Prices are already out of control and killing hundreds of thousands

Hazel and Sophia,11-14-2024, “PAYING THE PRICE: HOW DRUG MANUFACTURERS’ GREED IS MAKING HEALTH CARE LESS AFFORDABLE FOR ALL OF US” FamiliesUsa, https://familiesusa.org/resources/paying-the-price-how-drug-manufacturers-greed-is-making-health-care-less-affordable-for-all-of-us/

Families across America are facing a health care affordability crisis. In 2021, the United States spent $4.3 trillion on health care, two or three times more per person than other wealthy countries. Yet the U.S. still has some of the worst health outcomes and health care quality.1,2 Furthermore, high and rising health care costs force millions of people to choose between the health care they need and basic necessities.3 One-third of Americans say that the cost of medical care interferes with their ability to have food and housing.4 And, these high and rising costs drive more than 40% of adults into medical debt, further exacerbating their health and financial struggles.5 The high costs of prescription drugs are particularly egregious and play a big part in the affordability crisis. Over the past 15 years, launch prices — the initial prices of drugs set by manufacturers — grew more than 20% each year.6 In 2021 alone, the U.S. health care system spent $603 billion on prescription drugs (before rebates), and national prescription drug expenditures grew faster than spending on both hospital services, and physician and clinical services.7,8 Even after drugs launch, their prices continue to rise at irrationally high rates. For example, the price of Victoza (a popular diabetes and weight loss medication launched in 2010) increased a staggering 42% in just five years, rising from $7,936 per year in 2015 to $11,300 per year in 2020.9 The impact of these high prescription drug costs on individuals and families who rely on these medications is clear, with almost 30% of adults not taking their medications as prescribed in the past year — rationing their medications, skipping doses, or not filling their prescriptions at all.10,11,12 Being forced to make those decisions directly results in poorer health outcomes: rationing or skipping needed medication causes an estimated 125,000 deaths a year.13,14 What many Americans might not know is that not only do high and rising drug prices drive up health care costs for people at the pharmacy counter, but they also drive up health care premiums and deductibles and are often experienced in the form of reduced wages.15,16,17 For example, if a person with insurance from their employer is charged a very high price for a prescription drug, not only will those individuals receiving the drug have higher cost sharing, but also that high price will be factored in when establishing future premium costs for all employees insured in the employer’s insurance pool. This means we all end up paying the price for drug manufacturers’ greed, whether or not we take a prescription drug. For the 60% of U.S. adults currently taking at least one prescription drug and the 25% taking four or more, this means paying for prescription drugs multiple times, including through monthly premium payments, payments to reach their deductibles, and any out-of-pocket expenses paid at the pharmacy counter.18 Drug companies make the system work for them, not people who need care The entire business model of big drug companies is rooted in abusing their monopolistic or quasi-monopolistic position, including price gouging, protecting drug exclusivity through anticompetitive behavior, and increasing profits on old drugs rather than investing in new and innovative treatments to help our nation’s families.19 Simply put, it is a business model that is often rooted in greed. Just this year, a Stanford University business and medical school professor wrote in Forbes, “In the 21st century, most drug companies have replaced moonshots with chip shots: strategies aimed at minimizing risk. Rather than chasing the elusive game-changing drug, today’s biopharma giants focus on monetizing easy wins.”20 Drug companies game the prescription drug market and health care system from beginning to end. When drug companies file patents to bring new drugs to market, they can receive “exclusivity” on those drugs during which time no other company can market a competing drug.21,22 In general, under a series of federal laws, most prescription drugs receive between 12 to 16 years of exclusivity and patent protection to reward innovation, with the average being about 14.5 years.23 This length of time is in part the result of drug companies learning how to abuse this privilege, turning exclusivity and patent protections into a perverse incentive to maintain exclusivity as long as possible in order to maximize profits off old drugs without expending additional resources to develop new ones.24 Drug companies regularly deploy a barrage of tactics to extend their exclusivity periods, keep generics off the market, and maintain their market dominance.25 Common examples include blanketing one drug with multiple and overlapping patents to create a “patent thicket” and paying potential competitors not to produce a generic drug as part of a “pay-for-delay” scheme. In fact, the 10 top-selling drugs on the market today have been granted an average of 74 patents per drug, with an average of 140 patents filed for each of them.26 Importantly, 66% of those patent applications are filed after the drug is approved by the Food and Drug Administration.27 This means that drug manufacturers file new patents, looking to extend drug exclusivity periods, to protect against generic competition with no significant changes made to the original drug itself. Drug companies have an