Capitol Insights: A UC Center Sacramento Panel Discussion Soaring Drug Prices: Consumer and Clinician Perspectives and Policy Options

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1 Capitol Insights: A UC Center Sacramento Panel Discussion Soaring Drug Prices: Consumer and Clinician Perspectives and Policy Options

2 UCSF Center for Healthcare Value Philip R. Lee Institute for Health Policy Studies Drug Prices: Are They Related to Innovation? Who Pays When Drug Prices Increase? R. Adams Dudley, MD, MBA Director, Center for Healthcare Value Associate Director, Philip R. Lee Institute for Health Policy Studies University of California, San Francisco

3 Outline Review scenarios in which US drug prices are high and/or are increasing much faster than inflation Not all drugs are equally valuable Assess whether changes in drug prices increase consumer and insurer costs 3 UCSF Center for Healthcare Value

4 Prices for Drugs Are Higher in the US 4 UCSF Center for Healthcare Value

5 Drug Prices: Who Pays In And Who Gets Paid? 5 UCSF Center for Healthcare Value

6 Situation #1: New Drugs That Help A Lot And Cost A Lot A cure for Hepatitis C, but at $1,000 a pill. costs $84,000 for 84 pills, but cures Hepatitis C and prevents substantial future illness and costs 6 UCSF Center for Healthcare Value

7 Situation #2: New Drugs That DON T Help Much But Cost A Lot Tygacil New cancer drugs cost/year of life gained can be >$800,000 7 UCSF Center for Healthcare Value

8 Situation #2: New Drugs That DON T Help Much But Cost A Lot Tygacil TYGACIL: a new antibiotic associated with higher risk of death What would you do with Tygacil price if you were Pfizer? 8 UCSF Center for Healthcare Value 9/14/16

9 Situation #2: New Drugs That DON T Help Much But Cost A Lot Pfizer increases Tygacil price 20% in 2016 Tygacil 9 UCSF Center for Healthcare Value

10 Situation #3: Prices for Generic Drugs Rising Quickly EpiPen is a classic example Tygacil 10 UCSF Center for Healthcare Value

11 EpiPen Price Is NOT a Global Phenomenon Tygacil 11 UCSF Center for Healthcare Value

12 Situation #4: Generic Drug Shortages Hundreds of drug shortages every year Markups can be very large 12 UCSF Center for Healthcare Value

13 Situation #5: Drugs That Remain Expensive Even After the Patent Expires: Pay-for-Delay At times, the manufacturers of brand name drugs have negotiated deals with generics manufacturers to delay the introduction of lower price medicines 13 UCSF Center for Healthcare Value

14 Pay-for-Delay : Cephalon and Provigil Tygacil 14 UCSF Center for Healthcare Value

15 When Prices Increase, Who Pays? Analysis based on claims from a population of ~50,000, UCSF Center for Healthcare Value

16 When Prices Increase, Who Pays?` Tygacil 16 UCSF Center for Healthcare Value

17 When Prices Increase, Who Pays? Tygacil 17 UCSF Center for Healthcare Value

18 Conclusions Through many different paths, we have often arrived at high drug costs The contributions to health and to the value of health care are very different from scenario to scenario Contributions to health range from curing a deadly chronic disease to primarily adding harm Contrary to the assertions made by some, changes in list prices correlate highly with changes in total amounts paid 18 UCSF Center for Healthcare Value

19 Slides If We Have Time Or They Come Up 19 UCSF Center for Healthcare Value

20 Generic Insulin Prices Up More than 7-fold in 20 Years 20 UCSF Center for Healthcare Value

21 EpiPen: Market Failure + Policy Interventions = Very High Costs EpiPen inexpensive in 1980-early 2000s, with competitors having some production problems Mylan buys rights to EpiPen (then $57) in 2007: Tygacil Discounts for schools, esp if commit not to buy other brands 2012: Mylan CEO s mother named president of National Assoc. of State Boards of Education, which develops epinephrine policy 2013: federal law giving preference in grant applications to schools with autoinjectors, CEO s father votes Yes in Senate 2016: EpiPen ~$615, schools spending millions on rare problem 21 UCSF Center for Healthcare Value

22 Audience Suggested Resources Available at: United States Senate Finance Committee report on Sovaldi, the Hepatitis C drug that costs $1,000 per pill The Incidental Economist on the Orphan Drugs Act (a law to spur development of drugs for rare conditions): 22 UCSF Center for Healthcare Value

23 R. Adams Dudley, MD, MBA Director, UCSF Center for Healthcare Value Call: Beth Thew, UCSF Center for Healthcare Value 9/14/16

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25 How High Drug Costs Affects Consumers & Their Choices

26 $424 Billion spent on Rx drugs for 2015 in the U.S. Source: IMS Health figures (Before discounts and rebates applied.) Half of all adults in the U.S. take an average of 4-5 prescription meds Source: CR Best Buy Drugs Prescription Costs and Concerns Survey, February 2017

27 One out of every four people said their drug increased in price over the last 12 months Source: CR Best Buy Drugs Prescription Costs and Concerns Survey, February 2017 People paid, on average, $50 extra for their meds Source: CR Best Buy Drugs Prescription Costs and Concerns Survey, February 2017

28 3 Reasons Drug Costs Go Up 1. More people have high deductible insurance plans 2. Insurance companies cover drugs less so you pay more. 3. A few high-priced drugs increase costs for everyone, according to the insurance industry. Source: Consumer Reports, Why Drug Costs Keep Rising and What You Can Do about It, published May 16, 2017 available at:

