Last summer every insurer in the country was rerunning their models on how the next wave of cholesterol drugs were going to blow up the cost structure. A new set of inhibitors were coming onto the market. They were priced at over $1,000 per month before discounts while the drug class they would be replacing, statins, usually costs $30 to $50 per month. The specific on-label use of these drugs were for a certain subset of people with high cholesterol and a certain set of genetic markers and clinical indicators.
When the finance folks down the hall ran their projections the worse case scenario was that the prescribed conversion rate from statins to the new inhibitors would be somewhere above the Mendoza line. That conversion rate would be sufficient to take away all the cost savings that had kept premiums flat for 2015.
We got that one wrong:
A surge in sales of pricey new cholesterol treatments is unlikely to materialize this year, contrary to the previous expectations of Express Scripts Holding, an executive from the largest manager of U.S. drug benefits said on Friday….
xpress Scripts and rival CVS Health warned last year that using a wider group of patients would place too large a cost burden on the healthcare system. The drugs are priced at more than $14,000 per year, before discounts, compared with a few hundred dollars per year for statins, the standard cholesterol treatments.
Amgen did not disclose fourth-quarter Repatha sales, saying they had not been material, but said it expects growth in 2016. Regeneron earlier this week reported fourth-quarter Praluent sales of just $7 million.
The conversion rate is that of an indifferent National League pitcher facing Kershhaw or peak-Pedro for a season’s worth of at bats. The only people who are getting the drug are those with the very specific set of circumstances.
This is intriguing. It may be a blip or it could be a portent of a significant change in provider behavior. If it is blip, disregard the rest.
There is a possibility that providers are becoming price aware. We have seen some cancer centers refuse to buy certain new classes of drugs because they are $100,000 or more a cycle while producing no better outcomes than current drugs that only cost thousands of dollars per cycle. The big fear with the new inhibitors was that they would be widely prescribed for a much broader population of people than the clinically significant group. That has happened repeatedly in the past that drugs are either over prescribed or used off-label even when there are better options available. That is the entire point of the pharmaceutrical advertising industry, to get providers prescribing higher cost medications for marginal cases.
IF providers looked at these new inhibitors and stayed on label for the indicated populations, then this is a big cost control win.
Also, the Lipid Hypothesis, upon which the statin drugs are based, is being blown out of the water with new research. And statins seem to work based on lowered inflammation, not by any cholesterol magic.
That baby aspirin could be doing just as much good with far fewer side effects.
The pricing model for drugs like these seem to be broken. You’ve talked about this before, IIRC. If some conventional treatment costs $5M over a lifetime, they system doesn’t “save” $4M if a “cure” using a magic pill “only” costs $1M. Medicine isn’t static – who knows what will be learned about treatments over a person’s lifetime. The cost should be based on long-term viability of the company and production costs, not making as many billions as possible before patent protections run out.
Since too many drug companies seem to think that patents give them the right and obligation to charge as much as possible for any tweak they make to a molecule or packaging (Look it’s a new GelCap!! Oooh!!), we should seriously investigate regulating them like utilities. Healthcare is different from buying a box of cereal. Time constraints, lack of information on efficacy, lack of pricing transparency, insurance network issues, patent issues, etc., etc., all mean that it’s not a “market” that has proper supply-and-demand constraints. We should recognize that and stop letting these companies run amok.
Thanks as always for posts like this. You’re doing a great service for all of us.
(Who would like to see patents go back to reasonable “limited Times”, also too.)
I’ll note that the actual price, rather than the list price, is what matters. I’m currently using Restasis– eye drops that are pretty much the only prescription medication for dry-eye syndrome. It’s appropriate for me because 1) I had corneal lesions that had to be removed surgically, 2) I had serious eye inflammation after airline flights, and 3) recent eye surgery made the whole thing worse. The retail price for Restasis is $500/month, but the price with insurance (Express Scripts) is $25/month. Big difference!
And yes pitchers and catchers will be reporting soon!
@MattF: yep list price for drugs means almost as much as list price any other medical procedure/process…. Nil
Insureds or their pharmacy benefit managers usually get a discount or a percentage off list. New drugs with few near substitutes have lower discounts than older drugs with lots of substitutes. Think Cialis/Viagra versus the first six months of Solvaldi
@Richard Mayhew: Isn’t it true that “list price means Nil” only applies to people who are insured? My understanding is that people who aren’t insured end up being charged list price at emergency rooms and the like. IIRC, those bills are often only reduced on the threat of legal action. Since they’re most likely to be poor and living on the fringes of the economy already, and unable to use legal remedies as easily as others, it seems to be another example of America’s “war on the poor”. It’s another example of perverse choices that we have made over the years (negotiated discounts for insurance) that end up punishing those who can least afford it. There Otta Be A Law™ that says something like “no customer can be charged more than 20% more than the lowest discounted price for any medical item, procedure, etc.” (And even 20% might be high.) Medicine isn’t like buying commodities. The per-unit price of strep throat treatments doesn’t vary the way the price for 1 screw or 100M screws varies… We’ve made the choice as a society that a “list price” orders of magnitude more than the lowest “real” price is somehow sensible for medicine – it doesn’t have to be that way. And shouldn’t be that way, IMO.
