- The Costs of Multiple Sclerosis Treatment
- Rising Costs of MS Drugs
- How Do People Pay for MS Treatment?
- Sources of Help in Paying for MS Treatment
- Persistence Is Necessary
- MS Drugs: Expensive, Often Lifelong, and Not Cost Effective
- Are Multiple Sclerosis Treatment Prices Interfering With Patient Care?
- MS drug costs have increased exponentially, causing patients to pay more out-of-pocket
- Even with new therapies entering the market, drug prices continue to increase
- Why Are Prices of MS Drugs High? It’s Not R&D Costs, Executives Say
- Industry executives: Profits drive rising prices for MS drugs
- What I’ve learned about paying for medications
- Should Multiple Sclerosis Drugs Cost $62,000 a Year?
- Current Cash Prices for a One-Month Supply of MS Medication
- Just How Are Drug Prices Set?
- Medications as Commodities
- The Role of Patents in Drug Pricing
- What Does This Mean for MS Patients?
- Learn More
The Costs of Multiple Sclerosis Treatment
The treatment of multiple sclerosis (MS) typically includes prescription drugs and various forms of rehabilitation, such as physical therapy, speech therapy, and the use of mobility aids.
A study published in May 2013 in the Journal of Medical Economics found that the total cost of healthcare for MS ranged from about $8,500 to more than $50,000 per year during the period studied (1999 to 2008), with prescription drugs accounting for a large percentage of those costs.
On the bright side, the number of people with MS who have private health insurance or coverage under a government program such as Medicare or Medicaid appears to be increasing due to changes brought about by the Affordable Care Act of 2014, according to Nicholas LaRocca, PhD, vice president of healthcare delivery and policy research at the National Multiple Sclerosis Society (NMSS).
But even with insurance, high deductibles and co-payments can make paying for healthcare difficult for many individuals with MS, particularly since many people are unable to work because of their disease.
Rising Costs of MS Drugs
According to Dr. LaRocca, “Over the last few years, the prices of MS disease-modifying drugs have escalated faster than inflation. Most people with MS are able to cover their healthcare expenses, but it is challenging and has led many of them to make compromises, such as skipping doses or taking drug holidays.” Other money-saving compromises may include reducing general costs of living or eliminating luxuries such as vacations.
A study published in the journal Neurology in April 2015 found that the cost of first generation disease-modifying medications for MS increased from between $8,000 to $11,000 annually in the 1990s to approximately $60,000 per year currently. Newer disease-modifying drugs can cost even more.
But the prices quoted in this study do not take into account possible discounts negotiated by government or private insurance programs, nor do they reflect the lower prices an individual might pay if obtaining a drug through patient assistance programs.
RELATED: Rehab Options for Living with Multiple Sclerosis
How Do People Pay for MS Treatment?
The most common ways people with MS pay for treatment in the United States are:
- Job-based health insurance
- Individual health insurance
- Medicaid or a state Children’s Health Insurance Program
- Programs for the uninsured and underinsured
As they can for anyone, life changes such as losing a job, changing jobs, or getting a divorce can affect health insurance options and coverage for people with MS.
Barbara, a 69-year-old retired computer programmer and analyst who lives near Denver, describes how MS has affected her financially. “I am on disability because I had to retire at 46 and take a 60 percent pay cut,” she says. “That’s what the disability payments amount to. I also got a big reduction in assistance with medical insurance as a retiree.”
If you’re having trouble stretching your budget to pay for needed care, there are resources that can help.
Sources of Help in Paying for MS Treatment
Private insurance companies typically have representatives who can advise people with chronic conditions, such as MS, on healthcare coverage and costs. If you have health insurance through your job, ask your employer for the contact information of the representative, or contact the insurance company directly to find out whom to talk to.
If you receive care in a clinic that specializes in MS, there will likely be someone on staff, such as a social worker, who’s familiar with insurance issues and financial assistance programs.
In addition, here are some links to resources for helping to pay for MS medications and medical care:
HealthCare.gov Since January 1, 2014, people with pre-existing conditions in the United States can no longer be denied health insurance, thanks to the Affordable Care Act. Many formerly uninsured people now have health insurance as a result of this law, and premium subsidies are available to many low- and middle-income people. You can investigate your options and start the enrollment process at HealthCare.gov.
National Multiple Sclerosis Society The NMSS has a team of MS navigators in place to help with questions or concerns about paying for medications. The navigators can assist with changes in insurance coverage for medications, transitioning into a different health plan or Medicare, covering co-payments for medications, and other issues. The NMSS can be contacted online or at 1-800-344-4867.
Pharmaceutical assistance programs Drug companies often have their own patient assistance programs for people who can’t afford particular drugs. The NMSS maintains a contact list, including phone numbers, for patient assistance programs for many medications. The Multiple Sclerosis Association of American also maintains a patient assistance program list. If you don’t see the medication you need on either of these lists, your healthcare provider or pharmacist may know whom to call.
Medicare Those with Medicare may qualify for help with out-of-pocket costs for prescription drugs through Medicare’s Rx Extra Help.
National foundations NeedyMeds maintains a free information website describing programs to help people who cannot afford medications and healthcare costs. Partnership for Prescription Assistance also helps eligible people who cannot afford their medications. And the Patient Advocate Foundation’s Co-Pay Relief program has a new pharmaceutical assistance program for people with MS who have Medicare, Medicaid, or military benefits.
Social Security Disability Insurance (SSDI) People with MS who cannot work due to MS-related disability may be entitled to SSDI and possibly also Supplemental Security Income benefits. Information is available at the Social Security website. Your healthcare provider can help explain whether you may qualify based on your level of disability.
Local community services There may be local services that can help out with transportation, meals, and other needs. “I have used community support when needed, specifically Project Angel Heart for meals and, through our Denver Metro bus system, Access-A-Ride,” says Barbara of her local services in Colorado.
Health centers Federally-funded health centers offer low-cost preventive and primary medical care, with payment dependent on your income.
Hospital or physician patient assistance plans Tom, a 54-year-old Chicago resident living with MS, recommends making a payment plan directly with your physician or hospital if costs or co-pays are a problem. Many major hospitals have their own assistance plans, allowing for reduced costs or payments in installments over time. Tom recommends that people “talk and ask,” and emphasizes that it is particularly important to arrange payment before a bill goes to collection, at which point reductions are no longer possible.