29 In past surveys, we ve seen when people experienced a price hike with a drug they take, some took drastic actions to afford their meds

30 47% who experienced a spike in their drug costs did not comply with their RX vs. 27% who did not experience higher drug costs Source: CR Best Buy Drugs Prescription Drug Tracking Poll, April 2016

31 Higher Drug Cost Same Drug Cost 30% didn t fill Rx 17% Skipped a dose 13% Cut pills in half 11% didn t fill Rx 11% Skipped a dose 5% Cut pills in half Source: CR Best Buy Drugs Prescription Drug Tracking Poll, April 2016

32 Higher Drug Cost Same Drug Cost 28% Skipped Dr. visit due to cost 14% Skipped Dr. visit due to cost 23% Skipped test or procedure 18% Used discount mfg. coupon 11% Skipped test or procedure 9% Used discount mfg. coupon Source: CR Best Buy Drugs Prescription Drug Tracking Poll, April 2016

33 When faced with higher drug costs, 31% of people cut back on how much $$ they spent on groceries vs. 11% whose drug prices stayed the same Source: CR Best Buy Drugs Prescription Drug Tracking Poll, April 2016

34 #1: Take Fewer Meds: Get a Medication Review Our national surveys found that when people asked their healthcare providers if they can stop any of their meds, in 71 percent of cases, a doctor took them off at least one drug. Source: Consumer Reports, Too Many Meds? published August 2017, available here:

35 #2. Ask your doctor: "How much does this drug cost?" A CR poll of 200 doctors last year found physicians don't consider cost a top concern when prescribing a new drug. Ask if they will check with your insurance company to learn your costs. You can decide if it s affordable for you; if not, ask for another treatment option. Source: Consumer Reports, Is There a Cure for High Drug Costs? published August 2016, available at:

36 #3. Consider using $4/$10 discount generic drugs. Stores like Walmart, Sam's Club, and Costco offer hundreds of common generic drugs at very low prices so low they may be less expensive than your insurance co-pay. Ask your pharmacist if this applies to you. Good to know: Purchasing meds through these programs will not go toward your insurance deductible if you have one.) Source: Source: Consumer Reports, Why Drug Costs Keep Rising and What You Can Do about It, published May 16, 2017 available at:

37 #4. Is your new, expensive drug really an older, cheaper drug in disguise? As a drug reaches the end of its patent exclusivity, manufacturers may re-formulate it into a "new" med. For example: the migraine drug Treximent is a combination of sumatriptan and naproxen. Nine tablets of mg Treximent costs $834 at Healthwarehouse.com. But nine tablets of 100 mg of sumatriptan cost less than $16, and 500mg naproxen tablets are about $6. Source: Consumer Reports, Is There a Cure for High Drug Costs? published August 2016, available at:

38 #5. Don t Assume Your Insurance Charges The Lowest Price Ask you pharmacist for the lowest possible price Shop around prices may vary even within your zip code. Consider using GoodRx.com or BlinkHealth.com for better deals. Source: Consumer Reports, Why Drug Costs Keep Rising and What You Can Do about It, published May 16, 2017 available at:

39 Questions? Comments? Send comments, questions, corrections to Lisa Gill at: These materials are made possible in part by a grant from the state Attorney General Consumer and Prescriber Education Grant Program, which is funded by the multistate settlement of consumer-fraud claims regarding the marketing of the prescription drug Neurontin (gabapentin). Consumer Reports accepts no advertising, promotions, or corporate donations

40 Consumer Reports Best Buy Drugs Rx Tracking Poll 7 Telephone surveys of 4,015 random adults from March 10-27, Respondents screened for use of prescription drugs. Analysis is based on 2,139 adults who currently take prescription drugs and 2,080 who regularly take at least 1 medicine.) 95% confidence level minimum

41 Robin Feldman Harry & Lillian Hastings Professor Director, Institute for Innovation Law University of California Hastings

42 Recycling Drugs New Drugs Old Drugs

43 Top 100 Selling Drugs Percentage of Drugs Not Extending Protection Cliff Percentage of Drugs Extending Protection Cliff

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45 May Your Drug Price be Ever Green SSRN.comhttps://papers.ssrn.com/sol3/papers.cfm?abstract_id= Robin Feldman, Drug Wars: How Big Pharma Raises Prices and Keeps Generics Off the Market (Cambridge 2017) Robin Feldman & Rabiah Oral, Comments at Public Meeting at Hatch Waxman Amendments: Ensuring a Balance Between Innovation and Access, Regulations.Gov (Sep. 19, 2017), The CREATES ACT: Ending Regulatory Abuse, Protecting Consumers, and Ensuring Drug Price Competition: Hearing Before the S. Comm. on the Judiciary Subcom. on Antitrust, Competition Policy & Consumer Rights, 114 th Cong. 58 (June 21, 2016) (testimony of Professor Robin Feldman) Treating the Opioid Epidemic: The State of Competition in the Markets for Addiction Medicine: Hearing Before the H. Comm. on the Judiciary Subcom. on Regulatory Reform, Commercial & Antitrust Law, 114 th Congress (September 26, 2016) (testimony of Professor Robin Feldman) Robin Feldman, Federalism, First Amendment & Patents: The Fraud Fallacy, 17 Colum. Sci. & Tech. L. Rev. 30 (2015). Available at: