Is fight over drug price increases a win for transparency advocates?
Three of the nation's largest prescription benefit managers have cut ties with major pharmacies that they say relied excessively on particular brand-name medicines to make profits, rather than offering more affordable generics.
In late September, Americans angered by dramatic price surges in pharmaceuticals found the perfect scapegoat: Martin Shkreli, the 32-year-old CEO of Turing Pharmaceuticals who raised the cost of an antiprotozoal medication, Daraprim, from $13.50 to $750 per pill.
The unrepentant Mr. Shkreli – before agreeing to lower costs – insisted that such high costs were necessary to support new drug development. His words helped to fuel a wave of renewed attention to Big Pharma practices in the United States, where, "Americans pay, by far, the highest prices in the world for prescription drugs," as presidential candidate Senator Bernie Sanders bemoaned in a press release announcing an investigation into the cost of generic drugs alongside Rep. Elijah Cummings (D-Md.).
On Sunday, three of the nation's largest pharmacy benefits managers announced that they were cutting ties with at least eight pharmacies accused of unethical cooperation with drugmakers, underscoring how price gouging has permeated the drug industry far beyond a single company.
Express Scripts, OptumRX, and CVS Health, which manage more than 100 million Americans' prescriptions combined, found that a number of pharmacies were promoting more expensive brand-name treatments over generic ones to benefit drug makers that the pharmacies often relied on heavily for sales, reported Reuters.
Express Scripts plans to alter its audit algorithms to better track which pharmacies rely disproportionately on particular drug makers.
Among the affected pharmacies is Philidor Rx Services, which made up about seven percent of the sales of Valeant Pharmaceuticals, Inc. Valeant's stocks have nosedived in the past two months, going from a "stock market darling" whose investors approved of its strategy of purchasing drugs and quickly raising the price to an industry pariah whose stock is down 70 percent since mid-September, when its business practices began attracting scrutiny.
"The Valeant-Philidor relationship woke payers up to potential problems in their pharmacy networks," Adam Fein, the president of Pembroke Consulting, told Reuters. "We are now seeing much greater scrutiny of the independent pharmacies that may not be complying with payer requirements."
On average, US patients' prescription bills grew 12 to 13 percent last year, the type of price hikes that fuel nearly half of major drug companies' recent growth.
"Every week, I’m learning about another drug that has increased in price because of a change in marketing or the distributor," HIV Medicine Association spokeswoman Judith Aberg told USA today.
But now, the major winners are advocates for industry transparency, who jumped on the dramatic Turing example to make a point about how unmanageable many Americans' health costs have become, even as more gain prescription health insurance.
Both Hillary Clinton and Bernie Sanders have promised to make reasonable health costs a priority, and investigations have sprung up in the House and Senate.
"In a way, I thank him, because it's really sort of like putting a sign on your back saying, 'Kick me,'" Princeton University healthcare economist Uwe Reinhardt told The Washington Post about Mr. Shkreli, Turing's CEO. "Sometimes you need some sentinel effect that wakes people up."