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Many Drug Prices Are Sky High. A New Law Would Send Them Higher.

By Estay Greene | June 7, 2017 | Industry Perspectives

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Would you pay $17 for a gallon of milk? You would have to if the cost of milk had increased 500 percent in the last 15 years.

Unfortunately, that’s how fast costs for oral chemotherapy drugs are rising – from approximately $2,000 a month to $10,000 a month. Meanwhile, IV chemotherapy drug prices increased at a fraction of the cost.

And when the price of drugs rocket upward, they bring insurance premiums along for the ride. When five oral chemotherapy drugs sell for more than 600 times what they cost to make, consumers foot the bill, both through out-of-pocket costs and higher insurance premiums.

People fighting serious illnesses in North Carolina have been hit particularly hard by these rising costs. Soaring prices for prescription drugs are a top concern for families already struggling to pay for basic health care.

Drug companies have raised the prices of all prescription drugs costs for Blue Cross and Blue Shield of North Carolina’s (Blue Cross NC) customers 71 percent since 2010. And the trend doesn’t seem to be slowing down, according to recent reports.

Now, state lawmakers are drawing up new rules with good intentions, but also with unintended consequences. North Carolina’s House Bill (HB) 206/SB 152 would cap out-of-pocket costs for oral chemotherapy medications.

Sounds like a great idea, right? But a great idea – even a well-intentioned one – isn’t always what it seems.

Why? HB 206/SB 152 does absolutely nothing to protect patients from higher and higher prices for the drugs they must take to survive. The proposed legislation does nothing to address the true costs of specialty drugs. In effect, the bill would provide an invisibility cloak for drug companies to hide their price hikes by further removing consumers from knowing the prices of oral chemotherapy drugs.

HB 206/SB 152 would cause health insurance premiums to rise in North Carolina for two very important reasons:

  • The bill eliminates the incentive for drug companies to negotiate reasonable rates with insurers. Negotiation is one the most important tools insurers use to protect consumers from unreasonable costs. Without the ability to negotiate, drug companies would have even more power to charge consumers and insurers whatever they wish.
  • It allows drug companies to continue raising prices under the radar. Drug makers should offer justification about prices and price hikes and make that information widely available, just as insurers do with premium increases. That way, industry experts, insurers, consumers, the media and others can provide their analysis and question drug makers if the numbers don’t seem to add up. Without this transparency and public discourse, everyone is left in the dark. Pharmaceutical companies can’t simply expect everyone else to foot the bill if no one knows what they’re paying for, or why.

This legislation is a bad idea. Not only does the bill fail to address the high cost of care, it does very little to impact a consumer’s bottom line. That’s because chemotherapy drugs are so expensive, many patients quickly hit the maximum amount they are required to pay out-of-pocket. At that point, their health insurance covers the full cost of the drug. So, while the amount a patient would have to pay is already capped by their policy, this bill could send insurance premiums even higher.  

Otherworldly prices.

While many medicines have gotten more expensive in recent years, oral chemotherapy drug prices are on a whole other planet. Let’s keep in mind that these drugs target the sickest, most vulnerable patients in our communities.

Adding fuel to the fire: the US pays more – usually far more – for most drugs than the rest of the world. This is partly due to the fact that prescription drug makers in the US aren’t subject to the same pricing regulations as other countries. Consider that a course of treatment with a pill called Xtandi, used to treat advanced prostate cancer, costs $39,000 in Japan – but $129,000 in the US.

Enough is Enough.

North Carolinians can’t afford HB 206/SB 152 – nor should they be asked to afford it.

It doesn’t lower the cost of drugs. It doesn’t promote transparency by drug companies. It doesn’t lower insurance premiums.

Here’s what the bill would do:

  • It would allow drug companies to continue to hide their relentless price increases.
  • It would force North Carolinians to pay more for health care and health insurance.
  • It would fuel the continued, unchecked price increases for oral chemotherapy treatments.

None of these are desirable outcomes. And at the end of the day, lifesaving medications only work if people can afford to buy them.