Persistence Is Necessary
Struggling with MS symptoms is stressful itself, and dealing with the costs of healthcare and medications can add to that stress. Fortunately there is some assistance available through foundations, government organizations, patient assistance programs, and local organizations. But the person with MS, or a friend or family member, will likely need to be a strong, persistent advocate to obtain the help that is needed.
MS Drugs: Expensive, Often Lifelong, and Not Cost Effective
The disease doesn’t have a cure, the chance of disability is near certainty, and the cost of vital drugs continues to ratchet upward. That’s the sort of clinical and financial vise that grips the hundreds of thousands of Americans living with multiple sclerosis and, to some extent, insurance companies and employers that pick up the tab.
Despite numerous drug options for MS—more than a dozen have been approved to treat the most common form—competition hasn’t kept a lid on prices. Quite the contrary, according to a much-cited pricing analysis published in 2015 in the journal Neurology.
Since the first wave of MS drugs was introduced in the 1990s at a price of $8,292 to $11,532 annually, their costs have skyrocketed by as much as 36% year after year, according to the Neurology study. (During that same stretch, overall prescription drug inflation ran 3% to 5% annually.) And newer drugs have kept pace. Nearly all of MS drugs today cost from roughly $63,000 to nearly $104,000 annually, according to an analysis published last year by the Institute for Clinical and Economic Review (ICER).
The price hikes have undermined the cost-effectiveness case for these drugs, which are designed to treat a debilitating central nervous system disease with an inherently unpredictable course. At these prices, paying for the drugs year after year far exceeds the cost of caring for a patient following a relapse, say researchers and prescription benefit managers. Existing prices would have to be slashed by 37% to 98% to meet a cost-effectiveness benchmark of spending $100,000 to $150,000 for each additional quality-adjusted life year (QALY), according to the ICER analysis.
Payers continue to foot the bill for ethical, legal, and contractual reasons, but “it’s really hard to mount an economic argument,” says Gary Owens, MD, a biotechnology consultant in Ocean View, Del., who has written extensively about MS cost trends. “For the individual patient, the ability to remain functional and to be able to drive, to be a parent, to go to work—all of that is a cost benefit to the individual. Payers don’t reap any of that benefit however.”
“When the drug costs $5,000 or $6,000 a month, 30% is a substantial amount to pay out of pocket that patients face,” says Daniel Hartung of Oregon State University.
Meanwhile, patients covered by insurance policies that have high deductibles or require patients to pick up a percentage of a drug’s cost are increasingly vulnerable to being priced out of affording the medication at all, says Daniel Hartung, lead author of the 2015 Neurology pricing study and an associate professor of pharmacy at Oregon State University College of Pharmacy in Corvallis.
“Patients are seeing higher and higher co-insurance, 28% to 30% co-insurance,” Hartung says. “When the drug costs $5,000 or $6,000 a month, 30% is a substantial amount out of pocket that patients face.”
The hue and cry against high drug prices is now part of the soundtrack about what ails American health care. But the agita over MS drug costs illuminates some of the challenges specific to autoimmune diseases.
The stakes are not immediately life and death, as they can be for patients with cancer. But once patients are diagnosed with multiple sclerosis, rheumatoid arthritis, Crohn’s disease, and many other autoimmune diseases, they must figure out how to pay for treatment that’s likely lifelong, with few options beyond taking drugs. One study published in 2013 found that drugs comprised two thirds of medical care costs for MS patients. A more recent analysis from Prime Therapeutics, the PBM, reported that the drug bill was nearly 81% of total medical costs.
The MS drugs in question are labeled as disease-modifying therapies (DMTs) because they’re designed to decrease or shorten relapses. Relapses occur when inflammation in the central nervous system damages the protective coating on the nerve fibers, causing symptoms such as weakness in the legs or vision loss. Other, less expensive drugs, such as steroids, might help to ease symptoms during a relapse.
Nearly all of the DMTs have been approved for the relapsing-remitting form of MS, which affects more than 80% of MS patients and is characterized by relapses followed by periods of recovery. Last year, the FDA approved Ocrevus (ocrelizumab), which was launched with a price tag of about $65,000 annually. The infused drug, which can be prescribed for relapsing-remitting MS, is also the first approved to treat another category of MS, primary progressive disease, which develops in 15% of patients. MS patients with primary progressive disease experience worsening symptoms often without any breaks or remissions.
Cost just adds to the challenge of keeping patients on DMTs, along with the side effects and efficacy questions, says Bari Talente of the National Multiple Sclerosis Society.
The drugs should be started as soon as possible following diagnosis to have the best chance of forestalling relapses, the American Academy of Neurology (AAN) emphasized in its latest guidelines, published earlier this year. But keeping patients on these drugs—already a challenge because of side effects and uncertainty about whether they’re working—is made even more difficult by the budgetary hit, says Bari Talente, executive vice president of advocacy at the National Multiple Sclerosis Society. In a 2015 survey of nearly 8,800 MS patients conducted by the not-for-profit patient advocacy group, 17% reported skipping doses or stopping treatment the prior year because of the cost.
PBMs are under fire these days for lack of transparency about manufacturer rebates and other discounts. But they are trying out measures to at least partially shield payers from steep MS prices.
Starting this year, Express Scripts has implemented a program that reimburses payers for up to half of the amount they’ve already spent on a DMT if the patient stops taking it within the first three months. The MS program, which requires the drugs to be filled through Express Scripts’ specialty pharmacy, will also provide support for patients through those initial months, including education about potential side effects.
Roughly a fourth of patients stop the medication in that initial stretch, according to the PBM. “If 25% of new patients are discontinuing therapy, that’s a lot of waste that plan sponsors are paying for where we know patients won’t benefit,” says Harold Carter, senior director of clinical solutions at Express Scripts.
This summer, CVS Health announced a program that would allow any of its payer clients to exclude a newly launched drug—outside of “breakthrough” drugs—with a cost that, using ICER analysis, exceeded $100,000 per QALY.
Owens was dubious that the CVS Health move would provide much relief for payers, given that nearly all existing MS drugs far exceed that QALY benchmark. “I don’t think any payer on record or any employer is going to say, ‘Well, these drugs are not cost effective, so we’re not going to pay for treatment of MS patients.’”
