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Aug 2016

The Country’s Legal Drug-Pricing War Fueled by Dependence

If you grew up in the ‘70s, you probably loved the sitcom “Welcome Back Kotter.” On the show, John Travolta portrayed a dim-witted Romeo named Vinnie Barbarino. When challenged to imitate a drug addict, Barbarino nailed what America had become and remains to this day.

“Gimme drugs,” a hunched-over Barbarino said, as his hands begged for pills. “Gimme drugs. Gimme drugs.”

Our country’s dependence on pharmaceutical drugs fuels the battle between drug companies and insurers. Pharmaceutical companies are trying to make as much money as possible, while health insurers are working to drive down or flat-line drug prices. Caught squarely in the crossfire is Joe Consumer, whose wallet and/or time is feeling the pinch.

The war has escalated as insurers are threatening to kick drugs off their approved medications lists if the pharmaceutical manufacturers refuse to give them significant discounts.

CVS Caremark and Express Scripts, the country’s largest prescription insurers, released their 2017 lists of approved drugs this summer. Each insurer also has a long list of excluded medications. A couple of the drugs excluded are prescribed to treat diabetes and hepatitis. According to a Los Angeles Times story, the CVS list, “also excludes some cancer drugs, along with Proventil and Ventolin, commonly prescribed brands of asthma inhalers, while Express Scripts has dropped Orencia, a drug for rheumatoid arthritis.”

These exclusions are going to take consumers by surprise when they reach their pharmacy counter. The consumer has only two alternatives: pay the large fee to the pharmacist or attempt to appeal the decision in a process that is long and tiresome.

CVS currently lists roughly 130 drugs on their will-not-cover list. Express Scripts lists 85 and has a policy against banning cancer drugs or mental health medications.

So why do no-pay lists even exist? Because the threat of kicking drugs off their covered lists is a tactic insurers use to drive discounts. The practice is so new that Express Scripts and CVS have only used their lists this way since 2012. Both claim they’ve already extracted huge savings for their customers (the health insurance companies and private corporations who hire them to manage their prescription drug plans).

CVS said its lists will save customers $9 billion over the next five years. The company specifically targets drugs with prices that have more than tripled in the last three years. These drugs include three skin creams that combine an over-the-counter ingredient with a generic prescription drug to make a new and expensive brand-name medication.

It should be noted that CVS is a big gorilla in the war. The company manages prescription coverage for roughly 75 million people in the U.S. For the first time, in 2017, it is dropping two so-called biologic drugs (diabetes drug Lantus as well as Neupogen, a chemotherapy medicine to help boost white blood cells and immunity). Instead, CVS is paying for alternatives known as biosimilars, which are not exact equivalents of the medications they replace.

In the price war, that is just part of the strategy of exclusionary lists – pitting brand-name drugs that treat the same condition against each other, rather than waiting for generic drugs to come on the market to drive prices down.

The other big gorilla, Express Scripts, covers a staggering 85 million people. A company spokesman said Express Scripts tries to avoid excluding drugs because exclusions are an inconvenience to patients.

“Express Scripts will only ask members to switch their medication if there is a clinically equivalent alternative,” the spokesman told NPR, “and only if that switch delivers a significant cost savings for their employer.”

For patients, the inconvenience may become a dire medical issue when the excluded medications do not have a generic alternative that pharmacists can substitute automatically. This requires a patient having to go back to his or her physician to receive a written prescription for a new drug. There are also times when the drug on the insurer’s approved list does not work as well for the patient as the one that was booted off the list.

But Americans want, even demand, our drugs with prescriptions in hand.

Thus, the pharmaceutical price war rages on with no real end in sight.

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