I saw an example of changed provider behavior just yesterday. My husband, who has MS, is taking oxycodone for pain-management purposes, and has constipation. There’s a new med for opioid-induced constipation that’s being advertised now, and hubby mentioned it when we were seeing his pain doc yesterday. The doctor said it’s really expensive and recommended a regimen using OTC meds instead, saying many insurers refuse to cover it until everything else has been tried and has failed.
Another way insurers can induce price sensitivity is by going to a four-tier formulary with the fourth tier being covered at a percentage of the price instead of to a co-pay amount. I know I’m pretty much fucked in three years when I go on Medicare Part D because I have HIV, and pretty much every Part D insurer in MI has put non-generic HIV meds in their fourth tiers.
I’m sorry. What’s a Sovaldi?
@Snarkworth: A new, expensive Hep C drug.
One thing that frustrated me as a non-physician healthcare provider (before retirement) was the big drug companies’ tendencies to get a new medication through the approval process with a very narrow symptom specific protocol. Then they would spend the next decade pushing for more and more approved uses of their medications–and getting them approved again and again for more and more symptoms for more and more patients.
So my guess is that in the next five years, the use of this new class of cholesterol-lowering medication will sharply increase.
@I’mNotSureWhoIWantToBeYet: Thanks! I thought it had something to do with baseball.
@WereBear: My PCP made the same comment re: 81mg aspirin vs my (now generic) Lipitor years ago, although I still take ‘L’ since my liver fcn numbers are still good.
Top Hillary Clinton Advisers and Fundraisers Lobbied Against Obamacare and Dodd-Frank
@p.a.: As someone who is mumbley-mumble years old, I have apparently reached some mysterious Rubicon where anything that is wrong with me is only fixable by some hideously priced pharmaceutical.
I am fortunate to have a GP who shares my skepticism, but many of my peers and friends are getting a new prescription every year now. Without losing any of the old ones.
OMG! Hillary is secretly planning to repeal Obamacare!
No, AK…HRC is, as always, playing both sides of the issue and talking the talk while failing to walk the walk…unfortunate, unless you’re a fan of two-faced, corporatist hypocrisy….
Dear Americans, Please Stop Dreaming of a Better Nation
Scaling back dreams? Is that what we want?
I did not click the link, but I am intrigued by this sentence. Let’s parse.
(1) “Clinton has been relying on a team of strategists and fundraisers.” No surprise there.
(2) “Many of whom spent much of the last seven years as consultants or lobbyists for business interest” So “many” (more than 2?) have spent “much” (a majority?) of Obama’s term as consultants or lobbyists for business interests. Not ideal, I supposed, but not too surprising given Clinton’s network.
(3) “working to obstruct Obama’s agenda in those two areas.” Does this modify the “consultants and lobbyists” (more than 2?) on Hillary’s staff or “business interests” for whom they previously worked for. In other words, did the consultants themselves work to obstruct Obama’s agenda or did they simply work for “business interests” who did that work? And how did they work to “obstruct” Obama’s agenda?
I assume the article explains these points in detail. But I’ll leave that to people who like to leave the boat.
Look, if you don’t trust Hillary’s intentions regarding healthcare, of all things — this is someone who tried to get healthcare reform passed during Bill’s administration — then you just don’t trust her. And I respect your opinion, bless your heart. But it seems to me those consultants and lobbyists are people who follow their paymasters, not the other way around.
@Baud: Such chains and associations and sidelong movements are classic Greenwald, BTW.
It just kills you guys knowing that it’s legal for this entitled bitch to try and steal the nomination that rightfully belongs to Sanders, doesn’t it?
@FlipYrWhig: I wasn’t sure if it was GG because I didn’t click the link, but I was 99% sure given the writing style. Thanks for confirming.
Don’t get your hopes up.
Google sends me to the FDA which tells me that Repatha = evolocumab, that is an antibody. It has to be injected. Patients don’t like to get stuck with needles.
Doctors will prescribe a cheap pill which works just as well as a costly injection. The question is about cheap pill vs expensive pill and cheap injection vs expensive injection.
This comment is a bit tart, so I’d like to add that Mayhew is a brilliant blogger from whom I have learned a lot. A health insurance expert who writes well is very rare. The diversity of balloon juice bloggers is amazing (except for the facts that they all think and write)
Steve in the ATL
Why, you must be from *Southern* Malaysia!
Glen Fang, actually….
HRC isn’t a Tammany Hall-style politician…she isn’t ‘bought’…but she has ‘bought in’…unlike Sanders….
@Robert Waldmann: “I write.”
“No. You wrong.” BAM-
@DCF: Thanks for the correction on authorship.
I don’t know what “bought in” means, but I agree that her network isn’t exclusively non-corporate.