ICER’s analysis also highlighted some gaps in what’s understood about DMTs—starting with the limited time frame of the clinical trials, typically one to two years. While that study duration is not uncommon, it makes it particularly difficult to gauge a drug’s benefits and harms for a disease that unfolds over decades, says Dan Ollendorf, chief scientific officer for ICER.
Another significant knowledge gap that Ollendorf cites: Little research has delved into the optimal sequencing for these drugs. For instance, he says, “to understand whether patients do better if they start on an interferon first and then go to something more targeted, or vice versa.”
In guidelines released earlier this year, AAN leaders by and large didn’t recommend certain drugs over others for relapsing-remitting MS. (One exception: They suggested a short list of drugs—Lemtrada , Gilenya , and Tysabri —for patients with signs of highly active MS.) Instead, the professional group provided a consumer-friendly summary of medications sorted by alphabetical order, with details about their side effects, method of administration, and strength of evidence in preventing relapse.
By contrast, ICER took a shot at ranking the drugs by their clinical effectiveness. Lemtrada, Tysabri, and Ocrevus were identified as most likely to reduce relapses, followed by other drugs based on their relative effectiveness. But will this ICER drug guidance influence payer choices? At this point, because all of the drugs cost roughly the same and there are no standout options, payers will be more influenced by discounts and rebates in sorting out their preferred drug options, says Hartung, the author of the Neurology pricing study.
Manufacturers try to make the case that payers will reduce other MS-related expenses by spending money on medications, Owens says. But the reality is that the worsening of the disease, even as disability becomes more advanced, is not terribly costly from a payer perspective, he says. A patient might be briefly hospitalized in the event of a severe relapse. Other spending includes low-cost drugs like steroids and the purchase of a wheelchair or other medical equipment.
Patients can still relapse even when they’re faithfully adherent to DMTs, and that can be very costly, says Patrick Gleason of Prime Therapeutics.
Besides, patients can still relapse even while faithfully taking one of the DMTs, according to a cost-effectiveness analysis by Prime Therapeutics, which looked at relapses in 991 patients. During the three-year period Prime analyzed, 18.2% of adherent patients had relapsed versus 24.9% among those who weren’t adherent. The medical bill for a relapse was nearly $9,000, according to an abstract presented at a meeting earlier this year.
The bottom line: Drug adherence would have to be improved for 15 patients over three years—at a cost of about $3 million—to prevent a single $9,000 relapse. These findings align with ICER’s recent cost-effectiveness MS analysis, notes Patrick Gleason, senior director of health outcomes at Prime Therapeutics. “Our findings in a sense concur with that—the value is hard to see,” he says.
Payers have responded to rising prices by limiting the number of MS drugs on their preferred list, with only a few options that often include an interferon and an oral medication, Owens says. Otherwise, patients and their doctors must navigate prior authorizations and other plan designs, such as a step-therapy approach that requires patients to “fail” on a preferred drug first before trying another.
Dan Ford blames preauthorization hurdles with spurring further and potentially avoidable deterioration of his disease. When the military veteran was diagnosed with MS three years at age 49, his Kansas neurologist recommended that he start on the infusion drug Tysabri immediately because of the apparent severity of his disease as indicated by his having symptoms and two lesions already detectable on his brain.
But it took nearly three months—and a series of physician appeals—before Ford’s insurer approved coverage of the drug. By then, Ford was quite ill and weak and needed to be hospitalized for several days. MRI scans showed that two more lesions had appeared on his spinal cord. He’s been largely reliant on a wheelchair since then. No additional lesions have appeared, he says.
“How I look at it is that those second two lesions cost me my legs,” Ford says. “And put a price tag on that?”
A generic option has entered the MS market in recent years. Two manufacturers—Mylan and Sandoz—are marketing generic versions of Copaxone (glatiramer acetate). They are priced 20% lower than Copaxone, says Hartung. That helps but it’s not a huge, dent-making difference. Typically it takes four to six manufacturers before competition starts to drive down costs significantly, notes Hartung.
As they proliferate, though, generics could be influential. In their 2015 Neurology pricing analysis, Hartung and his colleagues speculate that the prices for TNF inhibitors haven’t followed the same arms race price trajectory as MS drugs, perhaps in part because those drugs compete with methotrexate and other generic medications.
Has Ocrevus set a good example?
Negotiating clout also can make a difference. At the Veterans Health Administration, which can negotiate prices, DMTs cost about a third less than what Medicaid pays, according to the 2015 Neurology analysis. In a campaign targeting high drug prices, launched in 2016, the MS society recommended that Medicare be given that same negotiating clout. Some of its other proposals target payers and insurance design, among them spreading out patients’ out-of-pocket drug costs more evenly over the year and not placing all drugs on the same specialty tier.
“When you have all of the available products on a specialty tier that typically comes with co-insurance, you have no alternative,” says Talente at the MS society. “You need your medication.”
Talente was among those interviewed who pointed to Ocrevus—introduced in 2017 at a wholesale acquisition cost that is nearly 20% less than the market average for DMT drugs—as perhaps a bit of a break in the pricing fever. “It was hugely encouraging—it shows that it can be done,” she says.
The drug could have been introduced at a “premium price,” Owens agrees. The infused medication has a lot of clinical strengths to promote, including that it’s the first approved for primary progressive MS and that it’s been shown to be more effective than one interferon.
Perhaps Genentech’s pricing reflected a well-thought-out positioning strategy to try to grab a hefty market share right out of the gate, Owens says. Or it might indicate, at least in part, a manufacturer’s sensitivity to the current pricing environment, he says.
“This nuclear arms race in continuously escalating MS costs is leading us to a position that’s very difficult for the patient, the employer, the payer, and even the manufacturer to justify,” Owens says. “One would like to think that they listened.”
Charlotte Huff is a health and business journalist in Fort Worth, Texas. She has written for Health Affairs, Kaiser Health News, and Stat among many other publications.
Are Multiple Sclerosis Treatment Prices Interfering With Patient Care?
