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Expiring Prescription Drug Patents Benefit Consumers

Medicine is getting cheaper. That may come as a surprise amid hand-wringing about the spiraling cost of health care, but two new studies, one from research company IMS Health and one from pharmacy benefit manager Express Scripts, show that the amount of money Americans spend on prescription drugs went down in 2012 for the first time in decades.
The reason for this welcome development is an influx of generic medications. Recently, the patents on a slew of blockbuster drugs — like Lipitor, which fights cholesterol, and Plavix, which prevents blood clots — have expired, paving the way for less expensive versions. The research behind a new drug is protected for a fixed number of years, after which competing firms can begin manufacturing generic forms.
In 2012, 84 percent of all prescriptions were dispensed as generics, the highest rate in history. It’s a boon for consumers.
These new studies also found the prices of specialty medicines are rising. These new drugs involve cutting edge technologies and can, therefore, be expensive, priced as they are to help inventors recoup their investments. Fearful of what the newest medicines may cost patients and insurers, some politicians have proposed measures aimed at forcing these prices down.
We shouldn’t fear the price tag of these new medicines. Expensive medicine may be a bitter pill, but these advanced therapies offer hope to millions of patients, keeping them healthier for longer. Lawmakers must continue to promote smart policies that encourage the research investments critical to invention.
We’re living in a golden age of drug development. New treatments for everything from cancer to rare genetic diseases are entering the market all the time, many of which are cutting-edge biologic medicines derived from living cells.
Biologics offer amazing promise. Consider their potential impact on cancer. Conventional cancer treatments often generate significant collateral damage to the patient. In contrast, the biologic approach injects a genetically engineered protein designed to knock out a tumor’s ability to produce new blood vessels, thereby cutting off its capacity to grow. No innocent tissue is harmed in the process. Such a biologic has already been approved for treating colorectal cancer.
Or consider a vaccine that, when injected directly into a tumor, would not only destroy the malignant cells but also stimulate the body’s immune system to go after similar tumor cells. That therapy for treating melanoma is already in the development pipeline, along with 906 other biologics targeting over 100 diseases from autoimmune disorders to viruses. There are currently 176 biologics in development to treat infectious diseases alone.
But the most specialized and complex drugs can come at an astronomical price. According to an exclusive Forbes’ survey of the most expensive medications, four biopharmaceuticals approved in 2012 cost more than $200,000 per year, per patient.
That’s because it costs on average, $1.2 billion dollars to bring a new drug to market — from the time it is a twinkle in a scientist’s eye, through a decade or more of lab research, to clinical trials and finally FDA approval. To put this in perspective, the entire cost of one of the greatest physics experiments of all time, the search for the Higgs boson — including building a super collider — would produce no more than 10 drugs.
The beauty of our system is that it encourages companies to make the massive investments of time and money required to bring a new drug to market. The biopharmaceutical industry’s legacy of risk-taking research has led to a world in which eight of every 10 medicines dispensed is generic.
And study after study proves these investments are paying off. Innovative therapies, though costly, are far more effective. By treating patients faster and keeping them well, advanced pharmaceuticals lower health care costs elsewhere.
For example, researchers are working to develop a medicine to delay the onset of Alzheimer’s — the sixth leading cause of death in the United States. Such a breakthrough therapy could reduce the cost of care for Alzheimer’s patients in 2050 by $447 billion.
Our children and grandchildren will grow up to marvel at the biologic revolution, just as an earlier generation marveled at the space race. But that can only happen if we accept the reality that innovation comes at a high price.
Pitts, a former FDA associate commissioner, is president of the Center for Medicine in the Public Interest.

Tyrone Squires, MBA, CPBS

I am the proud founder and managing director of TransparentRx, a fiduciary-model PBM based in Las Vegas, Nevada. We help health plan sponsors reduce pharmacy spend, by as much as 50%, without cutting benefits or shifting costs to employees.

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