Today, Explained - The $600 EpiPen

Episode Date: January 15, 2019

If there’s one thing pretty much everyone in the government can agree on, it’s this: prescription drug prices are too damn high. But how to fix them? Vox’s Dylan Scott showcases seven solutions floating around Congress. ***************************************************************** Are you interested in more discussions around health care policy? Join Vox's Facebook community for conversation and updates. bit.ly/VoxCareFBgroup Learn more about your ad choices. Visit podcastchoices.com/adchoices

Support for this Tuesday, January 15th, 2019 episode of Today Explained comes from HelloFresh. You get $80 off your first month by going to hellofresh.com slash explained80. And then you enter the promo code explained80. That's hellofresh.com slash explained80. And enter the promo code explained80 for $80 off your first month. Dylan Scott, you report on Congress for Vox. It's divided on a whole lot of stuff, but one thing both sides seem to agree on is that something must be done about prescription drug prices.

That's true. Going back to his 2016 campaign, Donald Trump has said that drug prices. That's true. Going back to his 2016 campaign, Donald Trump has said that drug prices were too high and that the pharmaceutical companies were getting away with murder and that he would do something as president to fix it. That was one of the things when he said, I alone could fix it.

High drug prices were on that list. And Democrats in Congress likewise have been promising for years that they wanted to do something big and bold to try to bring down prescription drug prices. And there's good reason for this. A lot of people in America take medications and a lot of people believe that the cost of medicine is unreasonable right now. And so they have consistently put it towards the top of their to-do list for lawmakers.

And how bad is this issue in America? Well, Americans pay more money for prescription drugs than any other country in the world. It's really that simple. So it's the worst? We have it the worst compared to everybody else. Okay, why are we literally the worst? Well, it's a complicated question, but the short answer is America does not regulate drug prices in a meaningful way, whereas almost every other developed country in the world does more forcefully regulate drug prices. Can you take us through exactly how the system works in the United States? So in the United States, it's pretty simple.

If a drug company wants to put a new medication on the market, all they have to do is go to the FDA, show that they have, you know, there's something novel about the treatment that they want to put on the market. You know, it's using some new molecule or it's even a new way of delivering a medication and the FDA approves it and they get a years long monopoly to set whatever price they want to sell the drug to, you know, health insurance plans and to the people. Okay. Whereas in other countries, there's usually a government agency or some kind of board that will evaluate a new drug. They'll try to figure out how much this new drug improves on the existing treatments, how much just value it provides to the patients who take it, how many patients are actually out there who would benefit from this drug. And so there's

a much more detailed and linear kind of value consideration in other countries that allows the governments to set and regulate a price of the drugs. Whereas here in America, we just say, hey, this is safe. There's something novel about it. Go forth and put your drug on the market and set whatever price you want. And so what does that result in? What are the more egregious examples of how bad this gets for people who need access to affordable drugs? I think we should think about this problem in two buckets. On the one hand, there are new breakthrough treatments that have really egregious prices.

Who should pay when drugs are very effective but extremely expensive? That's an important question for the U.S. health care system as new treatments come along. A couple of years ago, there were new drugs that came on the market that more or less cured hepatitis C, which was a really important medical breakthrough. You can imagine for the people who have hepatitis C, which usually affects minority and poorer populations. Its manufacturer announced record sales yesterday of more than $2 billion in just the first quarter of the year. But those drugs came on the market with five-figure price tags. One of them cost $84,000.

The other one was north of $50,000. And so you can see how that would start to hinder access. But the other piece of this is that you have drugs that have been on the market for a long time, things like insulin or the EpiPen, the allergy reaction medication that got a lot of attention a couple of years ago. So the price for EpiPen eventually topped more than $600, which is a $500 increase from the price it was

when the company that owns EpiPen now, Mylon, bought it in 2007. Nothing about it had meaningfully changed. It was the same drug that owns EpiPen now, Mylon, bought it in 2007. Nothing about it had meaningfully changed. It was the same drug that it had always been, and yet it had seen a $500 price hike just because the company decided it wanted to and was able to do it. And people kept buying it? There was a cost-benefit analysis that went into that? Well, if you need EpiPen, you need Ep EpiPen, right? Like think about the people with really bad bee allergies or peanut allergies. You know, if you're the kind of person who has a severe allergic reaction, EpiPen is not optional for you. And I think that's

