Posted on September 29, 2016 at 4:31 PM
by Craig Klugman, Ph.D.
More and more frequently, stories are appearing of drug companies buying patents of investment firms buying drug companies and then raising the cost dramatically. First there was Turing Pharmaceuticals that raised the cost of a toxoplasmosis drug by 5500% after the company bought the patent. EpiPen is currently in the news with its leaders having to appear before Congress and explain why it’s price increased 791% after being acquired by Mylan Pharmaceuticals. Now Novum Pharma, after purchasing several drugs from Primus Pharmaceuticals has raised the price of drugs used to treat eczema and skin infections. Alcortin-A has gone from a wholesale price of $189 to $7,968 (4,115% increase), Aloquin has gone from $201 to $7,968 (3,684% increase), and Novacort from $121 to $5,952 (4,819% increase) in the last 18 months.
When such prices initially rise, the costs are hidden because insurers cover it. Over time, insurance cannot mask such massive increases and the result are higher premiums, higher deductible, and drugs being moved to higher tiers that mean less of the cost is covered under an insurance plan. When these moves happen (usually when a plan is renewed annually), the cost becomes apparent to the consumer.
These companies are not recouping research and development costs because these are drugs that already exist on the market. They are very simply trying to maximize the profit on their purchase of these drugs. The motivation is nothing more or less than greed. Charging excessive prices on drugs needed by people who are suffering is unethical and immoral. Certainly, these companies have a right to make a profit on their investment but they are not entitled to make an excessive profit. For some patients, there are lower cost alternatives but for some there are not. Charging excessive costs, well above and beyond the cost of manufacture, marketing, and selling is a gross violation of justice.
Perhaps the answer is to make all of health care non-profit. There is something askew with the idea that we profit off the illness of others. Medical care does not follow the free market very well. After all, patients do not choose their drugs and cannot shop around for options and alternatives—they take the drug that a physician prescribes. I can shop around for prices on widgets because I can buy my widgets from any supplier and can choose different types of widgets if I want. But doctors control prescriptions and only licensed pharmacies can dispense. Applying free market (i.e. profit motive) principles to a controlled market violates equity and fairness. If I do not buy a widget, then I don’t have a widget. But if I do not buy my medication then I suffer and may imperil my health further. Not only must we understand the ethical problems these charges represent, but we must consider whether legislation needs to be introduced to make such price gouging illegal.
This leads to the question of how to help a patient who needs a drug that has been held hostage by a greedy corporation’s profit hunger? First, there should be an attempt to boycott these drugs. Second, when possible, prescribe those of competitors and generics. If the expensive formulation is the best one for a patient, then one should contact the company and see if they offer discounts. For example, Mylan is offering a half price coupon on EpiPen and under popular outcry is now releasing a lower cost (which is still priced much higher than the original price of the original EpiPen) alternative. Second, we should all write to Congress and encourage them to regulate the drug industry and require review of all sales of drugs to ensure that the new owners will not seek excessive profits and high charges. Utilities and insurers already submit requests for price increases for government approval. Insurance companies and large corporations should be reviewed by the FTC to be sure that changes do not cause monopolies or impose a price burden on consumers. Drug companies should have to do the same whether the entire company is being acquired or merely a few drugs are being sold. Third, one can check with a compounding pharmacy to see if there are alternatives available. Sometimes the drug is available in a difference size of packaging for less (and such a pharmacy can repackage into individual doses), or the drug can easily be compounded. A pharmacy can work with patients to see if anything can be done to be as effective and more cost conscious.
These companies raise their prices because they can. Initial increases are hidden and we only learn about it after the new pricing has been in the market for a while. As patients and consumers we need to hold companies accountable by voting with our pockets, writing to our elected officials, and letting these companies know that we are sick and tired of this and won’t take it anymore.
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