The Cost of Prescription Drugs

Earlier this week, I read an op-ed piece in The Baltimore Sun that focused on the life sciences industry in our state and the value that these companies bring to our economy. The author of the op-ed was making the case that regulations on the pharmaceutical industry are onerous and should be reduced.

As I was reading the article, I tried hard to keep an open mind. We should always be cautious in applying new rules or regulations to any industry to make sure that the benefit provided by the regulation outweighs any potential harm. We are well-served by the pharmaceutical industry in the U.S. in that we (usually) have a ready supply of high-quality drugs. But would the quality and efficacy of the drugs be so good without the manufacturing controls and tests required by the Food and Drug Administration? It is clear to me that the profit motive alone is insufficient to assure that we have the drugs we need. Recently, U.S. hospitals have had to scramble to acquire certain medications and intravenous solutions because they weren’t being manufactured due to low-profit margins.

GBMC works diligently to make sure that we are good stewards of the community’s resources. We are here to bring health, healing, and hope to those we serve and to do it as efficiently as possible. This year we are performing very well on our annual budget. We are serving many more patients than expected and our expenses are in line, with one big exception — we are overspending our pharmaceutical budget, especially in oncology drugs, by $3.2 million.

Why is this? Well, a small part of the overspend is because we are serving more patients, but the biggest reason is the dramatic increase in drug prices for both new and common drugs. A new report from The Health Care Cost Institute showed that the cost of insulin, which has been commercially available since the mid-twentieth century, has doubled between 2012 and 2016. By looking at health insurance claims, researchers also found that there was a 97% increase in the amount spent on insulin for people with Type 1 diabetes using employer-sponsored health insurance. Personal costs went from $2,900 in 2012 to $5,700 in 2016. For more on the report click here.

Recently, I heard a presentation from Aaron S. Kesselheim, MD, JD, MPH, Associate Professor of Medicine at Harvard Medical School and a faculty member in the Division of Pharmacoepidemiology and Pharmacoeconomics in the Department of Medicine at Brigham and Women’s Hospital. Dr. Kesselheim has made a career out of studying drug prices and he disputes the idea that new drugs are more expensive because of research and development (R&D) costs. Dr. Kesselheim’s work shows that only 10-15% of the cost of a drug comes from R&D and asserts that pharmaceutical companies are charging more to maximize their profits —sometimes more than one thousand times their cost of production. Dr. Kesselheim believes that this won’t change unless consumers and purchasers take action.

I think the American people need to first answer this question: “Is healthcare a right or a privilege?” If it is a privilege, then everyone must deal with the price of care in whatever way they can. If healthcare is a right, then we need a system with an oversight mechanism that checks the profit of individuals at the expense of the sick and the society at large. Pharmaceutical companies must make a profit but when is the profit too much?

The op-ed writer in The Baltimore Sun did not mention the protection afforded to pharmaceutical companies which block competition from generics for years after a drug comes to market. Nor did he mention their ability to maintain the protection significantly longer by creating minor changes to the drug formulation. Dr. Kesselheim explained government protected monopolies for drug manufacturers in his article in the Journal of the American Medical Association, which can be found here.

There is no simple solution to the dilemma of the cost of prescription drugs in the U.S., but it is time for citizens to learn the facts and weigh in. What do you think?

Bereavement Services for Our Employees
Over the last few weeks, I have highlighted various Gilchrist successes and initiatives, and this week I want to mention Gilchrist’s bereavement program led by Deb Jones, Bereavement Program Manager. The bereavement staff is well-trained in accompanying families through their grief journey.

The bereavement program is now open, not only to hospice families and friends, but also to GBMC and Gilchrist employees at no charge. The Gilchrist Grief Support Programs offer six-week and monthly support groups, workshops, and special events. For more information, please call 443-849-8251.