In this Friday, July 8, 2016 photo, a pharmacist holds a package of EpiPens, an epinephrine autoinjector for the treatment of allergic reactions, in Sacramento, Calif. Price hikes for the emergency medicine have made its maker, Mylan, the latest target for patients and politicians infuriated by soaring drug prices. (AP Photo/Rich Pedroncelli)

Prescription Drug Pricing Soars While Transparency Sinks

The shock of drug prices increases just keep coming.

Earlier this week it was announced by drug maker Mylan that the medically necessary EpiPens, an allergy reaction combating auto-injection, will see a 400% price increase. Then we learned, in the midst of controversy over this price-gouge, that Mylan’s CEO has enjoyed a 671% increase in pay over the last eight years, with news outlets deeming her the next Martin Shkreli.

The truth can’t be any clearer: Big pharmaceutical companies and their CEOs are lining their pockets at the expense of sick Americans.

Health Access, along with the California Labor Federation, had proposed a modest solution to this growing problem in Senate Bill 1010 (Hernandez). The legislation would have held a spotlight to the pharmaceutical companies for their cost increases. If a drug price was set to increase by more than 10% or $10,000, SB 1010 would have required Pharma to provide justification for the increase, and a breakdown as to where the additional money was going to be used. The bill would also have required a 30-day notice of price increases to allow purchasers the ability to negotiate, encourage competition, and ultimately reduce costs for consumers.

If this legislation was passed, California would have been among the first states in the nation to require price transparency for outrageous drug price increases. Unfortunately, due to a last-minute lobbying blitz by Big Pharma, SB 1010 was substantially amended coming out of the Assembly Appropriations to the point that it accomplished close to nothing of what it was intended to do. One of the most significant amendments increased the 10% threshold to 25%, effectively eliminating 99% of drug price increases. Along with that, the core consumer protections in the bill – the justification reporting requirements – were amended out, leaving legislators without the knowledge they need to hold drug companies accountable. And if that wasn’t bad enough, the amendments delayed implementation and only had the bill in effect for four years.

Big Pharma will tell you that providing notice will undercut their market and drive down drug prices to the point that they can no longer invest in research for cures. But there’s no way to know if the money that patients are paying are actually going to research. SB 1010 would have provided some of this information. It seems likely from this week’s headlines they are making exorbitant profit on the backs of patients, and cutting multi-million dollar paychecks for their CEOs. But without transparency, we’ll never know.

Transparency and disclosure are required from every other key player in the health care system. This includes the cost of physician services and insurance company premiums. However, the cost of medically necessary drugs has been steadily increasing without any justification or explanations. In 2015, drug prices hit heights never seen before, but Big Pharma locked the information behind think walls of secrecy and provided no information on their practices. According to the Milliman Medical Index, drug prices will have quadrupled from $1,111 to $4,270 from 2001 to 2016, respectively.

As a result, pharmacy benefit managers (PBM), health insurance plans, and government agencies like Medicare and Medi-Cal have been scrambling to compensate for the sudden spike in drug prices. As consumers, this can result in increased premium rates, higher deductibles, and more tax payer money being funneled into paying for rising prescription drug costs.

A good friend of mine volunteered at a local free clinic that specializes in working with the Southeast Asian population in Sacramento. She told me they see numerous cases of patients with Hepatitis A, B, and C. Many of these patients are uninsured, immigrants, or low income and are unable to afford the hiking prices of a drug that can manage their diagnosis. As a result, the clinic has been attempting to work with the pharmaceutical industry’s patient assistance programs to reduce the cost and sometimes get the drug for free. Unfortunately, she spoke to the person in charge of working with the drug companies, she was told their application process was “strict, convoluted, and lengthy,” to get approved. Throughout this process, many patients left the clinic untreated and more skeptical of health care providers. What good is it to develop cures and treatments if the people who need it most cannot afford it?

Although SB 1010 was not able to accomplish the work it had set out to do early this year, the fight against Pharma is not over yet. Advocates will come back even harder next time. Consumer groups and individuals refuse to watch drug prices soar without any oversight. Pharma needs to be held to the same standards as other players in the health care industry.

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