Alvaro San-Juan-Rodriguez, PharmD A recent study suggests that the price of disease-modifying therapies (DMTs) for multiple sclerosis (MS) patients has persistently risen over a 10-year period, with the introduction of additional therapies failing to contain out-of-control costs.¹
The development of various DMTs since the initial introduction of interferon beta-1b in 1993 has been significant for MS patients hoping to manage the condition. However, healthcare providers seeking to understand their clinical application must consider the distorting influence of financial burden. Research suggests that clinical and financial considerations have already blurred, given out-of-pocket costs rank higher in priority for patient decision-making around DMTs than efficacy or safety.²
The recent study, published in JAMA Neurology, used Medicare Part D claims data to conclude that annual costs associated with self-administered DMTs for MS increased dramatically from 2006 to 2016, from a mean of $18,660 to $75,847. This represents a mean increase rate of 12.8% yearly, resulting in a roughly 7-fold increase in patient out-of-pocket costs.
The study authors also cited several earlier studies indicating that the cost of DMTs for MS has risen disproportionately compared with specialty medications prescribed to treat other illnesses. Neurologists must thus consider MS a special case in terms of cost-burden, even in the context of high general healthcare costs.
In an editorial, Daniel M. Hartung, PharmD, MPH, and Dennis Bourdette, MD, noted that Medicare is “spending more than 3 times as much for DMTs for this single illness as they pay to neurologists for all of the services that they provide.”³
Counter to conventional wisdom, the introduction of new therapies seems to have done nothing to abate the consistent surge in out-of-pocket costs for DMTs. While one might expect increased competition to drive down pricing, the study authors point out that “although Teva launched the branded glatiramer, 40-mg, at a similar price as the branded 20-mg version in 2014, the price of the 20-mg branded formulation increased substantially the following year. This could have represented an attempt to encourage the use of the 40-mg formulation in anticipation of the entry of a generic version for the 20-mg formulation.”
Given the across-the-board nature of these price increases, reducing their cause to individual corporate decisions won’t elucidate the complexity of the problem. Looking at broad market trends and a regulatory environment that compels economic actors toward certain decisions is key.
The authors of the editorial noted that several states are considering legislation to address runaway prices for MS treatment. The Trump administration has also proposed changes to the Medicare Part D reimbursement process, which may help patients with high out-of-pocket expenses. The authors ultimately suggest that, individually and as members of national associations, neurologists should leverage their relationships with pharmaceutical and biotechnology companies, but it is clear there is a long and uncertain road ahead to address what has become a challenging issue for both patients and the healthcare industry. REFERENCES
1. San-Juan-Rodriguez A, Good CB, Heyman RA, Parekh N, Shrank WH, Hernandez I. Trends in prices, market share, and spending on self-administered disease-modifying therapies for multiple sclerosis in Medicare Part D. JAMA Neurol. Published online August 26, 2019. doi:10.1001/jamaneurol.2019.2711.
2. Hincapie AL, Penm J, Burns CF. Factors associated with patient preferences for disease-modifying therapies in multiple sclerosis. J Manag Care Spec Pharm. 2017;23(8): 822-830.
3. Hartung DM, Bourdette D. Addressing the rising prices of disease-modifying therapies for multiple sclerosis. JAMA Neurol. Published online August 26, 2019. doi:10.1001/jamaneurol.2019.2445.
- In a study published by JAMA Neurology, researchers found that multiple sclerosis patients who have Medicare Part D-government-funded health insurance that covers prescription drug costs-have seen their medication prices quadruple from 2006 to 2016.
- The rise in drug prices has also translated to an increase in patients’ out-of-pocket expenses, which increased by seven times over that decade, from $372 a year to $2,673 a year.
- Alvaro San-Juan-Rodriguez, an author of the study, told Business Insider that the expenses are “exorbitant” and mean limited drug access for multiple sclerosis patients.
- Visit Business Insider’s homepage for more stories.
The high cost of prescription drugs is a growing problem in the US healthcare system.
A new study published by the journal JAMA Neurology sheds new light on the issue, revealing how drug prices for individuals with multiple sclerosis (MS) quadrupled over a 10-year period. The average price of the treatments climbed from $18,660 in 2006 to $75,847 in 2016. That’s more than the median family in the US makes each year.
“We were not expecting the magnitude of the drug price increase at all,” Alvaro San-Juan-Rodriguez, one of the study’s authors, told Business Insider. “The price is exorbitant, and it’s higher than what we’ve seen for other specialty drug medications.”
MS is a degenerative inflammatory disease of the central nervous system, which affects almost one million people in the US, according to the National Multiple Sclerosis Society.
The study focused on patients using Medicare Part D, government-funded health insurance that helps cover prescription drug costs. Medicare Part D is available to seniors, as well as to some individuals with disabilities.
The cost of prescription drugs has drawn attention from both Republicans and Democrats, with the Trump administration proposing a number of fixes. Still, the administration has taken little action so far and drug prices continue to increase. Often patients end up paying a significant portion of the cost.
Lees ook op Business Insider
Study authors including San-Juan-Rodriguez and Inmaculada Hernandez at the University of Pittsburgh set out to study the increasing price of multiple sclerosis drugs to see how they affected patients and the healthcare system. They said increasing costs can make it difficult for patients to afford their medications.
MS drug costs have increased exponentially, causing patients to pay more out-of-pocket
The study showed that as the total cost of MS drugs increased, so did the amount that patients had to pay out-of-pocket. Looking at Medicare data, the study breaks down the price increases separately for drug list prices (the cost before any rebates), patients’ out-of-pocket expenses, and Medicare expenses.
The study looked at an average of 2.8 million Medicare beneficiaries every year from 2006 – 2016. The annual cost of treatment with self-administered disease modifying therapies (DMTs) for MS patients increased from $18,660 in 2006 to $75,847 in 2016, averaging a 12.8% increase annually, based on the list price of the treatments.
Medicare’s actual spending increased by 10 times over that decade, from $7,794 to $79,411 on average. And average out-of-pocket spending increased by seven times from $372 to $2673 over the 10 years.
The chart below from the study shows how the prices of different MS therapies all largely increased at a similar pace.
Foto: The graph shows the trends in annual cost of treatment with self-administered DMTs for MS in Medicare Part D.sourceThe chart is courtesy of JAMA Network.
Even with new therapies entering the market, drug prices continue to increase
Some of the most popular drugs for MS on the market like Copaxone, Tecfidera and Avonex reduce the frequency of relapses for MS patients.
