Oncologist's petition is latest salvo, as drug-pricing issue rises to new prominence

Gilead Sciences' hepatitis C treatment Sovaldi
Gilead Sciences' hepatitis C treatment Sovaldi

An oncologist at the University of Texas MD Anderson Cancer Center plans to gather signatures for 1 million people as part of a broader effort to set legal limits for how much a drugmaker can charge for a medication.

Dr. Hagop Kantarjian, who serves as chairman of the hospital's leukemia department, last week told The Wall Street Journal's Pharmalot blog that the plan includes urging Congress to allow Medicare to negotiate drug prices and the Patient-Centered Outcomes Research Institute (PCORI) to assess price when comparing a drug's performance.

A number of high-profile pricing issues have cropped up over the last two years, but the national drug-pricing debate has largely been driven by Gilead Sciences' decision in late 2013 to price Sovaldi, its breakthrough hepatitis C treatment, at $1,000 a pill, with a course of treatment totalling $84,000.

The price tag as well as the size of the potential market—an estimated three million Americans have chronic hepatitis C—led to criticism from insurers and pharmacy benefit managers. But the arrival of competing treatments in late 2014 prompted a bidding war among payers seeking to negotiate better prices on the costly drugs, and they have been successful. Gilead CEO John Martin told investors in February that the average discount on Sovaldi and on Harvoni, one of the new competitors to Sovaldi, is expected to be 46% in 2015.

As insurers and PBMs increasingly refuse to pay full price for high-priced drugs, experts say that some drugmakers are evaluating their pricing strategies for drugs currently on the market as well as for those that have yet to receive FDA approval.   

“One giant change that has happened since December is the open willingness of payers to exclude even specialty drugs from their formularies unless … (pharmaceutical companies) are willing to negotiate on price,” said Roger Longman, CEO of Real Endpoints, an analytics firm that specializes in pharmaceutical reimbursement.

One potential pricing concern are the PCSK9 enzyme inhibitors, the new cholesterol-lowering treatments that are expected to receive marketing approval from the FDA sometime this year.

Depending on how they are priced, an insurer or a PBM may exclude one of the new drugs from its formulary or make its formulary decision based on the company that provides the best price, Longman said.

“There is a desperate need for pharma to find a way to assess the comparative value of drugs in order to move payers away from a knee-jerk reliance on price as the major differentiation,” Longman said.

Using the PCSK9 inhibitors to treat patients with two conditions -- familial hypercholesterolemia and severe hypercholesteremia -- would create an estimated $16-billion market, while treating statin-intolerant patients would add $20 million in costs, according to CVS Health executives writing Feb. 17 on the Health Affairs website.

“... Perhaps the costs of PCSK9 inhibitors will push us to develop some consensus about the pricing of new specialty medications, as part of a more thoughtful discussion about the use of scarce resources on behalf of patients,” they wrote.

Another physician who was one of several clinicians to author an opinion piece criticizing the pricing of Kalydeco, Vertex Pharmaceuticals' cystic fibrosis drug, agrees that while the issue of price is finally being recognized, there is still concern in the medical community about how manufacturers will price new drugs currently being reviewed by the FDA.

“Getting bad press in JAMA is not something they want,” said Dr. Brian O'Sullivan, director of the Cystic Fibrosis Center at UMass Memorial Medical Center.

Express Scripts, the nation's largest PBM, is fielding requests from multiple drugmakers to speak to boards of directors at pharmaceutical companies about drug pricing. “This has been a sea change from the types of conversations we were having with manufacturers just two years ago,” a spokesman for Express Scripts said in an email.  

Still, not all critics of drug prices see immediate changes underway. Companies may simply be preparing their boards for negative media coverage of high prices, said Dr. Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center in New York. Bach is an author of a 2012 op-ed in The New York Times describing why the cancer center would no longer prescribe the cancer drug Zaltrap, a move that led Sanofi, Zaltrap's manufacturer, to later reduce the price of the drug.

“There's no question that the prominence of the price issue itself has risen,” he said. “Coverage of new drug launches seems to mention price and probably in an unfavorable way more often and higher in stories.”

The Pharmaceutical Research and Manufacturers of America, the drug's industry lobbying group, this week added to its year-long campaign promoting the value of pharmaceutical innovation, including the value medications provide to patients. Much of the pricing debate has focused on a drug's wholesale acquisition price, which is traditionally higher than the prices negotiated by commercial insurers or PBMs or including discounts, said a PhRMA spokeswoman.

Access is another issue to address as an increasing number of patients are enrolled in high-deductible health plans or have higher rates of co-insurance and cost-sharing than they have in the past.

“The conversation needs to focus more on the value (of the medicines),” the PhRMA spokeswoman said.