Big Pharma targeted in health care battle

Ed Weisbart: The free market likely will not solve the rising cost of prescriptions.

Rob Bailey: Formularies may not cover what some consider best options.

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Activists in Springfield are collaborating with state and national resources to promote law changes in the pharmaceutical industry.

St. Louis physician Ed Weisbart, spent Oct. 18-19 in Springfield equipping local supporters of Medicare expansion with data and talking points. He also organized a screening at the Moxie Cinema of the documentary “Big Pharma: Market Failure,” which proposes government-mandated selection and pricing of prescription drugs.

“The cost of pharmaceuticals is out of control. It’s time to realize the free market has not and probably will not be able to solve this,” said Weisbart, who was interviewed in the film.
 
The movie – produced by Richard Master, the CEO of Pennsylvania-based manufacturer MCS Industries – relates the rising cost of drugs and their burden on employer-based health plans to the influence of pharmaceutical lobbyists in Washington, D.C.

“It’s time to realize that the government has not been able to solve this because of the influence of how we’ve allowed lobbyists and other sources of financial influence to take over the way electoral politics works,” Weisbart said.

He spent eight years as chief medical officer at St. Louis-based Express Scripts Holding Co., which manages the prescription benefits of 83 million members and delivers 1.4 billion medications per year, according to its website. Weisbart helped design Express Scripts’ formulary, the list of drugs covered and the reimbursement prices. He retired in 2010 but has been volunteering at free health clinics since 2004.

“I’m a physician, so I’m motivated by not wanting to see people die earlier than they need to. But I spent years at Express Scripts and in the business world, so I’m pretty sensitive to the fact that any strategy that you might want to put in place has to make business sense,” he said. “It has to be prudent, it has to be affordable (and) it has to pay for itself or more so.”

Weisbart serves as chairman of the Missouri chapter of Physicians for a National Health Program, which advocates for an expansion of Medicare that would cover all Americans.

Weisbart and others in the “Big Pharma” film suggest creating a federal program to choose the best drugs for each condition and to set standard prices for medications. This would result, he said, in lower costs and less duplication by insurance providers.

“If you made up this national formulary, then like any formulary, you would need to have an easy, evidence-based exceptions process. Because the formulary is never perfect,” he said. “There is always going to be a small handful of people who need to have an exception to the formulary.”

Weisbart said Medicare already sets prices paid for various surgeries and office visits, which insurance companies use as the basis for insurance payments – usually paying 10-30 percent more. He said the same process could be applied to prescription drugs.

But under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Medicare Part D is specifically forbidden from negotiating drug prices.

Although the government is barred from seeking negotiated prices, deals were being instigated by manufacturers, said Springfieldian Rob Bailey. He spent 15 years promoting pharmaceuticals and medical supplies for Johnson & Johnson at hospitals in Missouri and Arkansas – including Mercy and CoxHealth.

“I dealt with that firsthand,” said Bailey, who retired in 2015 and now co-owns Homegrown Food grocery store. “As a pharmaceutical company, we negotiated prices. We gave rebates to states.”

The documentary acknowledges the rebates, but claims insurance companies and providers do not pass the savings on to customers.

“Technically yes, there is no Medicare price negotiation per product, but in a practical sense, there is downward pressure on pricing based on formulary and based on other programs that the government is involved with,” Bailey said.

The federal 340B Drug Pricing Program, he said, is an example of offering discounted drugs to certain hospitals and clinics. Mercy and CoxHealth are both considered disproportionate share hospitals, he said, because they serve high numbers of low-income patients and receive payments from the Centers for Medicaid and Medicare Services to cover uninsured patient costs, thus qualifying it for 340B pricing.

The U.S. Department of Veterans Affairs also employs a formulary to lower drug prices.

Weisbart and his colleagues see the value of those programs but would like to see the practices cover all Americans.

But there could be unintended consequences to limited profits for drug manufactures, Bailey said.

Companies were motivated, he said, because of the price protection defined by Medicare Part D.

“Pharmaceutical companies were more willing to invest in more newer products,” he said.

The cost of designing new medications has long been touted as a justification for the high cost of some pharmaceuticals.

The Tufts Center for the Study of Drug Development released a study in 2014 that estimated the cost of developing a new prescription medicine at $2.87 billion. This accounted for $1.4 billion in overall expenses, $1.16 billion for the time lost by investors waiting for a return and $312 million for post-approval requirements. The cost of failed efforts, during processes that often took more than a decade, was included in the overall expense.

But a study by American Medical Association’s The JAMA Network found the cost of development to be much less.

In an analysis of U.S. Securities and Exchange Commission filings for 10 pharmaceutical companies, the median cost of developing a single cancer drug was $648 million. The study showed the median revenue after approval for such a drug was $1.7 billion.

Another concern, Bailey said, is that formularies may not cover what doctors and patients consider to be the best options. There are some medications that cost more, he said, but require less monitoring and may offer better results.

“If you keep someone out of the hospital – that’s where the real money piles up,” he said.

Cost cutting already happens in all hospitals and with all types of insurance coverage, Weisbart said, so standardizing the process would not likely have a negative impact on care. Working at a low-income clinic in St. Louis, Weisbart said he rarely hears Medicare patients complain about coverage restriction, and would like to see its coverage expanded to the entire nation.

“Who do you trust more, (Medicare) or the insurance companies trying to maximize their profits?” Weisbart asked.

A handful of people recently have been advocating for single-payer health coverage outside of Sen. Claire McCaskill’s Springfield office, writing “Medicare for all” chalk messages on the sidewalk.

Sarah Feldman, McCaskill’s deputy communications director, said the senator doesn’t support nationwide expansion of Medicare, but does want Medicare to negotiate drug prices. She has co-sponsored the Empowering Medicare Seniors to Negotiate Drug Prices Act of 2017, which would allow the secretary of the U.S. Health and Human Services to negotiate prescription drug prices under Medicare Part D.