“These drugs offer great benefits to patients,” Rodriguez said. “It helps with vision loss, pain, fatigue and muscle weakness and much more.”
Even though there has been increased competition for for MS drugs overtime, as new therapies are introduced, the drug prices have been steadily increasing for almost all the therapies.
“The uptake for the new therapies since they entered the market a couple years ago is considerable,” Hernandez told Business Insider. “It’s hard to predict the future, but we hope these trends will not be maintained. There should be more competition so we don’t see these drug prices continue.”
Rodriguez said he hopes this study will be a call to action for drug prices to not continuously inflate.
“We observed how prices of drugs are more than four fold and the key driver is out-of-pocket expenses which reduces patient access for the vital medication they need,” Rodriguez said
Why Are Prices of MS Drugs High? It’s Not R&D Costs, Executives Say
High list prices are needed to support research and development in the pharma and biotech industry: For years, that has been one of the reasons cited to support the way prices work in the drug industry. But a qualitative study with 4 biotechnology executives involved for decades in the pricing and selling of multiple sclerosis (MS) disease-modifying therapies (DMTs) said the reason has more to do with maximizing revenue and corporate profit.
The study, published last week in Neurology, said that pricing decisions were not the result of needing to recoup specific costs. Rather, these executives cited other factors, which are unique to the United States.
The authors noted that soaring drug prices have particularly impacted therapies for MS. In fact, a recent paper published earlier this year in JAMA Neurology found that even as additional biologics for MS entered the market, the prices of self-administered DMTs for MS rose steadily from 2006 to 2016, and seniors with Medicare Part D coverage saw a 7.2-fold increase in out-of-pocket costs. For Medicare beneficiaries who have 25% to 30% coinsurance amounts in their Part D plans, out-of-pocket costs can exceed $6000 for the year.
The average annual wholesale acquisition cost for most DMTs now exceeds $80,000 a year, and patients, affected by higher cost-sharing amounts, reduced coverage, or increased utilization management, report drug costs as a top policy concern.
With debate and argument over what is to blame for high drug pricing, this report sought to examine the executives’ reasoning and attitudes behind pricing decisions. Their answers indicated that the “the existing price ecosystem, overall corporate growth, international pricing disparities, and supply chain–related distortions may play a more central role,” the authors said.
The interview consisted of 9 questions, and qualitative analysis was performed with NVivo 11 using a deductive approach. The 4 participants, who agreed to be interviewed on the condition of anonymity, had nearly 30 years of combined experience working with companies making MS drugs.
When it came to initial pricing decisions, the interviewees said that companies generally sought to match, but not beat, competitors’ prices, and in some cases went even higher.
“We can’t come in at less. That would mean we’re less effective, we think less of our product, so we have to go more,” a participant said.
In addition, a participant cited the increasing complexity of pharmaceutical distribution, noting that other players are taking a piece of the list price, which ultimately factors into pricing decisions as well.
Those interviewed were also asked about their justification for pricing decisions, and their answers ranged across 5 themes: promoting innovation, international versus domestic markets, corporate growth, drug distribution channels, and market dynamics.
The role of patents were mentioned in terms of expecting drugs to become less expensive as patents expire, but it was not clear how that impacted bisimilars, the authors reported.
“There hasn’t been the impact of biosimilars in anti-TNF or in MS or in cancer or in diabetes at this point. In theory bring it down prices by about 30% to 50%, which is what all the biosimilar manufacturers are saying, but we just haven’t seen that yet because it hasn’t been available,” one participant said.
Another mentioned the need to optimize return on investment for shareholders when developing orphan drugs.
Shareholder obligations and fiscal growth affect pricing decisions, they noted.
The interviews also touched on a facet of drug prices that has been noted in US efforts to control prices with an international pricing index. In effect, US prices make up for lower prices in other countries. The United States accepts increasing prices, whereas in Europe the highest price for a product is seen at launch and gradually falls.
The US also has more complex drug distribution channels; some participants said that having multiple for-profit companies involved in the process is partly to blame for the drug pricing problem.
Two participants suggested that pricing for MS drugs is likely to change in the near future, but the reality of this actually happening is unknown.
The authors noted that the obvious limitation of their study is the small sample size, which may not reflect widespread beliefs throughout the industry, but they said “the limited number of individuals available and willing to speak with us is emblematic of the opaqueness of the pharmaceutical industry.”
In Part B, there are 3 biologics for MS eligible for reimbursement (ocrelizumab, alemtuzumab, and natalizumab).
Last week, Polpharma Biologics said it had begun dosing the first patients in its phase 3 study of PB006, a proposed natalizumab biosimilar.
The cost of MS therapies has recently been criticized by the National Multiple Sclerosis Society.
Hartung DM, Alley L, Johnston KA, Bourdette DN. Qualitative study on the price of drugs for multiple sclerosis: gaming the system . Neurology. doi:10.1212/WNL.0000000000008653.
Industry executives: Profits drive rising prices for MS drugs
To find out why, a team of researchers at Oregon Health & Science University and the OHSU/Oregon State University College of Pharmacy recruited four pharmaceutical industry executives to speak confidentiality. In a study published today in the journal Neurology, the executives painted a frank picture of the rationale behind the price of medication available to people with MS.
“I would say the rationales for the price increases are purely what can maximize profit,” one executive said. “There’s no other rationale for it, because costs have not gone up by 10% or 15%; you know, the costs have probably gone down.”
The executives acknowledged their companies’ unique societal position in delivering medications to improve human health. However, each executive pointed out that their business model depends on generating a profitable return on investment to shareholders.
“The most surprising thing was how unsurprising it was,” said lead author Daniel Hartung, Pharm.D., M.P.H., associate professor in the OHSU/OSU College of Pharmacy. “There was not this secret, complicated algorithm that these companies used to drive up prices.”
The researchers did find some key themes.
Start high and go higher
The researchers noted that the U.S. health care system appears to be unique in its capacity to absorb continual price increases. Executives noted that in the world’s second-biggest market — Europe — the price of a drug is typically highest when it launches and then declines over time.
The opposite appears to be the case in the U.S.
“When you’re making these decisions you’re looking at the whole world,” one executive said. “And it is only in the United States, really, that you can take price increases. You can’t do it in the rest of the world. In the rest of the world, prices decline with duration in the marketplace.”
