How Higher Drug Prices Lead to Lower Quality Treatment

The Washington Post appears to be making a concerted effort to try to explain the high cost of prescription drugs in this country.  There’s no real explaining it of course, but the paper has been doing a great job of showing the impact on the health care system.

Today’s article shows how one hospital system put $$$ signs in its computers next to certain drugs to warn doctors about prescribing it due to the high cost. Other hospitals are shown attempting to mix their own solutions (literally) in an attempt to lower costs of using the more prescribed options.

Since drug pricing moves in mysterious ways, a drug that is fairly cheap one year, may be far more expensive years later. If you think this is an issue market forces should be able to fix consider the quote from Gerald Anderson of Johns Hopkins:

    “There’s been a huge consolidation of these generic companies…everybody is buying everybody else…”

So, there is by definition less competition if you thought that was going to be a way to bring down prices.

Perhaps as a result of this, the article is able to provide many scary statistics.

  • Bloomberg survey of 3,000 drugs prices more than doubled for 60 medication since 2014…and quadrupled for 20.
  • HHS inspector general says prices rose faster than inflation for nearly a quarter of the top generic drugs from 2005-2014.

That last point is worth thinking about. It might be understandable when proprietary drugs go up or are expensive…the logic of the industry is that they need the big profits from their proprietary drugs to provide incentive to develop the new drugs and recoup development costs of those we all need.

Generic drugs however, do not really fall into this category as they have already been developed.

But even that is not the most alarming part of the story. Rather the article touches on the choices doctors and hospitals have to make about cost versus the quality of patient care. We all like to pretend those choices do not exist, but they clearly do.

Here’s an exchange quoted in the post from Rep. Mathew Cartwright and a drug company executive about two expensive drugs administered by the hospitals.

“Given the choice between paying higher prices and risking the lives of their patients most hospitals choose to knuckle under and pay the price.  Am I correct in that?”

“I’d assume that is correct yes,”

That appears to be the logic, such as it is, behind drug pricing in the system.

Of course when the prices go up, the cost has to come from somewhere or rather somebody. All the hospital administrators and their staff having to pay attention to and make decisions based on the increased cost of drugs, even the time they spend doing it, creates a cost.

$$$ signs next to specific drugs in a system may be a way to alert physicians as to the cost of the drug they are about to use and point them to a cheaper alternative. It may make sense in the short term, but in the long term are we pretending that we are not making choices about money, which affect people?

There does not appear to be much in the way of leverage to keep the prices of drugs down. All of this is legal. Regulation of price is limited and drug pricing is beyond understanding or explaining.

Also beyond understanding, given the profit involved, is why the drug companies ever have to resort to illegal marketing and kickback strategies to do business. If they can raise their prices legally for products people must have to stay alive, it is hard to believe they ever would have to do something that amounts to a fraudulent activity to sell their products and find themselves defending a False Claims Suit.

That I guess is what we can do about it from here. Preventing the illegal marketing of drugs, stopping the sale of drugs for uses they are not approved, preventing kickbacks to illegally incentivize doctors from using a particular product is a good thing. The industry is now at least aware that those kinds of practices are actionable.

The Post story today reminds us that valiant as the False Claims whistleblowers have been and important as the fraud cases are, there is a lot more to look at.