Stanley Feld M.D.,FACP,MACE
Most consumers say the pharmaceutical cost is too complicated to understand. It is also too complicated for the prescribing physicians to understand. Therefore both physicians and patients ignore the origins of high drug cost.
However the insurance for drugs and the co-pays for drugs have gotten so high that many cannot afford to fill the prescriptions physicians give them.
Therefore consumers (patients) don’t take the drugs. They become sicker. This increase in sickness leads to hospital admissions increased cost to the healthcare system.
Most of the rules that have developed in the distribution and sale of the drug market have been written for the benefit of hospitals, middlemen, insurance companies and pharmacies.
Physicians write the prescription and the distribution is in control of these entities.
Dr. Scott Gottlieb, Commissioner of the Food and Drug Administration and Alex Azar, Health and Human Services secretary know all the defects in the drug business model. President Trump has put them in charge of creating a system that will make drugs affordable to the american consumer.
Neither man is fooling around. The traditional mass media refuses to understand what President Trump is doing to decrease drug costs.
Congressional Democrats seems to only be interested in being anti-Trump. They are certainly not advocating for consumers.
The U.S. Pharmaceutical market is presently characterized by:
- “High and rising list prices.
- Loss in patent exclusivity.
- Increasing consumer out of pocket expense for brand and generic drugs.
- Lack of competition for increases in drug prices.”
In order to get my readers’ attention I will give three simple examples.
- Understanding the Medicare Part D doughnut hole.
- Pricing of combination drugs.
- The pricing of generic drugs.
Medicare Part D drug plans have something called a doughnut hole. The original doughnut hole started at $2,700. Patients were required to pay retail for their prescriptions after their donut was charged $2,700. They paid retail price until their drug expenditures reached $5,000. After $5,000 patients paid a much smaller deductible than they were originally charged.
The Affordable Care Act increased the amount of money patients had to spend before reaching the doughnut. The doughnut started at $3,700 in 2017. It increased to $3,750 in 2018.
Most of the consumers on Medicare Part D do not spend $3,750 for medication per year. Therefore the doughnut doesn’t concern them. They do not bother to understand the dynamics of their supplemental drug plan.
Medicare Part D members pay a flat copay for their prescriptions until the total cost of drugs for that member reaches $3,740. After they reach $3,750 they have to pay 65% of the retail cost of the medication until they reach $5,000.
Once you reach $3,750 a year for payment of drugs you reach the donut. It will take consumers longer to reach the donut using generic equivalents than using a brand name drug. Brand name drugs are classified into different categories in which the co-pays for members of different Medicare Plan D plans vary.
Here is the tricky part. Let us say your copay for a drug is $10 for a three month supply of a generic drug.
Member has a choice of multiple Medicare Part D plans at varying monthly prices with varying co-pays.
Let us assume the approved retail price of the generic drug is $100. Medicare Part D would pay $90 dollars since you paid $10.00.
However your drug plan would be charged $100 toward your doughnut.
If you think that is confusing just wait a minute.
It is not clear how much the Medicare Part D insurance carrier pays the multiple middlemen in the system. There is the pharmacy, pharmacist and multiple pharmacy benefit managers(PBM). It is also not clear what the mark up by the PBM to the fulfillment pharmacy is.
It is not even clear how much CMS (the government) pays any of the middlemen or if the government marks up the retail price to the member’s doughnut.
If the various mark ups are percentages of the original cost (wholesale) of the medication then the motivation of all the vendors is to have a higher wholesale price for the medication. The middlemen would receive increased amounts of money as the prices increases. It provides incentive to charge more for medications.
President Trump’s plan is going to eliminate the middlemen or decrease the middlemen markup therefore decreasing the consumer’s price for the drug.
CMS has already received an executive order requiring vendors to publish the price of the medication.
Consumer price transparency is the first step in increasing competition and decreasing price. Government price controls do not decrease prices.
There is absolutely no price transparency when a member receives a prescription from a physician.