American consumers foot the bill
Prices outside the U.S. not only drop due to market considerations, but they’re held in check by single-payer health systems with fixed resources. In this way, one participant suggested that American patients ultimately make up for potential losses in other markets around the world.
“The rest of the developed world is subsidized by the U.S. consumer,” the executive said.
High price says “quality”
The price of a new drug reflected the price already set by competitors selling existing drugs that treated similar conditions, regardless of the cost of research and development. In fact, executives feared that undercutting competitors with a lower price — a hallmark of a free market — would instead undermine the attractiveness of their product.
Co-author Dennis Bourdette, M.D., chair of neurology in the OHSU School of Medicine, said the study provides a new perspective to public discourse around pharmaceutical pricing.
“The frank information provided by these executives pulls back the curtain of secrecy on how drug price decisions are made,” said Bourdette, who also directs the OHSU Multiple Sclerosis Center. “We see that it is indeed the race to make more money that is driving up drug prices and nothing more.”
The study was supported by the National Multiple Sclerosis Society, grant HC-1510-06870.
Are you having trouble paying for MS medications? If so, you’re not alone. People change or lose their insurance, and plans change the medications they cover from year to year. Your neurologist may change your medication without realizing that moving you from an injection to an oral med may radically change your out-of-pocket cost if you’re on Medicare.
Pharmaceutical companies have programs that can help cover or reduce those out-of-pocket costs but they have income limits. They’re also not available to people on Medicare or Medicaid due to a federal anti-kickback law.
Some nonprofit foundations can provide financial help, but they don’t always accept new applications and frequently don’t have money available for MS patients. Even if you manage to snag a grant, you might wind up with that assistance rug being pulled out from under you.
Recently, a woman complained to the private Tecfidera And Multiple Sclerosis Support Group on Facebook that she received an unexpected copay bill from her pharmacy. She claims to have been informed that the grant she’d received had ended and that the foundation’s well is now dry — no more money for MS grants.
Another potential problem also is brewing. A Wall Street Journal article last fall reported that the U.S. government is investigating whether patient assistance programs, even ones that only provide advice, are legal.
What I’ve learned about paying for medications
Talk with your neurologist about cost. Very few patients do this even though I suspect most doctors don’t consider cost when deciding on an MS treatment. But just as you should consider efficacy and risk when considering a medication, your ability to afford it should be a part of the decision-making process as well. Also, your neurologist probably has patients who are receiving payment help and can share their experiences with you.
Contact the patient assistance programs at the MS pharmaceutical companies. The National Multiple Sclerosis Society has an excellent drug-by-drug list of these programs on its website. I recommend checking it early in your search for financial help.
Contacting those programs can be frustrating but worthwhile. My experience has been that some of the people who answer these calls, generally nurses, are knowledgeable and helpful. Others don’t seem to want to bother to do more than read a script. I’ve had good luck with the assistance programs at Acorda and Sanofi Genzyme. The former provided me with direct copay help for Ampyra (dalfampridine), and the latter helped me find grant assistance for Aubagio (teriflunomide).
Contact a nonprofit assistance foundation. This can also be very frustrating. Fortunately, I was able to obtain assistance from a foundation with some great help from a nurse at Sanofi Genzyme’s One to One program. I was on Medicare when I switched to Aubagio, so Genzyme’s copay program wasn’t allowed to help me. However, my One to One nurse, whom I had called about another matter, knew that a nonprofit foundation had just received new funding for MS patients. She called the foundation and then stayed with me on the phone for nearly an hour until we got through to a live person. The nurse then helped me make my case for assistance. I wound up receiving a grant of $6,000, which covered all of my Aubagio copays for a year.
Full disclosure: In 2017, I was paid by Sanofi Genzyme to participate in a one-day Lemtrada MS Digital Advisory Board meeting.
Keep calling. The foundations that distribute grants get their money from donations. They don’t know when they’ll receive new money to distribute and they won’t take a waitlist. I was lucky to have been tipped off by the One to One nurse at the right time. Your best bet is to check the websites of various foundations each day to see if they’re accepting new applications from MS patients. If they are, run — don’t walk — to the phone and apply.
The National Multiple Sclerosis Association has created a list of these foundations:
Have you found good strategies to help pay for MS medications? Let others know in the comments below.
You’re invited to follow my personal blog at www.themswire.com.
Note: Multiple Sclerosis News Today is strictly a news and information website about the disease. It does not provide medical advice, diagnosis, or treatment. This content is not intended to be a substitute for professional medical advice, diagnosis, or treatment. Always seek the advice of your physician or other qualified health provider with any questions you may have regarding a medical condition. Never disregard professional medical advice or delay in seeking it because of something you have read on this website. The opinions expressed in this column are not those of Multiple Sclerosis News Today or its parent company, BioNews Services, and are intended to spark discussion about issues pertaining to multiple sclerosis.
- Author Details
Ed Tobias is a retired broadcast journalist. Most of his 40+ year career was spent as a manager with the Associated Press in Washington, DC. Tobias was diagnosed with Multiple Sclerosis in 1980 but he continued to work, full-time, meeting interesting people and traveling to interesting places, until retiring at the end of 2012. × Ed Tobias is a retired broadcast journalist. Most of his 40+ year career was spent as a manager with the Associated Press in Washington, DC. Tobias was diagnosed with Multiple Sclerosis in 1980 but he continued to work, full-time, meeting interesting people and traveling to interesting places, until retiring at the end of 2012. Latest Posts
This study documents the alarming rise in costs for MS DMTs in the United States since 2002. While we would expect that legitimate advances, such as the development of oral DMTs, might garner higher prices, the escalation in costs for first-generation agents that have been available for up to 2 decades is puzzling. Our analyses show that cost increases for IFN-β-1b, IFN-β-1a IM, and glatiramer acetate were many times higher than prescription drug inflation. First-generation MS DMT costs substantially outpaced those for a contemporaneous class of TNF inhibitor biologic agents, accelerating upwards following introduction of each new MS DMT. These results suggest that the dramatic increases in the costs of the first-generation DMTs may have been a response to the introduction of competing treatments with higher prices. The reasons for this are unclear. Classic economic theory asserts that competition should reduce or stabilize costs for the consumer as more products enter the market. However, our data suggest prices of existing DMTs paradoxically rise, quickly matching prices set by the newest competitor. Costs of MS DMTs are substantially higher in the US market than in the other countries we highlight, suggesting the dramatic increases in costs in the United States are not demanded by increases in manufacturing costs or other changes out of the control of the pharmaceutical industry.
