Tuesday, August 1, 2017

Pushing back against prescription drug price gouging

Sometimes missed in the headlines about the stratospheric costs of new specialty drugs is the contribution of price hikes for older, established drugs, including generics, to prescription spending increases. In an editorial in the July 1 issue of American Family Physician, Dr. Allen Shaughnessy described several situations that drug manufacturers exploit to raise prices excessively (also known as price gouging):

- Limited to no alternatives
- Older products with few producers
- Same product, different use
- Single producer, no generic available
- Evergreening (minor changes to gain patent exclusivity)
- Pay for delay (paying generics manufacturers not to sell a generic version of an off-patent drug)

In the United States, Dr. Shaughnessy observed, "The biggest driver of the cost hike is, simply put, that pharmaceutical companies can charge whatever they want. Drugs cost what the market will bear. Many medications could be a lot less expensive, but because an insurance company, the government, or a patient is willing to pay the asking price, there is no push to lower the costs."

Price gouging has become such a problem for patients and insurers that the Maryland General Assembly recently passed legislation to discourage price gouging on essential off-patent or generic drugs. As explained by Drs. Jeremy Greene and William Padula in the New England Journal of Medicine:

The law authorizes Maryland’s attorney general to prosecute firms that engage in price increases in noncompetitive off-patent–drug markets that are dramatic enough to “shock the conscience” of any reasonable consumer. ... To establish that a manufacturer or distributor engaged in price gouging, the attorney general will need to show that the price increases are not only unjustified but also legally unconscionable. ... A relationship between buyer and seller is deemed unconscionable if it is based on terms so egregiously unjust and so clearly tilted toward the party with superior bargaining power that no reasonable person would freely agree to them. This standard includes cases in which the seller vastly inflates the price of goods.

The scope of the Maryland law is limited. It restricts action to off-patent drugs that are being produced by three or fewer manufacturers, and requires that manufacturers be given an opportunity to justify a price increase before legal proceedings are initiated. It is too early to know if the law will be effective against price gouging, or if it will be copied by other states that are also struggling to contain prescription drug cost increases in their Medicaid programs.

In the meantime, what can family physicians do to help patients lower their medication costs? In a 2016 editorial on the why and how of high-value prescribing, Dr. Steven Brown recommended five sound strategies: be a healthy skeptic, and be cautious when prescribing new drugs; apply STEPS and know drug prices; use generic medications and compare value; restrict access to pharmaceutical representatives and office samples; and prescribe conservatively.

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This post first appeared on the AFP Community Blog.

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