GoodRx is a website and mobile app that tracks prescription drug prices and offers drug coupons in the United States.[1] GoodRx checks more than 75,000 pharmacies in the United States.[2][3] The website gets about four million visitors a month.[4] In recent years, there has been ongoing debate over prescription drug prices in the United States.[5][6]
https://en.wikipedia.org/wiki/GoodRx
GoodRx is a website and mobile app that tracks prescription drug prices and offers drug coupons in the United States.[1] GoodRx checks more than 75,000 pharmacies in the United States.[2][3] The website gets about four million visitors a month.[4] In recent years, there has been ongoing debate over prescription drug prices in the United States.[5][6] https://en.wikipedia.org/wiki/GoodRx
Drug prices vary wildly between pharmacies.
GoodRx finds the lowest prices and discounts. How?
- Collect and compare pricesfor every FDA-approved prescription drug at more than 70,000 US pharmacies
- Find free couponsto use at the pharmacy
- Show the lowest priceat each pharmacy near you
This is how Good Rx and many other drug discount sites work. I suggest that consumers download Good RX to your smart phone and try it.
https://www.goodrx.com/?utm_source=gemini&utm_medium=cpc&utm_campaign=Brand&utm_term=goodrx&c=gemini
If consumers use Good RX they could get a feel of how much the cash price will cost for a generic drug prescribed. Many times the cash price is cheaper than the Medicare Part D price. If it is cheaper or the same, consumers should buy the medication with the Good Rx coupon and not their Medicare Part D plan. Their doughnut will not be charged using the cash price.
However, Good Rx does not give consumers Medicare Part D information about how much their donut will be charged if they used Medicare Part D.
Another pharmaceutical company trick is to combine two drugs that have become generic. The generic price is usually markedly lower than the brand name price before it became generic.
Here are two examples of commonly used medications. There are thousands of examples.
- Benign prostatic hypertrophy (BPH) is a common illness in males over 50. Two commonly used medications are Flow Max and Avodart. They both decrease BPH’s symptoms. Used together the result is even better.
In the last 2 years a drug company created a combination of Flow Max and Avodart using the same doses.
It is called Jayln. Jayln is not available as a generic because it is new and patent protected.
The price for a 90 day supply of Jayln in my zip code on Good Rx is between $140.90 and $338.93.
The price range for the same 90 day supply of generic Flow Max is $22.34 to $46.23 in my zip code.
The price of a 90 day supply of Avodart is $38.64 to as high as $183.54.
If you bought the lowest price generics, it would cost $60.90 vs. $140.90, the lowest price of the combination drug Jayln.
This brings up another problem immediately.
Physicians are encouraged to email consumers’ prescriptions to the consumers’ favorite pharmacy using their mandated electronic medical record software.
However, the best price for separate prescriptions might be in two different pharmacies. Many patients do not care. Patients should be given the choice to shop their medicine after prices are transparent.
- The second is the medication for the common illness glaucoma. Latanoprost is a commonly prescribed medication. It has been on the market for over 14 years and is out of its patent protection. It is now generic. Good Rx’s price range for 2.5 ml is from $10.00 to $18.11 in my zip code.
A combination of latanoprost plus a nitric oxide molecule is the brand named Vyzulta. It is supposed to decrease the ocular pressure by one or two points in each eye. Its price range on Good RX is $376.63 to $391.75.
Lumigan (bimatoprost) which is not generic has a price range for a 2.5 ml of vial of $84.35- $107.92 or at least four to eight times more expensive than generic latanoprost. The efficacy of both medications is about the same.
There are many similar examples where the buyer with no information is taken advantage of.
The Trump drug plan promises to increase drug price transparency as well as drug competition.
The prices will decrease as consumers become aware of the price differences. The vendor will compete to sell their medications.
Good Rx Pro is an application for physicians. Its goal is to help the physicians become aware of the price difference.
This is just one of the steps the Trump administration is taking to force prices to become more competitive.
There are many more examples that I will review in the near future.
The examples given make Nancy Pelosi’s comments about President Trump’s drug plan sound silly.
The opinions expressed in the blog “Repairing The Healthcare System” are mine and mine alone.
All Rights Reserved © 2006 – 2017 “Repairing The Healthcare System” Stanley Feld M.D.,FACP,MACE
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