@Baud: Hil is being tarred by past association (or Bill’s )with R Rubin, Larry Summers, Mark Penn etc. Don’t know how accurate it is about the past or present, and it matters not a whit to me, she HAS to win. But a Sista Soulja moment might help with many of the waverers. (Of course, then the bitter enders will just accuse her of 1. lying 2. flip flopping 3. being too late.)
@p.a.: Which one of those people is among her current strategists?
The Intercept piece’s author is Lee Fang.
Villago Delenda Est
Start executing Pharma CEOs. That seems to be the most market based approach there is to resolving the mindless greed of an industry based on research that spends a lot more on marketing than research.
@DCF: I know that Hillary has some mercenary instincts. In fact, I am counting on it. I want someone in the Oval Office who will get important things done even if the opportunity is not primed for that to happen. That means I want someone who has connections in places where someone like you might think those connections should not exist.
I was alive and voting in the 1970s. Maybe you were as well? I saw a lot of wonderful Liberal Democratic candidates with pure ideologies get struck down before they had much of a chance.
Hillary Clinton may well be the most flawed candidate for president that I have or ever will vote for. And let me just say that since I have some time left before our primary there is a chance I won’t vote for her if she somehow manages to screw things up even more than she has. Nonetheless, I am sorry to say, that her hawkish centrism is going to have to be tolerated for now because there simply is not much else that can be better than her hand on the tiller guiding our entire, nearly impossible to navigate, ship of state.
I love Bernie’s idealism. Many of his issues are issues dear to my heart. Unfortunately, I just don’t see him being the type of personality and political game player that can sit at the at the head table of our government.
I’m thinking a little less flawed than you sound but our concepts are the same.
First I think we are a bit awed at President Obama. Not that he’s perfect but that he is very, very good. I’ve been voting for a long time and he’s the person that came closest to meeting my expectations. We’d like to see another with that level, and another and another. It isn’t going to happen. So we have to understand that this is a contest where the winner answers as many of the questions correctly as possible. For example the conservative side can not answer any of the questions correctly. Not one. Sanders answers a few very well but falls down on a very important one, HOW. Now Clinton may not get us what we want, in fact I’m 100% sure she won’t be able/capable of getting everything. But she knows how to play the game to get some of them.
And that ain’t nothing.
Hillary Clinton’s Pay-for-Play Reality
Whatever one thinks about Hillary Clinton’s sincerity when she professes progressive values, the undeniable reality is that she has immersed herself for decades in the corrupting sludge of Official Washington and its sleazy pay-for-play schemes with Wall Street and other power centers
George Carlin – They Own You
Baud – this is what I mean by ‘bought in’, alternately known as ‘triangulation’….
Where does Bernie Sanders stand on the issues?
Seek and ye shall find….
Bernie Sanders Confronts Alan Greenspan
Bernie Sanders is no ‘pussycat’….
10 reasons why voters are turning to Bernie Sanders
1) He’s seen as a challenge to the status quo…
2) … whereas Clinton is viewed as more of the same
3) Sanders’ consistency is judged a virtue
4) They’re suspicious of Clinton’s ties with Wall Street
5) They’re demanding ‘revolutionary’ change…
6) … and they think it’s too late for baby steps
7) Climate change is an existential threat
8) It’s not just about the millenials
9) They see him as a conduit for change rather than a miracle worker
10) They’re angry as hell
@Villago Delenda Est:
George Carlin – Death Penalty
Why does every thread have to turn into Hillary v Bernie? Aren’t there two or three active ones already?
If you or someone would tell me what this means and show some of the process by which this change will realistically be brought about (budgets, tax legislation, changes in U.S. Code) you might well win another voter.
As it stands, your list (and thank you for it) is a wishlist and not an actionable plan. Show me how it is.
Sanders wants to start several new programs that are very expensive and I image that he will be keeping several preexisting ones as well. He needs to have way to work through this with an electorate which almost evenly divided on many of these issues.
If he cannot chart a realistic process, his goals come to nothing.
@Robert Waldmann: a) thank you
And B I agree with you this could be a blip because it is a shot and not a pill. The last half of the piece is informed speculation if this is not blip.
As far as C, John has done a very interesting and good job of putting together a very eclectic community
this is relevant, because most of the top level of the fed gov’t is run by not the POTUS, but his team
therefore, what we get over then next 4 years is largely his or her team
if Hillary chooses to surround herself with people who have no principles, but are just hired guns, that says a lot to me
imo, this blog has gotten so much better – it use to be stupid wonkette snark stuff, but now has real, info rich posts – sort of the same thing that happened to no more mister nice blog
ps – re the baseball thing, you might want to check out
DLew On Roids
Peak Pedro makes Clayton Kershaw look like Jeremy Hellickson.
@e abrams: I agree, five years from now Peak Pedro vs. Kershaw is a dated reference but it is a relevant reference for this week
@DLew On Roids: Peak Pedro makes Kershaw look human instead of a pitching diety