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Host – Dan Keller
Hello, and welcome to Episode Ninety of Multiple Sclerosis Discovery, the podcast of the MS Discovery Forum. I’m Dan Keller.
Welcome to the weird world of the U.S. pharmaceutical market. A few outrageous cases of drug price gouging have made the headlines, but in multiple sclerosis, a more serious concern is the steady annual rise in cost of all disease-modifying therapies, or DMTs. So says Dr. Daniel Hartung, a researcher at the Oregon State University/Oregon Health and Science University College of Pharmacy. In a recent study, he found that MS drug prices over time outpaced both inflation and similar biologics. It’s not just the new drugs. As each more expensive DMT comes to market, the prices of older drugs also race to catch up. It’s affecting the drugs available to patients and causing other concerns.
Interviewer – Carol Morton
Can you tell me what questions you were asking and why?
Interviewee – Daniel Hartung
Sure. So the study that we did had its origin after having some conversations with some neurologists at OHSU about increasing frequency of seeing their patients facing larger and larger, not only cost sharing and copays from the insurance companies for drugs for MS, but also increasing restrictions, typically from insurance companies in kind of what medications they were supposed to take first prior to perhaps failing one, then going to another medication for MS. And so this is all kind of happening in the context of what they were seeing as just higher prices for some of these medications.
And so what we decided to do is…no one's really done this…is look at in a systematic way the trajectory of pricing for MS drugs, essentially since their approval until we went through the end of 2013. And to look at what the just general trend was, try to figure out if there were certain specific factors that were associated with higher prices over time, like the approval of newer agents, things like that. That was kind of the general objective of the study.
MSDF
And then how did you go about conducting this study? Is it hard to find that data?
Dr. Hartung
It can be. So I'm fortunate to have access to some data set that has longitudinal pricing data for pharmaceuticals for the past 30 years or so. And so from my perspective, it wasn't difficult. But essentially we used this data set that collected average wholesale price, as well as wholesale acquisition cost, so kind of the two usual, most common (I'll call them) sticker prices for drugs. And so this data set for all medications, it kind of tracked pricing of medications over time. And so that was the core data set for our analysis.
MSDF
And so you pulled the multiple sclerosis disease-modifying therapies out of that. How many did you look at?
Dr. Hartung
So in our study we looked at 11 medications for MS. They included the three what are typically called platform therapies that have been on the market for about 20 years now. Those include Avonex, Copaxone, and Betaseron, and just followed them through time, through the approval of several other new agents, like Tysabri. And then there's in the last five to six or seven years, the FDA has approved several agents that can be taken orally, Gilenya, Aubagio, and Tecfidera now. And there was a couple other kind of miscellaneous agents that were kind of variants of the interferons and things like that.
MSDF
And then what did you find?
Dr. Hartung
Well, there are several interesting things, but I think one of the most striking things is that the prices for the platform therapies, Avonex, Betaseron, and Copaxone, were pretty stable for at least 10 years from their approval in early to mid-90s. And then, essentially what we observed is that new agents that came on the market, starting with Rebif in about 2001, came out, and they were usually priced about 20% to 30% higher than the existing therapies. And what we observed is that when these new agents came out or approved, that these higher prices, the cost or the price of kind of the platform therapies quickly escalated to almost match the price of the newer agents that were approved. And this pattern kind of repeated itself and actually became more intense when the newer oral agents came on the market in the last five or six years.
So the cumulative effect of that is in the early 2000s, Copaxone, Betaseron, and Avonex were priced about $10,000 to $15,000 a year. And at the end of our study, all of the agents that are currently approved were priced between $50,000 and $60,000 per year. And so we tried to quantify kind of the rate of increase and compare that with other kind of benchmarks: inflation, prescription drug inflation. What we found is that the price increase for those agents was well above what you'd expect for not only just general inflation, but also prescription drug inflation.
MSDF
MS drugs, the cost of all of them, not just the new ones, are increasing at a rate higher than any other drug category?
Dr. Hartung
In addition to looking at kind of standard metrics of inflation, we compared the price increases for the platform therapies to what we considered kind of comparable biologics. So we looked at a class of medications called tumor necrosis factor inhibitors, which are used for immunologic conditions like rheumatoid arthritis. And what we found is that the price increases for the platform therapies for MS increased substantially and significantly above price increases for those medications for the tumor necrosis factor inhibitor. So from our study, from our perspective, prices increased higher than they did for these TNF inhibitors.