Why the costs of MS DMTs in the United States have risen so dramatically is uncertain. However, the simplest explanation is that pharmaceutical companies raise prices of new and old MS DMTs in the United States to increase profits and our health care system puts no limits on these increases. Unlike most industrialized countries, the United States lacks a national health care system to negotiate prices directly with the pharmaceutical industry. The US Medicare program, the largest single-payer health care system in the United States, is legally prohibited from negotiating drug prices directly with the pharmaceutical industry.19 Pharmaceutical pricing and purchasing is complex and one of the least transparent transactions in health care. Government-issued patent monopolies, third-party payers, lack of reimbursement transparency, and imperfect clinical information all contribute to a seemingly dysfunctional marketplace where expanded choice has led to higher, rather than lower, prices. Some argue that recent trends in industry pricing suggest collusive behavior between manufacturers, although this is challenging to prove with price data alone.20 Similar to the MS DMTs, noncompetitive markets have produced rapid and coordinated rises in unit prices for drugs used to treat hemophilia.21,22 Our data add to a body of literature suggesting that branded pharmaceuticals in the same therapeutic class likely compete against each other on aspects other than price.23,–25
It is also unclear why the MS DMT pricing trajectory is so different from that of the TNF inhibitors. One possible explanation is that TNF inhibitors face significant price competition from generic drugs in most therapeutic applications (e.g., generic disease-modifying anti-rheumatic drugs such as methotrexate and hydroxychloroquine). Although the evidence is mixed, there are some data suggesting that generic drug entry may slow the growth of competing branded drug prices.25
Generic drugs are one of the most effective checks on rising drug costs in the United States.26 However, most MS DMTs are complex biologic agents and not exposed to price competition from generics. The Biologics Price Competition and Innovation Act of 2009 was intended to develop a generic pathway for biologics through the approval of biosimilars. Because the evidentiary requirement for a biosimilar is substantially higher than for small-molecule agents, biosimilar applications have been slow to emerge.27 Historically, the pharmaceutical industry has fought efforts to undermine their branded monopolies through the traditional Hatch-Waxman generic drug pathway.28 Teva Pharmaceuticals, which manufactures a variety of generic small-molecule drugs, has aggressively pursued several strategies to mitigate potential financial losses following the expiration of its patents on glatiramer acetate in May 2014. Patent infringement lawsuits brought against Momenta Pharmaceuticals by Teva threaten to delay the release of a generic version of glatiramer acetate.29 In addition, through a process commonly known as evergreening, Teva has been actively converting current glatiramer acetate patients to a recently approved higher dose 3 times a week formulation in an effort to protect their franchise.4,30,31 Barriers and regulatory loopholes make economic relief in the form of generic competition unlikely in the near future.
The primary limitation to our analysis concerns the estimation of drug costs. As previously noted, third-party reimbursement of pharmaceuticals is not transparent, and actual costs are often driven by proprietary contractual discounts and rebates. Therefore, the list price, commonly estimated by AWP or WAC, frequently does not reflect the ultimate cost to the payer net these discounts and rebates. With a few exceptions (most notably the VA), the US Medicaid program is legally entitled to receive best prices on medications in the United States. Although we have attempted to estimate net costs to a typical state Medicaid program by adjusting for average rebates, the actual rebate amounts are not publicly available and therefore the actual costs are not known.
The high cost of MS DMTs in the United States is producing a cascade of negative effects upon patients with MS and their medical care. In what appears to be a direct response to the high cost of these drugs, insurance carriers have developed tiered formularies requiring step-wise DMT trials, with the tiers apparently determined by preferential pricing contracts rather than any objective analysis of risks and benefits of the various therapies.32,33 In our experience, initial denials of coverage for DMTs for both new and established patients are occurring much more frequently now than in years past, requiring multiple approval steps for patients and their neurologists.
Our results shed light on systemic problems with pharmaceutical pricing in the United States, with relevance beyond drugs for MS. The escalating costs of specialty pharmaceuticals for conditions such as MS, cancer, and hepatitis C have been a growing concern among health care payers, policy-makers, clinicians, and patients.34,35 Recently, some in the medical community have begun to question the ethics of our current free-market drug pricing system and to acknowledge that exorbitant pricing for drugs is a major burden on our already stressed health care system.20,34,36 While it is important for neurologists and MS advocacy groups to work on maintaining access for patients to all the MS DMTs, it may be even more critical to address DMT costs as a root cause of the access issues.
Recent cost-utility studies suggest the incremental cost per quality-adjusted life-year (QALY) for MS DMTs relative to supportive care are high, with one analysis reporting estimates in excess of $900,000 per QALY, several fold higher than traditionally accepted thresholds of what is believed to be cost-effective.37,–39 One cost-effectiveness study found that the cost to prevent an MS relapse exceeded $80,000 for several IFNs and glatiramer acetate.40 Dramatic increases in the cost of MS DMTs without significant improvements in efficacy will only further reduce the cost-effectiveness of these drugs. Sensitivity analyses suggest that incremental cost-effectiveness ratios for MS DMTs would approach accepted thresholds if US drug costs were reduced to levels similar to the United Kingdom.38 The prices for MS drugs in the United Kingdom, Canada, and Australia, and the more controlled drug costs in large integrated health care systems, such as the VA, suggest that solutions are possible.
A flourishing pharmaceutical industry provides invaluable benefit to society by developing new drugs to combat disease and alleviate suffering. The success of the pharmaceutical industry in bringing new therapies to market for the treatment of MS has improved the care of people with MS. However, the unbridled rise in the cost of MS drugs has resulted in large profit margins and the creation of an industry “too big to fail.” It is time for neurologists to begin a national conversation about unsustainable and suffocating drug costs for people with MS—otherwise we are failing our patients and society.
Should Multiple Sclerosis Drugs Cost $62,000 a Year?
