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Can we lower drug costs?


Experts discuss the forces contributing to costs that are rising faster in the United States than in other countries, as well as what dermatologists can do now to help patients get access to more affordable medications.

It’s no secret that U.S. prescription drug spending outpaces that in other countries. In fact, in America, per capita drug spending is higher than that in all other countries, researchers reported August 2016 in the Journal of the American Medical Association (JAMA).

Even patients within the United States pay different prices for their prescription drugs, according to which government system or insurer is involved in the patient’s coverage.

Negotiating power or lack of it has a lot to do with how much U.S. patients pay for their medicines, according to The New York Academy of Medicine Fellow Ambassador Mark Jarrett, M.D., M.B.A. The Academy is an organization with the goal of advancing the health and well-being of people living in cities.

“The problem is that the government has the right to negotiate certain rates for the Veterans [Health] Administration, but Medicare doesn’t have the ability to negotiate rates of medication costs. That’s a problem,” says Dr. Jarrett, who is professor of medicine at Hofstra Northwell School of Medicine in Hempstead, New York.

In the VA system, medicines are part of the benefit, and VA members don’t pay for covered drugs. Unfortunately, the rest of the population, which is most of the population, is having a particularly hard time affording medications, according to Dr. Jarrett.

“The problem for people who are not in the VA is, even if they have very good insurance, they may have a very large copay. And not every drug is necessarily covered, especially soon after their release. So, it produces a lot of out-of-pocket expenses for the average person, especially people who don’t necessarily have the Cadillac of plans,” Dr. Jarrett says. “Plus, you have the Medicare patients who wind up in the doughnut hole, and that costs them money.”

ObamaCare is no different when it comes to drug costs. Politico.com reported July 13, 2016 that big pharma pretty much escaped reforms in healthcare reform. And there’s nothing in the health law that gives government power to push back.1

Independent health plans aren’t much better when it comes to offering patients lower out-of-pocket costs for medicines, according to the dermatologist.

“Regular insurance companies can negotiate through their third party pharmacy benefit managers, like Express Scripts, etc., on the prices of drugs, but they really can’t get them down dramatically,” Dr. Jarrett says.

This all puts big pharma in a position of power, here in the United States.

Dr. Jarrett says that the classic example is hepatitis C, which when the first cure came out, pharma was charging patients $84,000 a year. Even when insurers and others can negotiate on drug prices, negotiating is much more difficult when there’s only one option for treating a dangerous disease. As generics come to the market, prices go down. But as we’ve reported in this series, even generic prices are climbing out of financial reach for many Americans.

Adding salt to the drug cost wound in this country, the United States is in some ways supporting the lower drug prices offered in many other countries, according to Dr. Jarrett.

Big pharma yields to other countries that have publically-funded healthcare because they get full tilt in the United States, Dr. Jarrett says.

For some patients, the solution lies in getting their medications from other countries, according to Adam Friedman, M.D., vice-chair, Fellows Section on Dermatology, and associate professor of dermatology at George Washington University School of Medicine and Health Sciences, Washington, DC.

Dr. Friedman, also a New York Academy of Medicine fellow, says his dermatology practice has a large, transient international component of patients, who understand the economics of shopping in other countries.

“One of the most common [prescription] drugs my patients will purchase overseas are topical retinoids, whether it be for acne or antiaging purposes,” he says.

Getting coverage for prescription topical retinoids in the United States has become exceedingly difficult, and most insurance companies require prior authorization, only to eventually deny request for these topicals, according to Dr. Friedman.

“… patients learn from their pharmacies that the cost of their ‘cream’ is anywhere from $300 to $500,” Dr. Friedman says. “Patients can purchase retinoids outside the U.S., often without a prescription, for a fraction of the price. Therefore, with many of my patients who travel back and forth, they often ask for just the names of the medications, instead of a prescription.”

While the benefits of cheaper, more accessible medications are obvious, there are potential problems when patients get their medications abroad, Dr. Friedman says.

“Firstly, the regulatory standards for generics may be less stringent; second, there could be ingredients in the products acquired abroad, which may be deleterious-have a high risk for contact dermatitis, or could potentially interact with current or future medications. I have had patients come to me with branded drugs from abroad, which I have never heard of, only to find out that they contain mercury or high-potency corticosteroids or high concentrations of hydroquinone, none of which the patient was privy to,” Dr. Friedman says.

Dermatologists should share these concerns with patients and welcome the discussion about how they can safely get more affordable medications, he says.

Be careful what we ask for?

We have to lower drug prices for Americans, but at what cost?

Lowering profit margins for big pharma could result in less research investment, according to Dr. Jarrett.

After all, there is some truth to the fact that medicines are expensive to develop, and big pharma is made up of for-profit companies with shareholders.

And U.S. patients are accustomed to a high level of healthcare, where they get access to needed drugs-even if those drugs are expensive, he says.

“In single-payer or national healthcare system, some medications aren’t covered,” Dr. Jarrett says. “I remember a patient required Velcade (bortezomib, Takeda Oncology) for multiple myeloma, and it was paid for here in the U.S. but, at that time, in England it wasn’t paid for because when they looked at the cost and benefits-how long the patient was going to survive if they got the drug, etc.-they decided it wasn’t worth the expense.”

As for that national debate on how to lower drug costs in the United States, Dr. Jarrett says, Congress is starting to look at the problem, especially since word got out about EpiPen prices.

“In the U.S., that will be a very brutal and hard discussion because we assume that everything should be available to everybody. That’s why it really requires a philosophical conversation because as the expenses go up, maybe we can’t deliver everything to everybody, especially if it has marginal benefit. But how are we going to make that decision and who is going to make that decision?” Dr. Jarrett says.


Norman, B. and Karlin-Smith, S. (2016 July 12). The one that got away: Obamacare and the drug industry. Politico. Retrieved from http://www.politico.com/story/2016/07/obamacare-prescription-drugs-pharma-225444

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