Editorial: Drugmakers need to show costs behind drug prices

By The Herald Editorial Board

There is no shortage of outrageous examples of medication price hikes by pharmaceutical companies.

Take your pick (and swallow with a full glass of water): “Pharma Bro” Martin Shkrelli, who jacked the price of a drug used to treat patients with malaria and HIV by 5,000 percent; Mylan, which raised the price of its EpiPen auto-injector for life-threatening allergy attacks to $365 for a generic drug that normally costs a dollar a dose; and more recently drugmaker Kaleo, which has increased the price for a two-pack of its “talking” Naloxone auto-injector — used to halt opioid overdoses — from $690 in 2014 to $4,500 today.

Particularly suspicious was the timing of Kaleo’s latest increase for its Evzio device, which uses recorded instructions to guide anyone to deliver a measured dose of Naloxone to someone who has overdosed. The increase followed Congress’ passage last year of the Comprehensive Addiction and Recovery Act, which sought to increase the availability of the emergency drug, especially for rural communities, and provided $1 billion in federal grants to state and local governments to fight the opioid and heroin epidemic.

Senators, including Sen. Maria Cantwell, D-Washington, wrote Kaleo in early February, calling the increase “beyond exploitative.”

After each outrage, drugmakers typically provide vague justifications about the costs of research and development and make token offers of price discount programs, but there’s been little in the way of satisfying explanation for the rising cost of medications, many of them substantial if not as forehead-slapping infuriating as the examples above.

Among widely used drugs that have seen marked increases in costs include insulin, the antibiotic erythromycin and the antidepressant clomipramine HCL. A report by the U.S. Government Accountability Office last year found that a group of 315 generic drugs covered by Medicare Part D saw increases of at least 100 percent between 2010 to 2015, and some increased by 1,000 percent or more.

Recent legislation in the U.S. Senate and in the Washington Legislature may eventually shine a brighter light on pricing practices.

Last year, U.S. Sen. John McCain, R-Arizona, introduced the Fair Drug Pricing Act, which would require drugmakers who increase the price of a drug by more than 10 percent over the course of a year to disclose information behind the decision to the public, including what was spent on research and development, as well as advertising and marketing. The bill did not advance further than the committee stage, last year.

This year, Rep. June Robinson, D-Everett, and others have sponsored HB 1541, which would seek even more detail from pharmaceutical companies. The bill would direct the state Office of Financial Management to hire a contractor to collect and release information from drugmakers and release it to the public and lawmakers.

Cost and other data would be collected for the 25 most frequently prescribed medications, the 25 costliest prescription drugs and the 25 drugs with the highest annual increase. And 60 days before they intend to increase the price of a particular drug, drugmakers would be required to submit information on the drug’s pricing history for the last five years, the financial assistance provided by companies to consumers through rebates and coupons, and an economic justification for the price increase. That information would be required for drugs set to increase by 10 percent over a 12-month period or 25 percent over a 36-month period.

Pharmaceutical companies are correct that research and development have driven innovation in new medications, devices and treatments, but a lack of transparency that obscures the reasons for price increases fuels the public’s suspicion and resentment.

The information that the federal and state legislation seeks would allow the public, governments, health care providers and the health care insurance industry some clarity on costs and better leverage for negotiating fair prices for medications.

It might also reveal costs that many consumers, who only see their $10 to $30 co-pay, normally don’t realize until their insurance premiums are increased.

There’s a balance to be struck between allowing pharmaceutical companies the capital they need to continue research and development and providing safe and affordable medications that can save lives and keep people healthy.

A little more light on the actual costs involved will help.

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