Renda Brower knows well the cost of drugs to treat rheumatoid arthritis 鈥 her husband, son and daughter all have the painful, disabling autoimmune disease. And the family鈥檚 finances revolve around paying for them.
Even with insurance, Brower鈥檚 family last year faced $600 a month in copayments for the drug, plus additional payments on another $16,000 in medical bills racked up in 2016 when a former insurer refused to cover all the doses her 9-year-old daughter needed.
Brower, of Warsaw, Ind., said her family tries to keep up with prices by cutting back on her children鈥檚 sports and extracurriculars and skipping family vacations. She also works as a part-time teacher.
But financially, it鈥檚 hard. 鈥淭he cost should not be this high,鈥 she said.
Wholesale prices for Humira and Enbrel, the two most commonly used treatments for rheumatoid arthritis, known as RA, increased more than 70 percent in the past three years.
Since the first RA drug came to market a decade ago, nearly a dozen have been added. If basic economics prevailed, RA treatments and patients would have benefited from competition. But, because of industry price-setting practices, legal challenges and marketing tactics, they haven鈥檛. The first RA drug cost $10,000 a year. It now lists for more than $40,000 鈥 even as alternatives have entered the U.S. market.
鈥淐ompetition generally doesn鈥檛 work to lower prices in branded specialty drugs,鈥 said Peter Bach, director of Memorial Sloan Kettering鈥檚 Center for Health Policy and Outcomes.
Humira is the world鈥檚 No. 1 prescription drug by revenue. AbbVie manufactures and markets the drug and is on track to reach revenue from the product of $17 billion this year.
Other RA treatments are also among the top 10 drugs by revenue sold in the U.S. Enbrel, made by Amgen, ranks as No. 3. Remicade, by Janssen Biotech, is fifth. Some RA medications are approved for other conditions, including psoriatic arthritis, Crohn’s disease and psoriasis.
About 1.5 million Americans have rheumatoid arthritis. The Brower found some relief this year but not because prices dropped. Rather, Renda鈥檚 husband left his job at an engineering firm to work as a machinist at a medical device company that has an insurance plan with lower copayments. Her daughter was accepted into a clinical trial at Cincinnati Children鈥檚 Hospital. The trial covers the drug鈥檚 cost but not the associated expense of weekly travel, among other things.
Middlemen Benefit As Wholesale Price Rises
The complicated pharmaceutical supply chain in the United States means middlemen 鈥 such as pharmacy benefit managers (PBM) and, in some cases, hospitals and doctors鈥 offices 鈥 can gain financially by choosing more expensive drugs. That鈥檚 because PBMs usually get a rebate from the drugmakers on top of whatever profit they get from selling or administering the drug.
Those rebates often are based on a percentage of the list, or wholesale, price. So, the middlemen who get the rebates take in more money when drugmakers raise those sticker prices.
But who pockets the rebates? PBM firms, which oversee drug benefits for millions of Americans, say they share all or part of them with the insurers or employers who hire them. In some cases, the rebates go directly to specialty pharmacies, medical clinics or physicians dispensing the treatments.
The rebates rarely end up directly in patients鈥 pockets.
Those rebates affect the market in another way: They can make it harder for some companies to offer new treatments or they can thwart less costly rival products.
鈥淲e could give [our new drug] away for free and 鈥 it would still be more economically advantageous鈥 for insurers and PBMs to send patients to Humira first, said Andreas Kuznik, a senior director at Regeneron Pharmaceuticals, at a examining the cost and value of RA treatments.
Thomas Amoroso, medical director for medical policy at Tufts Health Plan, said at the same March conference that he has found drug industry sales representatives to be persistent in tracking how their drugs are positioned on plan formularies.
If insurers decide to add a new, lower-cost drug as the preferred alternative, 鈥渙ur Humira rep would be knocking on our door next week and saying, 鈥楬ey, that rebate we gave you? We鈥檙e taking it back,鈥欌 Amoroso said.
The roundtable at which they spoke was part of an assessment of RA drug pricing convened by the , a nonprofit that evaluates the value of medical tests and treatments for insurers and other clients.
PBMs won鈥檛 disclose the rebates they provide to clients, but studies provide a clue. It鈥檚 a huge amount of money.
The Berkeley Research Group, a consulting firm that advises major employers, that rebates and other discounts paid to insurers, PBMs and the U.S. government for brand-name drugs grew from $67 billion in 2013 to $106 billion in 2015.
