When Martin Shkreli’s Turing Pharmaceuticals hiked the price of its anti-parasitic drug to $750 a pill, there was public outcry. So Turing and its backers resorted to a talking point employed across the drug industry: That was the list price. Nobody actually pays that.Forgive the confusion. Even for people whose job requires them to know this stuff, drug pricing is hopelessly complex. That helps explain why, for all the debate over drug costs these days, there’s surprisingly little detail about what anybody actually is paying for prescription medicines.“We have list prices, wholesale prices, average wholesale prices, rebates, supplemental rebates, mark-ups, outpatient vs. inpatient, formularies, patent expirations,” Andy Slavitt, acting administrator at the federal Centers for Medicare and Medicaid Services, said at a forum in Washington last month. “Most of that information is not available or well understood by the public.”advertisement Under siege over prices, drug makers ready their counterpunch Tags drug pricespharmaceutical industryprescription drugs BusinessInside the impossibly byzantine world of prescription drug prices The system of determining prescription drug prices is hopelessly complex and little understood by the public. Andreas Rentz/Getty Images By Dylan Scott Dec. 21, 2015 Reprints This all raises the question: Just what the heck is the point of the list price anyway? Related: The short answer is that the list price is a drug company’s opening bid in negotiations with the insurance plans, government programs, and health care providers that purchase its medicines.advertisement Related: Drug makers and insurers, longtime rivals, eye an alliance on prices But the reality of drug prices can be almost impossible to understand.For starters, the negotiations between health plans and pharmacy-benefits managers or health plans that take a list price down to its actual cost are totally hidden from public view. Even their outcome, the final price paid, often isn’t known.“It emerges in a completely different form, and most of us can’t see what’s happening inside this black hole,” said Dr. Walid Gellad, a University of Pittsburgh professor who studies drug prescribing. “It’s impossible to understand what people are really paying.”That means that a drug’s real cost — the elusive lower price that drug makers love to cite as proof that list prices are misleading — is not typically public.Some aggregate estimates have been made to understand the difference between list prices and net prices. An IMS Health analysis released last month estimated that while list prices increased on average by 13.5 percent in 2014, the net price increase was 5.5 percent.That would seem to back up the drug industry’s position — but that analysis was based in part on proprietary information not available to the public. And even so, according to a new Bloomberg analysis, the United States still pays more for drugs than other countries once those discounts are accounted for.Equally frustrating for those who track the issue is that it’s hard to know exactly how a drug maker goes about setting a list price in the first place.“Right now, it’s a black box,” said Dan Ollendorf, chief review officer at the Institute for Clinical and Economic Review. “There’s really no inkling to the general public about what the ingredients of that soup that make up the price that’s set.”Read more: Anger over drug prices driving support for Democrats’ ideasThe exact equation is unknown, but some of the variables are obvious, said Khedkar, the consulting executive.The big one: competition. Drug makers consider other drugs that are already on the market or coming soon. Then they look at the market control of the various payers they’re working with. Medicaid is a not-for-profit venture; health insurance plans are. They require different approaches.Lastly, what are the long-term projections for the drug? A medicine usually starts with a limited number of uses, but over time, its so-called “off-label” indications expand. So down the road, the price might go down, but if the drug is going to be prescribed to more people for more purposes, that is another factor a drug maker may take into account.A recent investigation by the Senate Finance Committee into the pricing of Gilead’s hepatitis C drug, Solvaldi, is one of the few times that a drug company’s thinking behind a list price has been documented in such detail.Gilead executives weighed whether the expanding Medicaid population under the Affordable Care Act and more baby boomers joining Medicare should factor into its pricing strategy because the required discounts for the government programs tend to drive actual prices paid down.They also looked at the discounts previously given to private payers for prior hepatitis C treatments and considered what the Solvaldi price would mean for future medicines. A second-wave drug, Harvoni, was in the works, and Gilead knew that the Solvadi price would determine what the company could charge for its follow-up.Gilead also considered whether to contract with health plans, and a big part of that equation was the plans’ market share. Plans with large control of their markets were the ones who could block Solvaldi because of its high price. In its final round of pricing discussions, the report said, the company sought the maximum price it could set without risking that a substantial number of payers or physicians would not take to the drug.“This presentation shows that Gilead set a price as high as it thought acceptable before significant access restrictions would be imposed,” the report said.The final price? $84,000. “The list price helps establish that initial starting point,” said Pratap Khedkar, a top executive at ZS Associates, a consulting firm that advises drug companies. “If you’ll never let me increase the price in the future, I’ll start high and I’ll drop as much as I need to.”In other words, the list price is not dissimilar from sticker prices on new cars, as another expert put it to STAT.The actual price is driven down as health plans and pharmacy-benefits managers negotiate with drug makers. Government programs like Medicare and Medicaid also have built-in discounts that pharma companies must honor if they want those customers.Despite all of that, the list price is what usually drives headlines.“I think there’s oftentimes a perception issue when it’s looked at just as list-price increases,” Lori Reilly, a top official at the Pharmaceutical Research and Manufacturers of America, the pharmaceutical industry’s Washington lobby, told STAT earlier this year. “The perception and reality aren’t necessarily aligned on some of these issues.”
