Drug research continues to churn out new advances, some that are potential cures. But even though more than $800 billion a year is spent on pharmaceuticals, many Americans either don’t get the medicines they need or for various reasons, they can’t.
“A quarter to a third of adults skip or ration their medications because of the cost of medications, which we find unacceptable,” said Jay Rughani, partner at Andreesen Horowitz. “And this is increasingly putting pricing pressures on the demand side, on the employer side, and on the payer side, and on the government side of how we’re thinking about making these medicines affordable.”
Rughani’s comments came as moderator of a drug costs panel during MedCity News’ Bullseye conference in Chicago on Thursday. The panelists were Tanvi Patel, VP and GM, Amazon Pharmacy, AJ Loiacono, CEO of Judi Health, and Annie Collins, chief commercial officer Aradigm Health.
There are plenty of friction points that keep make medicines less accessible, Patel said. In Amazon’s hometown of Seattle, the city’s downtown is considered a pharmacy desert. A consumer might have to drive 10 miles and carve out an hour of time just to pick up a prescription. That inconvenience leads many people to just not take their medications, Patel said. Another friction point is lack of price transparency. Consumers do not know how much they will need to pay before they reach the pharmacy.
The lack of price transparency is by design, Loiacono said. When people don’t understand the appropriate price, they overpay. He described the complexity of drug pricing as a game of tug-of-war between drug manufacturers and payers. Loiacono pointed out that the largest payer is the U.S. government, which has different pricing across the 340B program, Medicare and Medicaid, the Department of Defense, and the Veterans Administration
“If the federal government can’t get one price for a drug, what chance does the average employer, what chance does a small employer have, like Doug’s Towing or Patty’s Plumbing,” Loiacono said. “They have zero chance, and oftentimes they are the ones that are being absolutely abused under this system. And to go further on that point, the people that suffer the most are the elderly and the poor under this model.”
Just as Amazon seeks to increase pricing transparency in retail goods, the company also tries to improve pricing transparency for medicines, Patel said. If there is choice, companies are then incentivized to provide a better offer and a better experience to win over consumers. For certain prescription drugs, patients are getting some level of choice and transparency through new direct-to-patient channels, such as Eli Lilly’s LillyDirect. Amazon powers some of these platforms by becoming a dispensing pharmacy option.
Amazon is also part of TrumpRx, a website established by the Trump administration that lists prices for select generic products and limited number of branded medications. But Patel noted that TrumpRx shows cash prices for products, and fewer than 10% of American pay for their medications in cash.
Collins said there is complexity in every part of the system including some of the most expensive medicines available. Aradigm operates a benefits platform for cell and gene therapies, treatments that offer curative potential. Price transparency and choice are not considerations for many of these treatments, Collins said. Cell and gene therapies are covered under medical rather than pharmacy benefits.
“These are drugs that are administered by doctors and, for the most part, actually procured by doctors as well, and you’re not going to a pharmacy to pick up your medical benefit drugs,” Collins said. “So yes, you can pick your doctor, but from there, it’s mostly providers and payers kind of having a little bit of a battle in the background.”
In some cases, the a doctor’s therapy selection can be surprising. As an example, Collins pointed to Casgevy, a Vertex Pharmaceuticals gene therapy for sickle cell disease. Casgevy competes with Lyfgenia from Gentix Biotherapeutics. While Casvey’s clinical data show better outcomes and this product costs $900,000 less, many doctors choose Lyfgenia. Collins said that in cell and gene therapy, doctors choose what they were used to administering when they were investigators in a therapy’s clinical trials.
“The science is making unbelievable leaps and bounds in terms of what we can deliver to patients, but when it actually comes to paying for these things and supporting the patients in the way that they need to get these therapies, that’s, where we have the biggest gap today,” Collins said.
Collins said there’s about 2,000 cell and gene therapies in development today. Many of the diseases they target currently have no other available treatments. But Collins questioned the sustainability of list prices in the millions of dollars. She said pharmaceutical companies need to come to the table to talk about pricing before these drugs launch, not after.
Photo: grThirteen, Getty Images
