Due in large part to the “21st Century Cures Act,” 2017 has seen the highest number of new drugs granted FDA approval than in any single year since 1996. According to a financial analyst at a Mumbai-based securities firm, there were between 750 and 800 ANDA (abbreviated new drug applications) approvals during fiscal 2017 – and he expects that number to rise to around 1,000 over the coming year.
That could be good news for U.S. healthcare consumers – at least, those who do not suffer from a rare disease. For drug companies based in India, which export approximately $16.5 billion worth of medications to the U.S. on an annual basis, that means more sales – but also downward pressure on pricing. Some estimates indicate a reduction of as much as 10 percent or more in the prices of generic drugs.
Other factors in falling drug prices is growth in the number of generics as drug manufacturers lose their patent protection and thus, their monopolies, as well as the increasing availability of “biosimilars” – biologic medications that are near-copies of an original, but manufactured by different companies (generics are exact copies). All of this increases competition and thus results in lower drug prices – at least, those designed to treat common disorders.
For people suffering from rare conditions or are dependent on unique branded medications, the news is not so good – even if the drug used to treat the disease in question is decades old and long off patent. So-called “orphan drugs” are still subject to the whims of an opportunistic industry with insatiable greed. A recent example is dichlorphenamide, originally approved in 1958 for the treatment of glaucoma.
Originally sold by Merck as Daramide, dichlorphenamide has long been used off-label for patients suffering from a rare genetic disorder known as hypokalemic periodic paralysis, or hypoPP. Two decades ago, dichlorphenamide sold for around $2 a pill. Then, in 2016, following a dramatic price spike, Taro Pharmaceuticals Industries, by that time selling it under the brand name Keveyis, announced that it would make it available to its distributors at no charge. Later that year, however, a new company, known as Strongbridge Biopharma, acquired the U.S. rights to the drug – then promptly jacked the price up to over $15,000 for a bottle of 100 pills – about a six-week supply.
When questioned about it, a company spokesperson side-stepped the issue. Pointing out that hypoPP affects only about 5,000 people in the U.S., she said, “Strongbridge is committed to serving the unmet needs of the primary periodic paralysis and other rare-disease communities.”
That’s cold comfort to those who must now shell out as much as $220,000 a year to treat their condition.
In the face of public shaming and increasing public outrage, the pharmaceutical industry has engaged in a multi-million dollar campaign to deflect that outrage toward the middlemen – pharmacy benefits managers (PBMs) and who funnel products from manufacturers to patients as well as insurers. These are third-party companies that negotiate drug prices for insurance companies and employee benefit plans. They make their profits from fees they collect from insurance companies and taking a percentage of rebates given by drug companies.
This has created infighting between two sides of the same industry – and at the same time, has made it difficult for legislators to address the problem. Currently, three large companies – Express Scripts, CVS Health and OptumRx – dominate almost 80% of the market and control the lives of over 250 million U.S. patients. At the same time, drugmakers argue that PBMs are demanding larger rebates – and that is what is behind the rise in drug costs.
While the federal government has been making some token efforts to address the problem of out-of-control drug pricing, few of these have targeted the drug industry, and solutions that consumers have been hoping for – such as reimportation and allowing Medicate to negotiate drug prices (in other words, moving in on PBMs’ turf) – have failed to materialize. The issue of drug pricing has started to resemble an onion, with one layer after another – and the involvement of several bad actors, including drug manufacturers, PBMs and for-profit hospitals that add their own mark-ups, will continue to make any real solutions difficult to achieve under a profit-driven system and an industry with such power.