FDA issues sweeping regulations for e-cigarettes for first time [email protected] First OpinionCould changes to a global tobacco treaty harm health? With mixed progress, nations review war versus the tobacco industry The Royal College of Physicians of London, relying on toxicological studies, has estimated that the health risks of electronic cigarettes are “unlikely to exceed 5 percent of those associated with smoked tobacco products, and may well be substantially lower than this figure.” Electronic cigarettes don’t burn tobacco, so they don’t produce carcinogenic tar and other toxic products of combustion. Sally Satel Faced with these dueling reports, what should delegates at the FCTC meeting actually do? Here are six pieces of advice:First, delegates should read the conflicting reports and decide for themselves based on evidence, not on politics or ideology. The WHO should be at least as concerned with squandering a tangible opportunity to save lives through safer alternatives to smoking as it is with controlling hypothetical risks.Second, the treaty should not be changed unless and until more of the controversy is resolved at the country level. This means that the FCTC should call for more research and a more professional assessment of the evidence. So far, the WHO has failed to provide any meaningful assessment of the risks and opportunities of electronic cigarettes in comparison with tobacco cigarettes.Third, the WHO should stop endorsing outright bans on the sale and manufacture of electronic cigarettes in its member countries. How can it make sense, ethically or scientifically, to ban a safer alternative when the dangerous product, tobacco cigarettes, is available everywhere?Fourth, the FCTC should go back to public health basics and recognize that the role of government is to help citizens make informed choices in their own interests. This means giving people access to all the possible options to control their health risks, along with high-quality information to help them decide what is best for them. Instead, the alarmist rhetoric emanating from the WHO and some anti-tobacco activists is creating a climate of fear and confusion that will leave smokers sticking with the devil they know rather than trying something new and much safer. The opening shots have been fired already. Officials at the WHO published a literature review of electronic cigarettes in August. Late last month, an expert group at the UK Center for Tobacco and Alcohol Studies published a detailed and damning critique of the WHO’s work. It argued that the WHO “fails to accurately present what is already known about e-cigarettes … it positions e-cigarettes as a threat rather than an opportunity to reduce smoking.”advertisement Justin Sullivan/Getty Images @Clive_Bates Related: @slsatel [email protected] Clive Bates By Clive Bates and Sally Satel Nov. 8, 2016 Reprints Related: Tags e-cigarettessmokingtobacco It’s hard to believe that a global public health treaty dedicated to stopping smoking — and saving millions of lives in the process — could lead to more unnecessary disease and premature death. But that’s what may happen if the World Health Organization has its way.This week, India is hosting a major meeting focusing on the WHO’s Framework Convention on Tobacco Control (FCTC), a landmark 2003 global treaty on tobacco control. The most controversial issue under discussion will be the treatment of electronic cigarettes.The debate could not be more polarized. On one side, the WHO has taken a relentlessly hostile approach to electronic cigarettes, seeing them as a threat to individual and public health. On the other side, a large group of experts in nicotine science and policy point out that using electronic cigarettes is much less risky than smoking tobacco cigarettes, and the new products provide an opportunity to reduce smoking and related diseases.advertisement Fifth, the FCTC meetings must be more diverse and inclusive. In the guise of excluding the tobacco industry, the WHO and FCTC have excluded just about everyone who may disagree with their approach. This includes smokers and vapers, and the many electronic cigarette businesses that have never had anything to do with the grim history of Big Tobacco. Strikingly, the opposite approach has been taken with other UN initiatives such HIV/AIDS, where the slogan “nothing about us without us” hangs over the convention meetings.Sixth, the WHO and the FCTC should focus on their obligation to “first do no harm” by avoiding misguided interventions into this new market. Almost any regulation of electronic cigarettes has the potential to backfire if it causes vapers to return to smoking tobacco cigarettes or never switching away from them in the first place.Regulations that make electronic cigarettes less accessible, less palatable, more expensive, less consumer friendly, and less satisfying, or that slow down innovation, will tilt the market back in favor of tobacco cigarettes. If that happens, the result will be more cancer, heart, and lung disease, and premature deaths.We hope the FCTC delegates have a successful and productive meeting. But we urge them to carefully consider all the options, because lives are at stake. Making unwise and premature decisions about e-cigarettes could add to the burden of ill health instead of reducing it.Clive Bates is a public heath commentator and former head of Action on Smoking and Health in the United Kingdom. Sally Satel, MD, is a resident scholar at the American Enterprise Institute. About the Authors Reprints