For those who suffer from multiple sclerosis (MS), perhaps the only thing more shocking than receiving their diagnosis is learning how much the disease modifying drugs (DMDs) used to control it will cost. Patient demand, research and development costs, and competition all affect the pricing of these life-altering medications.
MS is a chronic, progressive, and often debilitating autoimmune disease that affects the central nervous system, including the brain, spinal cord, and optic nerves. More than 400,000 people in the U.S. have been diagnosed with MS, while worldwide that number is in excess of 2.1 million.
The first MS DMD to be approved by the U.S. Food and Drug Administration (FDA) was Betaseron, which came on the market in 1993. Drug makers predicted there would be such a high demand for the product that it was initially prescribed by lottery. Only one in five patients who applied received it.
Since then, nine other DMDs have joined the ranks of medications proven effective at reducing the number of relapses an MS patient suffers. Some have even been shown to slow the disease progression. With no cure in sight, many patients must take these medications indefinitely.
The fact that there are so many options available to patients is the good news; the bad news is that they all come with a substantial price tag. The chart below shows today’s drug prices, as quoted by Walmart and Walgreen’s pharmacies in northeast Florida.
Current Cash Prices for a One-Month Supply of MS Medication
*Administered by IV every 3 months and is prescribed in multi-dose vials. Single-month pricing information was unavailable.
In 2010, when Novartis won FDA approval of its much-anticipated, first-ever pill treatment for MS, Gilenya, the company set the price for the oral medication at $4,000 per month. At the time that price was 30 to 50 percent above that of other established DMDs, according to a post written by noted MS blogger Lisa Emrich. Other drug manufacturers soon responded with price increases to match.
Tecfidera, the newest pill treatment to enter the market, is also priced in the range of $62,000 per year.
Just How Are Drug Prices Set?
“That is the blackest of all black boxes,” said Dr. Kenneth Kaitin, a professor at Tufts University School of Medicine in Boston, Mass., in an interview with Healthline. “People in the industry will never talk about drug pricing. kept in the dark about all of it just because the less they know about it, the better.”
None of the drug makers we contacted responded to requests for comment.
“There is I have ever seen that describes the pricing process because there is no incentive for industry to provide any clarification on that process. Industry says that it’s the enormous cost of drug development…and bringing to market new medicines that drive these very high costs,” Kaitin said. “The real factor is value. If you develop a very expensive drug that few people are interested in, then you’re not going to price it high because then even fewer people will be interested in it. In that regard, pharmaceuticals are just like any other commodity, any other product.”
Medications as Commodities
The pharmaceutical industry has been around for a very long time. While Merck boasts of being the oldest drug company on the planet since its inception in 1668, the very first drug store opened its doors in Baghdad in the year 754. And the pharmaceutical industry survives and thrives based on the same business practices that drive all companies that produce consumer goods.
“If you develop a product that doesn’t cost too much to manufacture, however if it’s of tremendously high value, it’s going to be priced very high,” Kaitin said. “If you compare a Mercedes and a…Hyundai, the fact is the Mercedes may not cost that much more to develop, but there’s a higher demand for it and there are people that are willing to pay for it, and therefore the price is very high.”
To further illustrate his point, Kaitin said there is a high demand for “lifestyle” drugs like Rogaine to promote hair growth. “People are willing to pay for , so the products will be priced accordingly. It’s not based on the cost of production; it’s based on the value.”
The issue, of course, is that DMDs for MS are not “lifestyle” drugs, and patients do not so much choose to take them as have to.
Besides value, Kaitin said, pharmaceutical companies “consider any kind of competition or therapeutic alternatives that are out there. If they are competing with other products in the same therapeutic area…they have to take that into consideration.”
Competition doesn’t always mean other drugs. The new medication could be competing with surgical procedures, physical therapy, or even changes in lifestyle.
“Think of it this way,” Kaitin explained, “if everybody could be convinced to lose weight then the cost of anti-hypertensives would have to go down because…people’s blood pressure would go down as well. But people tend to not lose weight so…there’s still demand for high blood pressure drugs.”
The Role of Patents in Drug Pricing
Another important factor, besides value and competition, is the patent life of a drug. For new medications just hitting the market, patients can expect to wait five to 10 years before seeing generic competition.
It’s during this time that drug companies must glean as much profit as possible because, according to Kaitin, “Once the product goes off patent, if it’s a popular product, there will be generic competition and the market share will erode by about 80 percent with the first two months or so. They lose market share very, very rapidly.”
“In an ideal situation, a pharmaceutical company would have a balanced portfolio of products that are reliable generators of revenue, like , and then the revenues that come in from those drugs help sustain their efforts to find cures for diseases that are untreatable, or not adequately treated. It’s a balance,” Kaitin added, “and industry is always struggling with that balance.”
During the early 2000s, pharmaceutical companies took a lot of criticism for making only incremental improvements to existing drugs, as opposed to looking for “breakthrough” drugs in new areas. Now, the industry is trying to re-balance the portfolio, putting more emphasis on breakthrough products, which is leading to a rash of partnerships between big companies and smaller companies that typically focus on breakthrough drugs.
Smaller companies, according to Kaitin, have a “life or death situation with those products. These small companies are created to develop a product with a lot of promise. If the product fails in development, often the company will disappear. But if it doesn’t, that’s where a lot of the breakthroughs are coming from.” If the drug fails in clinical trials, it also means big losses for the larger company that invested in the partnership.
“Just like anybody’s financial portfolio, they have a hedge against different problems,” Kaitin said. “If a breakthrough drug fails in development, they’ve got these more standard drugs that are more likely to continue to generate revenue for them.”
What Does This Mean for MS Patients?
With 10 therapies to choose from and more currently in clinical trials, MS patients have options that didn’t exist 20 years ago. But with many newer medications having just earned their patent rights, you won’t see cheaper generics available for as long as two decades.
In the end, it’s business as usual, despite the great need for these drugs and the impact drug costs have on patients’ lives. Drug companies are not totally insensitive to this, however, and all have patient assistance programs in place to help cover the cost of medication if a patient has insufficient insurance or no coverage and cannot otherwise afford it.
In part two of this series, we will examine the emerging roles of social media, patient activism, and physicians groups in effecting change in a market that, according to Kaitin, “pays even more attention than they have in the past.”
Read the second story in this series here.
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