one of the things that concerns people who see drug prices ever increasing is that for the population that relies on these medications, it's not optional. If you need a medicine, you need it. And so you're going to pay whatever it takes to get it. How does the United States government let that happen? Because obviously it's going to make the EpiPen, for example, totally unaffordable for people. Well, we've set up this system for a reason. You know, we want to reward companies that create innovative new drugs. And we want them to be able to make their money back and make enough money that they can, you know, research and development the next wave of medications

and breakthrough treatments. And, you know, one thing we always have to account for is there's a lot of research and development that doesn't go anywhere. And companies have to be able to make up that shortfall too. But the trade-off that we've made is the United States has become kind of the medical innovation center of the world.

But because we have not meaningfully regulated prices in any way, we end up paying the highest prices in the world as well. Buried under a bunch of tweets about the shutdown, the president sort of addressed this head on last Friday. He said drug prices declined in 2018, the first sort of addressed this head on last Friday. He said drug prices declined in 2018, the first time in nearly half a century. During the first 19 months of my administration, capital A, Americans saved 26 billion, capital B, on prescription drugs. Our policies to get cheaper generic drugs to market are working. Is that all true? So I would say that it's complicated. The president is sort of making it very simplistic. The thing is healthcare prices never go down. It's all about

a rate of growth. And so we did see a slower rate of growth in this last year for prescription drug prices than we had in the few years prior. How much credit the president actually deserved for that is a matter of debate. But I believe, you know, it's always hard to tell when he's when he starts talking policy exactly where he's getting his numbers from. But I believe that that's what he was referring to. Is there something to be said for the president sort of foregrounding this issue and tweeting about it? I will say President Trump seems cognizant of how much people care about drug prices. Before he took the oath of office, he accused pharmaceutical companies of getting away with murder. They're getting away with murder, pharma. Now, his policy agenda has been a little

humbler than the rhetoric, let's say. He's appointed a health secretary, Alex Azar, who used to work for Eli Lilly, one of our major pharmaceutical firms. Now, I know some people thought Azar would just be a shill for the drug industry once he got into HHS. And I want to say to his credit, the administration has to propose some interesting ideas for how to get drug prices under control. Trump's FDA has approved a record number of generic drugs over its first couple of years. And that is one way to try to help bring prices down. But I would say, you know, from Trump saying that pharmaceutical companies are getting away with murder, if you place that alongside the actual policy agenda that they pursued, it doesn't quite match up. His rhetoric has definitely outpaced what the administration has been able to do. Okay, so if there's only been like limited action from the executive branch, is there any hope from

Congress? Well, there might be a little bit. There's obviously a new House Democratic majority that has said it wants to make drug prices a high priority. And this is an area where Republicans in Congress have signaled that they're interested in taking some action. So the good news is that the administration and Congress are interested in doing something about drug prices because they know how much Americans care about it. What we'll see in the next couple of months and the next couple of years is whether they're actually able to act on it. Coming up, the president's got one or two ideas about how to fix this, but Congress has at least seven, and some of them are kind of radical. We're heading into the weeds next on Today Explained. Meatloaf a la mom, with roasted root veggies and thyme gravy.

It's commonly agreed that no one makes meatloaf quite like mom, but the chefs at HelloFresh will settle for second best by taking a page from her book and passing on this recipe that stays about as true to tradition as can be. These ground beef mini loaves are brushed with a ketchup glaze, served with tender roasted carrots and potatoes, and drizzled with an herby thyme gravy. And if you'd like to claim this recipe as your own, don't worry. HelloFresh will stay mom. If you like recipes and food but don't like going outside, try HelloFresh. You get $80 off your first month by going to HelloFresh.com slash Explained80 and enter the promo code Explained80. That's HelloFresh.com slash Explained80, entering the promo code Explained80. They'll bring the food and recipes

to your door. Okay, so Dylan, the president's taken a couple swings at this, but Congress is apparently ready to take it on? Yes. So last week, Senator Bernie Sanders and Representative Elijah Cummings came out with this package of bills that pulled together some of the most popular ideas out there for bringing down drug prices. And so based on that, based on some of the comments from some key Senate Republicans and my conversations with staff members on the Hill, drug prices are going to be a focus for the next year. There are going to be hearings. We can probably expect some legislation to start moving. And so I think, if nothing else, lawmakers have heard people's concerns

and they want to try to do something about it. How many ideas are out there? So I have counted out about seven. Seven? All from the Democrats? There are a couple that have some buy-in from Republicans. But for the most part, Democrats are a little more excited about this issue. They tend to have a little more fully thought-out policy ideas. But in a couple of circumstances, there are proposals that share support from both Democrats and Republicans.