We haven't really compared them across other classes of drugs, but there are some new publications that have looked at price increases for other agents, such as in other classes like insulin, drugs for diabetes, and cancer agents as well. The numbers are slightly different, but the trajectories look pretty similar. So in the last, you know, 10 years, there's been almost it seems like a logarithmic increase in the price of many of these agents and classes.
MSDF
So is this a case of a system that has incentives that maybe aren't as well matched to patient needs as they should? What's going on here?
Dr. Hartung
I mean, that's a good question. Definitely there's a system. The market-based system for pharmaceuticals in the United States is incredibly dysfunctional in that it's very dissimilar from any other kind of consumer market for technology, phones, cars, things like that, where you typically see prices go down after a while. And you don't see that in health care or in drugs. You see just prices increase. And so there's a dysfunction that just kind of is core to the economics of health care.
And then I think there is an element of pharmaceutical industries pricing these agents essentially what the market will bear. Now my opinion is that a lot of the aggressive increases in price were initially seen with some of the cancer agents. And so I think that in that field there is a kind of pushing of the envelope for many anti-cancer drugs that's now has proliferated to other classes of drugs, including MS agents.
The other element that's kind of unclear and adds to the murkiness to this is that, you know, our study and other studies that have looked at what I'm calling pricing of the agents use average wholesale or WAC and with some sort of adjustments for rebates or discounts. So typically third party payers or pharmaceutical benefits managers will negotiate with pharmaceutical industry to lower the cost of the agent for the payer. But all that information is typically proprietary, and so it's really difficult to know what the actual cost of the medication is, unless you're paying cash. If you're paying cash, then the cost is going to be pretty close to the price that's set. So people who don't have insurance are paying the most, and the people with insurance, Medicaid, any sort of governmental insurance, they're paying typically AWP minus a certain proportion or WAC plus a proportion percentage essentially based on the rebate that they get.
So that adds a little bit of kind of uncertainty. Pharmaceutical industry may come back to say that, you know, we're giving pretty good discounts on certain medications in certain payers, but from the data we have and the pricing data, there's just been this aggressive increasing in prices. And we don't know if it's being mitigated by increasing rebates and discounts over time. So it's complicated.
MSDF
What do you hope people will do with this information? It does sound like a complicated system that's almost unapproachable for the individual patient or individual doctor. What can people start doing now? Where does the responsibility or responsibilities lie?
Dr. Hartung
You know, I think that the data we generated in our study has been useful for some of the advocacy groups in the multiple sclerosis community. So the National Multiple Sclerosis Society has been using it to try to, you know, advocate or perhaps political reforms or some other meaningful reforms in kind of how these things are reimbursed, things like that. Drug prices has been in the news quite a bit over the last several years, and now even more with the election season in full tilt. And so I think a lot of the candidates are talking about potential solutions to the issue.
From the patient's perspective, they're in a real quandary in a sense that even a sharp move with the Affordable Care Act to a lot of high deductible, high cost sharing plans where if your monthly cost of a MS agent is $5,000, you pay 20% of it until you hit your deductible. You know, that's $1,000 at the pharmacy, and that's a pretty big out-of-pocket cost that you face. So I think that there's some, you know, movement in the advocacy groups to try to…especially working with insurance companies to make sure that access is open because these medications are incredibly individualized. And there's not really good predictors of who will respond to each type of medication, and they're all different. Some of them are administered subcutaneously, intramuscularly, orals, and so there's some patient preferences that fall into play here as well as the price. And so I think there's been some movement and some discussion making sure that access to all the agents is relatively easy for patients.
But from a solutions to the pricing situation, you know, I think we're still kind of in discussion phases about what we can do as a country to kind of deal with this issue because it's not exclusive to the MS drugs.
MSDF
So what's next with you? Are you following up on this?
Dr. Hartung
So from our perspective, the group that I worked with, the two neurologists' project, we just submitted a grant, well, it was in January, that we hope to be competitive and hope to get that's looking at how these high drug prices actually affect patients in terms of their medication taking and potentially adverse outcomes because they're not taking their medication. Either they're hitting access restrictions from insurance companies or they just can't afford or have problems with the cost sharing or something like that, and so trying to quantify how this is affecting patients. And so from a research perspective, I think that's kind of our next move.
My colleagues, my two neurologist colleagues, they're really active in kind of speaking with representatives at the state about the issue, bringing it to increased visibility from our elected officials as well as making sure that the MS Society is aware of kind of the current status of the pricing trajectory. So we've been updating our graph that we published as new agents come online and things like that.
MSDF
Can you give us a couple of the updates you've made since the study?
