pharma: Increasing drug prices & the healthcare industry's influence over scientists

Looks like insurance companies are combating higher drug prices by decreasing coverage of tier 4 and tier 5 drugs (i.e. expensive "specialty drugs"). The details.

This article is also interesting...

As a brief little update to this post, the NYTimes just published an editorial on the rising price of drugs.

I really need to synthesis all of this data and put it into my upcoming write up on the drug industry. For the time being I will settle on quoting the nytimes editorial, given that it sums things up pretty nicely:

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The plight of patients who have recently been hit with a huge increase in their insurance co-payments for high-priced prescription drugs was laid out in The Times on Monday by Gina Kolata. Instead of paying a modest $10 to $30 co-payment, as is usually the case for cheaper drugs, patients who need especially costly medicines are being forced to pay 20 percent to 33 percent of the bill (up to an annual maximum) for drugs that can cost tens of thousands of dollars, or even hundreds of thousands of dollars, a year.

These drugs — what insurers call Tier 4 medicines — are used to treat such serious illnesses as multiple sclerosis, hemophilia, certain cancers and rheumatoid arthritis. And since there are usually no cheaper alternatives, patients must either pay or do without, unless they can get their medicines through some charitable plan.

There is little doubt that the so-called tiered formularies, in which co-payments rise along with the cost of the drugs, are a sensible approach for encouraging consumers to use the cheapest drug suitable for their condition. But the system seems to break down when it moves to Tier 4 drugs where co-payments can be huge and suitable alternatives don’t exist.

The insurers say that forcing patients to pay more for unusually high-priced drugs allows them to keep down the premiums charged to everyone else. That turns the ordinary notion of insurance on its head. Instead of spreading the risks and costs across a wide pool of people to protect a smaller number of very sick patients from financial ruin, insurers are gouging the sickest patients to keep premiums down for healthier people.

The health insurance system is so complex that it is hard to parse the blame for this injustice. The drug companies, especially the biotechnology companies, are at the root of the problem; they often charge exorbitant prices for monopoly drugs that were developed with heavy government assistance. Washington needs to rein them in by encouraging generic competition for biological drugs and allowing government programs to negotiate lower prices.

Employers, including the federal government, also bear responsibility. They have been pressing to reduce their prescription drug expenditures, and all health care expenditures, by shifting more of the burden to patients. One patient who had been paying only $20 for a month’s supply of a multiple sclerosis drug was shocked when the charge rose to $325 per month. (It has since been suspended.) Another patient found that his co-payment for a newly prescribed leukemia drug would exceed $4,000 for a 90-day supply, so he has deferred buying it.

If patients do without medicines or put off taking them, the likely result will be sicker patients, and higher costs, down the road.

What is not clear is whether insurers are primarily reacting to pressure from employers or are exploiting the situation to increase their profits. Congress needs to probe hard to find out how many patients are facing enormous drug bills and how best to protect them from medical and financial disaster.
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