Most RA drugs are a complex type of medication, called biologics, which are made in living organisms. Nearly identical copies of biologics are called biosimilars. They hold the promise of lower prices, just as generic drugs did for less complex medications.
While several biosimilar RA treatments have won Food and Drug Administration approval, including replicas of Humira, Enbrel and Remicade, most are tied up in court battles over patents. And those biosimilars that have made it to market are now the subject of new areas of legal challenge.
In mid-September, Pfizer filed what will be a closely watched antitrust lawsuit against Johnson & Johnson. The case alleges that J&J is using exclusionary contracts and the threat of withdrawing rebates to protect Remicade from Pfizer鈥檚 lower-priced biosimilar, Inflectra, which hit the market last winter.
J&J defends its contracts, saying they are 鈥 that will lead to overall lower costs.鈥
Arguments For And Against Rebates
Rebates are under increasing scrutiny, amid growing alarm about soaring prescription drug prices in the United States. But the Pharmaceutical Care Management Association, the PBM industry鈥檚 trade lobby, said that complaints that rebates help fuel higher prices are unfounded.
These rebates, the lobby says, help save the health system millions of dollars by shifting dollars back to insurers or other clients, who can then use them to lower future premium increases. This year, it commissioned a that found no correlation between rebates and the rising list prices of the top 200 brand-name drugs, suggesting higher rebates didn鈥檛 necessarily drive higher prices.
鈥淭he rebate system exists because [insurers, employers and other clients] want discounts,鈥 said Steve Miller, chief medical officer for Express Scripts, one of the nation鈥檚 three largest PBMs.
Express Scripts offers clients an option to give patients the discount directly, but most choose not to, he said.
鈥淲hile individual patients would get the benefit, everyone else鈥檚 premiums would go up [because the rebate savings would not flow back to the insurer],鈥 Miller said. 鈥淐hanging where the rebate goes doesn鈥檛 lower the price of the drug.鈥
But rebates play a role in what some patients pay at the pharmacy counter.
It stems from a simple calculation: whether a patient鈥檚 insurance copayment is based on a percentage of the drug鈥檚 wholesale price or the drug鈥檚 price after rebates are given to the middlemen.
Heidi Barrett , a mother of five from Everett, Wash., faces a 10 percent copay whenever she or one of her four children who have RA, all of whom have been on medication for years, go for their monthly infusion of Remicade.
Although Barrett is shielded from much of the cost because she has good employer-based insurance through her husband鈥檚 job, the question of whether her monthly copayments are based on the wholesale price or the after-rebate price rankles her.
鈥淚 have asked that question of the insurance company. I鈥檝e asked that of our union,鈥 said Barrett, 47, a paralegal who isn鈥檛 working because she spends so much time on her children鈥檚 treatments. 鈥淚 never got any answers back.鈥
Based on data analyzed by Bach鈥檚 group at Sloan Kettering to determine the cost of 100 milligrams of Remicade, it appears she is paying based on the pre-rebate price.
Here鈥檚 how that works: Barrett鈥檚 18-year-old son recently received a 600 mg dose that required a copay of $655. That is close to 10 percent of Remicade鈥檚 average U.S. wholesale price for that dose of $6,450, the Bach analysis showed.
Barrett is not benefiting from the rebate that middlemen receive.
Rebates and discounts, however, drive down the price for pharmacy benefit managers, hospitals or doctors.
According to the analysis, the average net cost of a 600 mg dose is $4,140, once all discounts are calculated. If Barrett could use that base price as her copay, she would save more than $240. For her entire family 鈥 all her children and Barrett take similar doses 鈥 that equals a savings of $1,000 a month.
With her current insurance, Barrett quickly meets a yearly $12,900 deductible. She considers herself lucky that her insurer then picks up the drug鈥檚 full cost. But the experience has changed her motherly advice to her children, who are 10, 18, 19 and 25, about what to hope for in life.
鈥淚 tell them, you can be anything you want when you go grow up. But you need to go to a company with good health insurance, even before you look at the salary or whether you鈥檒l be happy there, your first priority is health insurance,鈥 Barrett said. 鈥淚t鈥檚 an insane world we live in.鈥
麻豆女优 Health News' coverage of prescription drug development, costs and pricing is supported in part by the .