Dr. Hartung
They haven't been dramatic, but there's been a couple new agents that have been approved. And I guess most notably is that the first generic drug for MS was approved, I believe, last April. So a generic for Copaxone came online. I think there's two manufacturers of it. When it came online, there was one. And so I think it was priced just modestly lower than the brand name Copaxone. But something interesting also just dealing with Copaxone, which is the number one MS drug in terms of sales, so when Copaxone lost its patents and lost its kind of patent disputes, in preparation for that, Teva released a different formulation of Copaxone.
So Copaxone is traditionally a daily injection. And so they released a three-times-a-week higher strength injection and basically switched everyone from the once-a-day to the three-times-a week 40-mg injection. And so I think a large proportion of patients who were originally on the once-daily Copaxone were switched to the 40-mg three-times-a-week Copaxone. So that really to some extent mitigated if there's any sort of savings due to this new generics in the field, kind of really mitigated any kind of savings due to the new generic as most people are now on the 40-mg three-times-a-week product. And the generic is not substitutable for the 40-mg three-times-a-week product. So that's a very common tactic in pharmaceutical industry approach to try to like sustain their franchise with a particular drug that's going off patent.
But the big questions are the ones that don't have a good answer. Essentially, what do patients do about this? What do we do as a society to deal with this issue? And you know, there's been proposals that have been put out by different elected officials and other folks about, you know, we should allow Medicare to aggressively and directly negotiate with pharmaceutical industry on price. We should allow importation of medications from other countries, similar industrialized countries like Canada. So the United States pays by far and away the highest prices than any other country in the world. And so many people think that we should be able to import these drugs that are the same drugs that are going to Canada into the United States. You know, some people suggest that there should be some sort of forms of price control. You know, maybe medications shouldn't be allowed to increase 10% a year or something like that.
And so all of these are being kind of discussed and played out and the pros and cons are weighed. And whenever you talk about limiting price increases, the usual response you get from industry is that any constraint on the amount of money that they're able to make and the profits that they're able to make for their shareholders is going to have some sort of effect on kind of future innovation potentially. Whether that comes to bear or not is unclear, but that's usually the number one response you get is that we need to have these high profits in place because it's an incredibly risky endeavor that we're doing. Only a very small proportion of drugs that are under development actually make it through the developmental process and are approved and make it to market. So any constraint on profits is going to have an effect in terms of future innovations and future breakthrough medications and things like that. Incentives are a big…they are real. And so that is something that needs to be weighed carefully in kind of any solution, essentially. I don't think it's the best solution, but just people are talking about a wide variety of things, I think.
MSDF
I appreciate your raising all these issues and going through the study. Is there anything else that I haven't asked that you wanted to add or emphasize as take-home lessons? Something to mitigate the rage, I don't know… [laughter]?
Dr. Hartung
Yeah, well I mean there's been a lot with all this, you know, the Valeant Pharmaceutical issue and the other company, Martin Shkreli guy who's castigated for increasing the price of this drug for toxoplasmosis by like 5,000% and buying the company and jacking up the price. That's a separate phenomenon of what is happening. But I think the outrage over that type of exploitation of the dysfunctional pharmaceutical market kind of masks and kind of hides the other issues that are happening on a consistent and aggressive basis in terms of just regular 6% to 10% increases in price on a year-to-year basis for drugs that a lot of people use, like drugs for diabetes or MS products, cancer agents, things like that. And so, you know, you have these really highly visible cases of really dramatic increases that are kind of morally outrageous. They draw your attention from the real and kind of moderate but aggressive and year in, year out, increases that are seen across the board in a lot of different agents. And that's where our focus should be essentially.
MSDF
That's helpful. Well, thank you so much.
Dr. Hartung
Yeah. My pleasure.
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MSDF
Thank you for listening to Episode Ninety of Multiple Sclerosis Discovery. This podcast was produced by the MS Discovery Forum, MSDF, the premier source of independent news and information on MS research. MSDF’s executive editor is Carol Cruzan Morton. Msdiscovery.org is part of the nonprofit Accelerated Cure Project for Multiple Sclerosis. Robert McBurney is our President and CEO, and Hollie Schmidt is Vice President of Scientific Operations.
Msdiscovery.org aims to focus attention on what is known and not yet known about the causes of MS and related conditions, their pathological mechanisms, and potential ways to intervene. By communicating this information in a way that builds bridges among different disciplines, we hope to open new routes toward significant clinical advances.
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For Multiple Sclerosis Discovery, I'm Dan Keller.