Plenty of blame to go around on high drug prices

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MURRAY, Utah — Nick DeNunzio calls himself a “Utah boy”, as he was born and raised in the state. Like most diabetics in the United States, he spends thousands of dollars a year on his medical care and to buy the two life-saving insulins Toujeo and Novalog.

“The scariest part about being a diabetic is walking into the pharmacy and [thinking] how much is this going to cost me this time? Is my coupon still good? Is the coupon not good? Is this medicine that I’ve been taking for the past two years and costing me $25 a month because of the coupon–all of a sudden now I don’t have any more coupons–and now it calls $400 a month,” DeNunzio says.

DeNunzio has gone to Canada and Mexico to fill his prescriptions before, however, local pharmacists have also helped find him coupons to reduce the cost of his prescriptions.

But what DeNunzio and other Americans pay at the pharmacy counter is only part of the story.

Medicare, one of the largest purchasers of prescriptions in the country, has to pay for certain drugs regardless of price. This, in turn, drives up the cost of these medications for everyone.

There are also companies called Pharmacy Benefit Managers (PBMs). They negotiate prices between manufacturers and pharmacies. But pharmacists have accused them of overcharging pharmacies and pocketing the difference, something the PBMs deny.

Dr. Rena Conti from Boston University says PBMs have helped keep prices for generics low. Brand name or newer drugs, however, are a different story.

“Their business model is predicated in part on buying low and selling high. They don’t necessarily face the strongest incentive to pass off those discounts and rebates that they get to patients at the pharmacy counter,” Conti says.

That’s something John Hansen from Taylorsville found out when a billing company affiliated with a PBM charged his insurance 10 times the normal rate for the medications he needed. Hansen had been hit by a drunk driver and discovered the charges as part of a court case.

The pharmacy he went to was paid about $3 for each medication while the billing company made more than $100 per prescription.

“It was a guaranteed amount that shows how certain companies will insert themselves for maximum profitability not maximum benefit,” Hansen says.

Hospitals, insurance companies, and sometimes pharmacies buy low and sell high as well.

For example, Walgreens had profits of over $4 billion in 2018, mostly from filling prescriptions. In its defense, Walgreens says 97% of prescriptions filled there, “are paid for using some form of insurance coverage or savings program.”

The biggest question for many people is why insulin prices are so high since it’s an off-patent drug with several choices.

Insulin manufacturers have been sued for colluding, as some brands have raised their prices by similar amounts several times since 2008.

Whether that’s true or not, there is another issue. Because of a law passed in 2010, the FDA has until March of this year to approve any new generics for insulin. If they do not, companies will have to reapply to get their medication approved. And it usually takes about a decade for a new drug–even one that’s a low cost, life-saving alternative–to legally come to market.

In 2019 and 2020, the FDA approved a pair of generic Insulins. But they are manufactured by Novo Nordisk and Eli Lilly, some of the companies accused of colluding on prices. Some patients and pharmacies have also been reporting shortages or been taking the companies to task for not promoting the generic forms, something the companies deny.