infections, and sees patients in the inpatient and outpatient settings. Eli N. Perencevich, MD, ACP Member, is an infectious disease physician and epidemiologist in Iowa City, Iowa, who studies methods to halt the spread of resistant bacteria in our hospitals (including novel ways to get everyone to wash their hands).

db's Medical Rants
Robert M. Centor, MD, FACP, contributes short essays contemplating medicine and the health care system.

Suneel Dhand, MD, ACP Member
Suneel Dhand, MD, ACP Member, is a practicing physician in Massachusetts. He has published numerous articles in clinical medicine, covering a wide range of specialty areas including; pulmonology, cardiology, endocrinology, hematology, and infectious disease. He has also authored chapters in the prestigious "5-Minute Clinical Consult" medical textbook. His other clinical interests include quality improvement, hospital safety, hospital utilization, and the use of technology in health care.

Juliet K. Mavromatis, MD, FACP, provides a conversation about health topics for patients and health professionals.

Dr. Mintz' Blog
Matthew Mintz, MD, FACP, has practiced internal medicine for more than a decade and is an Associate Professor of Medicine at an academic medical center on the East Coast. His time is split between teaching medical students and residents, and caring for patients.

Everything Health
Toni Brayer, MD, FACP, blogs about the rapid changes in science, medicine, health and healing in the 21st century.

Vineet Arora, MD, FACP, is Associate Program Director for the Internal Medicine Residency and Assistant Dean of Scholarship & Discovery at the Pritzker School of Medicine for the University of Chicago. Her education and research focus is on resident duty hours, patient handoffs, medical professionalism, and quality of hospital care. She is also an academic hospitalist.

Glass Hospital
John H. Schumann, MD, FACP, provides transparency on the workings of medical practice and the complexities of hospital care, illuminates the emotional and cognitive aspects of caregiving and decision-making from the perspective of an active primary care physician, and offers behind-the-scenes portraits of hospital sanctums and the people who inhabit them.

Gut Check
Ryan Madanick, MD, ACP Member, is a gastroenterologist at the University of North Carolina School of Medicine, and the Program Director for the GI & Hepatology Fellowship Program. He specializes in diseases of the esophagus, with a strong interest in the diagnosis and treatment of patients who have difficult-to-manage esophageal problems such as refractory GERD, heartburn, and chest pain.

I'm dok
Mike Aref, MD, PhD, FACP, is an academic hospitalist with an interest in basic and clinical science and education, with interests in noninvasive monitoring and diagnostic testing using novel bedside imaging modalities, diagnostic reasoning, medical informatics, new medical education modalities, pre-code/code management, palliative care, patient-physician communication, quality improvement, and quantitative biomedical imaging.

Informatics Professor
William Hersh, MD, FACP, Professor and Chair, Department of Medical Informatics & Clinical Epidemiology, Oregon Health & Science University, posts his thoughts on various topics related to biomedical and health informatics.

David Katz, MD
David L. Katz, MD, MPH, FACP, is an internationally renowned authority on nutrition, weight management, and the prevention of chronic disease, and an internationally recognized leader in integrative medicine and patient-centered care.

Just Oncology
Richard Just, MD, ACP Member, has 36 years in clinical practice of hematology and medical oncology. His blog is a joint publication with Gregg Masters, MPH.

Kevin Pho, MD, ACP Member, offers one of the Web's definitive sites for influential health commentary.

MD Whistleblower
Michael Kirsch, MD, FACP, addresses the joys and challenges of medical practice, including controversies in the doctor-patient relationship, medical ethics and measuring medical quality. When he's not writing, he's performing colonoscopies.

Medical Lessons
Elaine Schattner, MD, FACP, shares her ideas on education, ethics in medicine, health care news and culture. Her views on medicine are informed by her past experiences in caring for patients, as a researcher in cancer immunology, and as a patient who's had breast cancer.

Mired in MedEd
Alexander M. Djuricich, MD, FACP, is the Associate Dean for Continuing Medical Education (CME), and a Program Director in Medicine-Pediatrics at the Indiana University School of Medicine in Indianapolis, where he blogs about medical education.

More Musings
Rob Lamberts, MD, ACP Member, a med-peds and general practice internist, returns with "volume 2" of his personal musings about medicine, life, armadillos and Sasquatch at More Musings (of a Distractible Kind).

David M. Sack, MD, FACP, practices general gastroenterology at a small community hospital in Connecticut. His blog is a series of musings on medicine, medical care, the health care system and medical ethics, in no particular order.

Reflections of a Grady Doctor
Kimberly Manning, MD, FACP, reflects on the personal side of being a doctor in a community hospital in Atlanta.

The Blog of Paul Sufka
Paul Sufka, MD, ACP Member, is a board certified rheumatologist in St. Paul, Minn. He was a chief resident in internal medicine with the University of Minnesota and then completed his fellowship training in rheumatology in June 2011 at the University of Minnesota Department of Rheumatology. His interests include the use of technology in medicine.

Technology in (Medical) Education
Neil Mehta, MBBS, MS, FACP, is interested in use of technology in education, social media and networking, practice management and evidence-based medicine tools, personal information and knowledge management.

Peter A. Lipson, MD
Peter A. Lipson, MD, ACP Member, is a practicing internist and teaching physician in Southeast Michigan. The blog, which has been around in various forms since 2007, offers musings on the intersection of science, medicine, and culture.

Why is American Health Care So Expensive?
Janice Boughton, MD, FACP, practiced internal medicine for 20 years before adopting a career in hospital and primary care medicine as a locum tenens physician. She lives in Idaho when not traveling.

World's Best Site
Daniel Ginsberg, MD, FACP, is an internal medicine physician who has avidly applied computers to medicine since 1986, when he first wrote medically oriented computer programs. He is in practice in Tacoma, Washington.

Other blogs of note:

American Journal of Medicine
Also known as the Green Journal, the American Journal of Medicine publishes original clinical articles of interest to physicians in internal medicine and its subspecialities, both in academia and community-based practice.

Clinical Correlations
A collaborative medical blog started by Neil Shapiro, MD, ACP Member, associate program director at New York University Medical Center's internal medicine residency program. Faculty, residents and students contribute case studies, mystery quizzes, news, commentary and more.

Interact MD
Michael Benjamin, MD, ACP member, doesn't accept industry money so he can create an independent, clinician-reviewed space on the Internet for physicians to report and comment on the medical news of the day.

PLoS Blog
The Public Library of Science's open access materials include a blog.

White Coat Rants
One of the most popular anonymous blogs written by an emergency room physician.

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