STAT+ is STAT’s premium subscription service for in-depth biotech, pharma, policy, and life science coverage and analysis. Our award-winning team covers news on Wall Street, policy developments in Washington, early science breakthroughs and clinical trial results, and health care disruption in Silicon Valley and beyond. Kansas lawmakers fail to override veto of Medicaid expansion GET STARTED Unlock this article by subscribing to STAT+ and enjoy your first 30 days free! GET STARTED TOPEKA, Kan. — Kansas won’t be extending its health coverage to thousands of poor adults under former President Barack Obama’s signature health care law after Democrats and moderate Republicans failed Monday to override conservative GOP Gov. Sam Brownback’s veto of an expansion bill.The state House voted 81-44 to override Brownback’s veto of the measure, which would have expanded the state’s Medicaid program to cover as many as 180,000 additional adults. But supporters of the bill needed three more votes, or 84 in the 125-member chamber, for the two-thirds majority necessary to overturn the governor’s action. Log In | Learn More Kansas Gov. Sam Brownback vetoed a bill that would have expanded the state’s Medicaid program. Orlin Wagner/AP What is it? What’s included? By Associated Press April 3, 2017 Reprints Associated Press Politics About the Author Reprints Daily reporting and analysis The most comprehensive industry coverage from a powerhouse team of reporters Subscriber-only newsletters Daily newsletters to brief you on the most important industry news of the day STAT+ Conversations Weekly opportunities to engage with our reporters and leading industry experts in live video conversations Exclusive industry events Premium access to subscriber-only networking events around the country The best reporters in the industry The most trusted and well-connected newsroom in the health care industry And much more Exclusive interviews with industry leaders, profiles, and premium tools, like our CRISPR Trackr. Tags Medicaidpolicy
Unlock this article — plus daily coverage and analysis of the pharma industry — by subscribing to STAT+. First 30 days free. GET STARTED Good morning, everyone, and how are you today? We are just fine, thank you, since a shiny sun and delicious breeze are enveloping the Pharmalot campus. We hope things are just as delightful wherever you may be. Now, though, the time has come to get cracking. Before we continue, however, we would like to note that we will break for a couple of days in observance of ancient traditions. But we will be back before you can say Jack Robinson, or Donald Trump, or how about Bernie Sanders? Well, whatever. Best of luck during the rest of the week and see you soon …The U.K.’s National Institute for Health and Care Excellence recommended the Opdivo immunotherapy as a second-line treatment for some forms of lung cancer after Bristol-Myers Squibb (BMY) agreed to discount the price, Pharmaphorum explains. The arrangement comes a year after the cost-effectiveness watchdog initially offered to recommend coverage only for about one-third of the 1,300 eligible patients. What is it? Pharmalot Columnist, Senior Writer Ed covers the pharmaceutical industry. GET STARTED @Pharmalot Alex Hogan/STAT Log In | Learn More [email protected] What’s included? STAT+ is STAT’s premium subscription service for in-depth biotech, pharma, policy, and life science coverage and analysis. Our award-winning team covers news on Wall Street, policy developments in Washington, early science breakthroughs and clinical trial results, and health care disruption in Silicon Valley and beyond. Pharmalot By Ed Silverman Sept. 20, 2017 Reprints Ed Silverman Daily reporting and analysis The most comprehensive industry coverage from a powerhouse team of reporters Subscriber-only newsletters Daily newsletters to brief you on the most important industry news of the day STAT+ Conversations Weekly opportunities to engage with our reporters and leading industry experts in live video conversations Exclusive industry events Premium access to subscriber-only networking events around the country The best reporters in the industry The most trusted and well-connected newsroom in the health care industry And much more Exclusive interviews with industry leaders, profiles, and premium tools, like our CRISPR Trackr. About the Author Reprints Pharmalittle: Alnylam gets a big clinical trial win; states expand their opioid probes Tags opioidspharmaceuticalspharmalittleSTAT+
STAT+ is STAT’s premium subscription service for in-depth biotech, pharma, policy, and life science coverage and analysis. Our award-winning team covers news on Wall Street, policy developments in Washington, early science breakthroughs and clinical trial results, and health care disruption in Silicon Valley and beyond. [email protected] Daily reporting and analysis The most comprehensive industry coverage from a powerhouse team of reporters Subscriber-only newsletters Daily newsletters to brief you on the most important industry news of the day STAT+ Conversations Weekly opportunities to engage with our reporters and leading industry experts in live video conversations Exclusive industry events Premium access to subscriber-only networking events around the country The best reporters in the industry The most trusted and well-connected newsroom in the health care