overwhelming financial interest in having market and patent exclusivity that has no relation to improvements to the medications or accessibility of the medications for patients.28,29 When Revlimid, a chemotherapy drug, had patent exclusivity, it brought in $23.8 million per day in revenue. When Keytruda, a cancer drug, had exclusivity it made $26.8 million per day in revenue. And before its first competition came onto the market in early 2023, Humira, an immunosuppressant drug treating arthritis and Crohn’s disease, made $47.5 million per day in revenue for its manufacturer.30 Finally, once they have established market dominance, drug companies can price gouge freely, raising prices year after year at shocking rates on the medications that they have long since released. These price increases are wholly unrelated to the effectiveness of a drug over time. One study of high-spend drugs showed that seven of the 10 drugs reviewed provided no additional clinical benefit relative to other available drugs to justify their high list price or price hikes.31 Some examples of price gouging are particularly predatory. For instance, the drug manufacturer Mylan faced and settled a series of class-action lawsuits resulting from its widely publicized price increases of more than 400% for the EpiPen.32 In another example, even though the FDA first approved the use of naloxone to treat opioid overdose in 1971, the company manufacturing the drug raised the price from $1 to $150 for a two-pack of nasal spray in the mid-2010’s and charged $4,500 for an auto-injected version of the drug — putting it out of reach for people who needed it.33,34,35 Since then, opioid overdose deaths in the U.S. continued to rise each year, reaching 80,411 deaths in 2021.36 Time and time again, drug companies demonstrate that it is easier and more profitable for them to abuse patent law, limit competition, and raise prices rather than investing in new, innovative treatments that will help people live longer, healthier lives.37 High drug costs do not stop at the pharmacy counter Most people think of high drug costs as a problem when they are filling a prescription. But that is only part of the story. As drug companies continue to price gouge and drug prices go up, consumers are stuck with the bill in more ways than one. That is because drug companies set the list price for their drugs long before they are purchased by the consumer. These underlying prices are paid by insurance providers who in turn pass those high and rising costs along to families and employers in the form of higher insurance premiums. The problem of costs being pushed onto the consumer is particularly pronounced for the 174 million people with employer-sponsored insurance (ESI), because the premium and deductible structure in these private plans are particularly vulnerable to drug pricing increases as compared to the more standardized structure of Medicare or Medicaid.38,39,40 The increased prices charged by drug companies for their drugs become part of the costs analyzed by actuaries to establish updated health insurance premiums, and those increased premiums accrue to all people within an insurance pool, regardless of whether those enrollees take prescription drugs. Put simply, when a drug company abusively increases its prices, the amount insurance companies pay increases, and insurance premiums increase right along with them, for everyone, whether or not they take prescription drugs.41,42 In fact, almost 20% of health insurance premiums are driven by the rising cost of prescription drugs.43 These premium increases result in a cascade of negative impacts on health care affordability for employers and workers alike. In the past decade, health insurance premiums for those with private insurance rose faster than the rate of inflation and workers’ wages.44 From 2012 to 2022, the average premium for family coverage rose 42%, from $15,745 a year to $22,463 a year, and the average premium for an individual rose 40%, from $5,615 a year to $7,911 a year.45 In 2022, health insurance accounted for almost 8% of employee compensation, second only to wages and salary.46 As monthly premiums increase, wages rise more slowly because increased health care costs cause employers to spend more of their annual budgets on employee health care and less on employees’ take home pay.47 This problem is especially concerning for individuals who are already paid low wages and are then forced to contribute a disproportionately high percentage of their wages toward health insurance premiums.48 On top of increased health insurance premiums, high drug prices result in other increased health insurance-related costs in the form of deductibles, coinsurance, and copays — for prescription drugs and other health services alike. With 50% of out-of-pocket spending on medical care (including prescription drugs) experienced through deductibles, increasing deductibles leaves consumers paying more out-ofpocket and exposes more consumers to the full price of their prescription drugs and other health care services.49,50 In 2019, a Consumer Reports survey revealed that 30% of adults who take a prescription drug regularly experienced out-of-pocket cost increases from one year to the next, and 12% said those costs went up by $100 or more.51 The average deductible for covered workers in 2022 was $1,763 for single coverage, and just one year later, in 2023, that average had grown to $2,004.52,53 Increases to deductibles and premiums affect all people with health insurance, regardless of what kinds of care they are seeking, and when taken in combination with the stagnating effect on wages, it is clear that high and rising drugs costs are compounding families’ financial insecurity.54,55