We live in an age of medical miracles in a country that offers the most advanced medical care for challenging disease conditions. Sadly, though, there’s a barrier to access that has nothing to do with any deficit in technology or expertise: the exorbitant cost of specialty drugs.
As a physician and a former member of Congress, I know how this regrettable fact of American life increases the suffering of those who rely on these drugs, and how it also poses harm to an economy that needs innovation and a vibrant pharmaceutical industry.
Even though they are used by only about 2.5% of patients, specialty drugs account for over half of all prescription drug spending – an estimated $310 billion anticipated for this year alone. Federal government projections show overall drug spending in the United States continuing to rise at an average rate of 5% per year between now and 2030, and much of that increase will be driven by the high price of specialty drugs.
The health-enhancing and lifesaving power of specialty drugs all too often comes with price tags that can soar into the tens or even hundreds of thousands of dollars annually for individual patients, forcing them to balance financial constraints with their health needs. For those without adequate healthcare coverage, the situation is especially dire. The fact that many specialty drugs prolong the lives of their recipients, thereby magnifying lifetime costs, adds to the burden and complexity.
At the same time, pharmaceutical companies invite criticism that they prioritize profit margins over the well-being of those they’re in business to help. While these companies routinely offer Patient Assistance Programs (PAPs) to the uninsured and underinsured, hard-to-navigate eligibility criteria and bureaucratic obstacles limit the benefits of PAPs by excluding some worthy patients.
Large pharmaceutical manufacturers also have massive resources – and many government-based incentives – to game the system and suppress competition in the marketplace.
The manufacturer of the blockbuster drug Humira (adalimumab), AbbVie, provides one example. Humira is used to treat many autoimmune diseases, including rheumatoid arthritis, Crohn's disease, and ulcerative colitis. It’s been a huge money-maker, raking in over $200 billion (yes, with a “b”) since its release.
How did AbbVie do so well with one drug? To a significant extent, it wasn’t via clinical excellence alone, but also via regulatory maneuvering to protect Humira’s coveted patent and facilitate ten years of annual price hikes well above the rate of inflation in an artificially restricted marketplace.
AbbVie used "patent thickets," filing multiple patents based on a single drug, to discourage competition and impede the entry of lower-cost biosimilar alternatives into the market. When a key Humira patent was due to expire in 2016, AbbVie initiated lawsuits against potential competitors to delay the launch of their products. Such tactics gave AbbVie time and opportunity to raise the annual price of Humira for a single patient from $13,600 to the staggering level of nearly $90,000.
Given that most health care in the United States is funded by third parties rather than the patients themselves – primarily commercial insurers, Medicare and Medicaid, and the Department of Defense/Veterans Administration – it’s easier for manufacturers to inflate prices than would be the case if we had a more transparent marketplace. This problem is exacerbated by insurers’ reliance on Pharmacy Benefit Managers (PBMs).
PBMs are middlemen that administer drug insurance benefits with the nominal goal of facilitating cost-effectiveness for providers, payers, and patients via PBMs’ industry and regulatory expertise and economies of scale.
In real life, however, the utility of using PBMs is debated. The three largest PBMs control almost the entire marketplace for drugs covered by insurance, and they profit from rebates provided by manufacturers, strongly incentivizing a preference for higher-priced drugs. PBMs have much power to pick favorites and further thwart lower-cost competition. The best proposals for improving drug affordability take the distinctly inessential, cost-inflating PBM layer out of America’s healthcare cost equation.
For the moment, patients experiencing hardship due to the price of Humira have new hope: biosimilars finally became available in July. One Humira biosimilar, Yusimry, produced by Coherus, for instance, will only cost about $1,000 per month.
Further hope is being provided by an emerging industry of organizations serving patients specifically to help them navigate the complex healthcare landscape – advocating for fair drug pricing and guiding patients through the intricate process of applying to pharmaceutical Patient Assistance Programs. This is welcome news but no substitute for national policy solutions, such as those detailed by Gregg Girvan and Avik Roy of the Foundation for Research on Equal Opportunity, to enable market forces to cut the cost of specialty drugs.
We need patent reforms to prevent manufacturers from gaming the system. We need to accelerate the process of approving and making available biosimilar drugs from trusted manufacturers. And we must eliminate the artificial regulatory incentives that enable large and powerful manufacturers to achieve monopolistic command over what should be a diverse and expanding marketplace.
Americans can and should call on their members of Congress and senators to take action to ensure patients' well-being; improve our healthcare system; and foster the innovation and competition that improve quality, cut costs, and strengthen America’s economy at home and on the world stage. Ensuring affordability for specialty drugs is urgent, and timely solutions to this problem will provide the model for other robust reforms to meet our many healthcare challenges as the 21st century proceeds.
The Honorable Nan Hayworth, M.D. is the first female physician to have been elected to a full term as a Member of Congress, representing New York’s 19th District from 2011 to 2013.