industry And much more Exclusive interviews with industry leaders, profiles, and premium tools, like our CRISPR Trackr. Alex Hogan/STAT Log In | Learn More @DrewQJoseph GET STARTED Pharmalot Greetings, everyone, and welcome to Friday. Andrew Joseph here filling in for Pharmalot himself, and doing our best to channel the man, the myth, the legend. As we turn our sights to the weekend, we dream of prescription-free naps, simmering pots of soup, and relaxing quaffs of both the stimulatory and adult varieties. But for now, there’s news to catch up on. Many of you are kicking back after basking in the annual biopharma bacchanalia in San Francisco, but don’t forget those of us still burning the oil on this final day of the week. (Programming note: Pharmalittle will be off for the Monday holiday and will return Tuesday.)A plan in India to fight high drug prices is facing blowback from the country’s pharmaceutical industry, Bloomberg informs us. That’s left the Draft Pharmaceutical Policy, which was announced last summer, in limbo. The country’s Department of Pharmaceuticals was supposed to revise the proposal, but now it’s no longer expected to in the current government term. About the Author Reprints Unlock this article by subscribing to STAT+ and enjoy your first 30 days free! GET STARTED Tags drug pricinglegalopioidspharmalittleSTAT+ Pharmalittle: Drug-pricing plan stalls in India; pay cuts for Teva’s board Andrew Joseph General Assignment Reporter Andrew covers a range of topics, from addiction to public health to genetics. By Andrew Joseph Jan. 12, 2018 Reprints What is it? What’s included?
Politics WASHINGTON — Two high-ranking lawmakers on the Senate committee that crafts legislation about health and oversees public health agencies disclosed that they or their families traded in tobacco company stock while they were on the committee, according to a STAT review.Sen. Orrin Hatch (R-Utah) reported purchasing at least $15,000 worth of stock in Philip Morris International. Sen. Patty Murray’s (D-Wash.) husband, meanwhile, owned an account whose manager bought and sold about $1,000 worth of stock in Reynolds American while Murray was the top Democrat on the Committee on Health, Education, Labor, and Pensions. Log In | Learn More What is it? Tags Congresspolicy STAT+ is STAT’s premium subscription service for in-depth biotech, pharma, policy, and life science coverage and analysis. Our award-winning team covers news on Wall Street, policy developments in Washington, early science breakthroughs and clinical trial results, and health care disruption in Silicon Valley and beyond. By Ike Swetlitz Feb. 5, 2018 Reprints What’s included? GET STARTED Senators traded in tobacco stocks while sitting on health committee Daily reporting and analysis The most comprehensive industry coverage from a powerhouse team of reporters Subscriber-only newsletters Daily newsletters to brief you on the most important industry news of the day STAT+ Conversations Weekly opportunities to engage with our reporters and leading industry experts in live video conversations Exclusive industry events Premium access to subscriber-only networking events around the country The best reporters in the industry The most trusted and well-connected newsroom in the health care industry And much more Exclusive interviews with industry leaders, profiles, and premium tools, like our CRISPR Trackr. Yasser Al-Zayyat/AFP/Getty Images Unlock this article by subscribing to STAT+ and enjoy your first 30 days free! GET STARTED
About the Author Reprints By Ed Silverman March 28, 2018 Reprints STAT+ is STAT’s premium subscription service for in-depth biotech, pharma, policy, and life science coverage and analysis. Our award-winning team covers news on Wall Street, policy developments in Washington, early science breakthroughs and clinical trial results, and health care disruption in Silicon Valley and beyond. After years of skirmishes, the most comprehensive statewide drug take-back program in the nation became law late last week in Washington, potentially creating a new template for states to press the pharmaceutical industry to underwrite these efforts.The Washington law requires drug makers to fully finance and operate the program, which is designed to lower the threat of drug abuse stemming from medicines that linger in households and also reduce contamination in drinking water. Tags opioidspharmaceuticalsSTAT+ [email protected] GET STARTED What is it? Pharmalot Columnist, Senior Writer Ed covers the pharmaceutical industry. Washington state has the first comprehensive drug take-back program. Which state will be next? Unlock this article by subscribing to STAT+ and enjoy your first 30 days free! GET STARTED Pharmalot Ed Silverman Daily reporting and analysis The most comprehensive industry coverage from a powerhouse team of reporters Subscriber-only newsletters Daily newsletters to brief you on the most important industry news of the day STAT+ Conversations Weekly opportunities to engage with our reporters and leading industry experts in live video conversations Exclusive industry events Premium access to subscriber-only networking events around the country The best reporters in the industry The most trusted and well-connected newsroom in the health care industry And much more Exclusive interviews with industry leaders, profiles, and premium tools, like our CRISPR Trackr. Keith Srakocic/AP Log In | Learn More @Pharmalot What’s included?