Can Drug Companies Be Shamed into Limiting Price Hikes?

WASHINGTON, D.C. — The skyrocketing cost of drugs and political threats to the federal 340B Drug Pricing Program have emerged as a common concern at this week’s annual meeting of the American Hospital Association.

As I reported in this space Monday, safety net hospitals consider the federal 340B Drug Pricing Program “mission critical” and fervently hope the program does not fall victim to the intense lobbying now taking place by the pharmaceutical industry among federal and state lawmakers.

Representatives of Ascension Health yesterday echoed those sentiments in an interview between sessions at the AHA meeting.

“The loss of [340B] funding would be very dangerous,” said Peter M. Leibold, Ascension’s chief advocacy officer, noting that restricting the program would threaten access to medications and care for some of America’s neediest patients.

Mary Ella Payne, senior vice president of policy and system legislative leadership, said the organization has produced case studies of all Ascension hospitals participating in the 340B program to demonstrate its value and to be transparent about how the hospitals use the savings to enhance patient care. “We have an obligation to be transparent, and we are,” she said.

As an example of its value, Payne noted that 340B allows Ascension to provide chemotherapy infusions to rural cancer patients close to their homes, averting their need to travel long distances. Without 340B, that probably would not be viable.

The program has become even more essential as the prices of pharmaceuticals surge, advocates say. “Drug pricing increases have been enormous in the last year, and it’s really hurting,” Leibold told me, pointing out that “these are everyday drugs, not just specialty drugs.”

Ascension’s size has not convinced pharmaceutical companies to hold back prices. “Here we are, the largest system in the country, and we can’t negotiate,” Payne said.

Recent reports in the Wall Street Journal, New York Times and elsewhere have drawn broad attention to the pricing issue. Governing magazine yesterday in its online health report noted, for instance, that the hepatitis C drug Sovaldi costs $1,000 per pill, amounting to $84,000 for a 12-week treatment, “which disproportionately plagues poor people on Medicaid.” Nearly every state has limited Medicaid patient access to Sovaldi to only the sickest.

Critics say most of the price increases appear to be arbitrary and some have happened virtually overnight, even for medications that have been available for some time. They’re demanding more transparency from the drug industry. An editorial in yesterday’s New York Times speculated that disclosures on investment and profit “might shame [drug] companies into restraining their price increases and provide state officials with information to determine what action to take.”

Legislation has been introduced in five states that would require manufacturers to file annual reports for their most expensive products that reveal all their costs, from research to development to marketing, as well as profits and price increases, Governing reported. That’s something the pharmaceutical industry has lobbied hard against and, as Governing’s headline bluntly noted: “In state’s fight for price transparency, drugmakers are winning.”