Is it worth running down all seven? Let's do it. What order should we go in? So I've been thinking of them from the politically possible to the purely aspiration. Okay, that sounds good. So let's go in that order. So first, on the more practical side, you've got helping generic drugs get to the market faster.

And generic drugs, if people don't know, are basically knockoff versions of brand name medications that can be sold at a much lower price. And that's really the main mechanism we have in our market right now for bringing down drug prices. So I think the one thing that literally everybody who works on this issue, even the big drug companies agree on, is that helping generic drugs get to the market faster is a good thing because, especially for people who have an investment in the status quo, we're not really disrupting things.

We're just trying to make the system that we have today work a little bit better. Last year, the FDA approved more than 1,000 low-cost generics, the most in the history of our country. This year, we beat that record, approving even more generics. All right, so the first thing is generic drugs on the market. What's number two? That would be capping out-of-pocket costs that patients actually pay for drugs. So I think one thing to remember here is that we have drug prices, which are the prices that drug makers set for their

drugs, those $84,000 treatments for hepatitis C. And then you have drug costs, which I think of as this is what when a patient goes to the pharmacy at CVS, this is what they're asked to pay out of their pocket. It's their co-pay or their co-insurance or their deductible that this person actually has to pay. And that's usually more like, you know, $50, maybe like $10 for cheaper medications, or a couple hundred dollars for your more expensive medications. And so there are a couple proposals out there from Democrats to basically place a cap on how much money people would be asked to pay out of their pocket for prescription drugs. So number one, more generic drugs.

Number two, capping how much you have to pay out of pocket for said drugs. Yep. Number three? Letting Americans import medicine from Canada and potentially other countries. Okay, so like legalizing the thing that's already happening? Wow. Yeah, you hear those stories about people who go across the border from Vermont to try to buy drugs because they're cheaper over there. So yes, this is actually interestingly too an idea that does enjoy some bipartisan support.

There's obviously a whole bunch of conditions about safety and criminal penalties for people trying to bring in counterfeit drugs. And one of the concerns that you hear from the drug industry is that, how can we be sure that drugs coming in for other countries are safe? It's a bit of a messy issue once you kind of get into the details, but at its heart, it's pretty simple. Okay. Generic drugs, fewer out-of-pocket costs, trust Canadians. What's number four? Number four is something that you've heard both President Trump and Democrats talk about, which is more robust negotiations for medications under Medicare. So right now, Medicare is actually specifically forbidden under federal law from collectively negotiating drug prices with manufacturers. If you took the full purchasing power of Medicare, which covers 50 million people, and let the health secretary negotiate directly with drug manufacturers, we might be able to get

much lower prices than the current system allows us to get. There's very little bidding on drugs. We're the largest buyer of drugs in the world, and yet we don't bid properly. And we're going to start bidding, and we're going to save billions of dollars over a period of time. So what happens in this country is the drug company simply charges what the market will bear, any price they can come up with by which they can make money. It's a little more complicated than it sounds. The way that you're able to negotiate is if you are willing to restrict access to certain drugs. You have to be willing to tell a drug maker, we're not going to cover this or we're going to make it more difficult for patients to access your drugs in order to have any leverage over the drug maker to bring their price down.

Imagine the pharmaceutical industry funded ads that the government denied my grandmother's access to a cancer drug because they decided they didn't want to pay that price for it. That's where sort of the practical implementation is a little more complicated than the kind of one-line campaign stump. But the idea is that unlike all these other countries across the world, the U.S. government does not use the sort of full power in covering so many Americans to help bring down prices through direct negotiations. Okay, so we have generic drugs. We have out-of-pocket costs. We got trust Canadians. We have changed the way Medicare negotiates with the drug companies.

What is the fifth idea? So now we're getting a little more into ideas that probably aren't necessarily going anywhere anytime soon. This is like a fantasy, not an idea. Yeah. The next one that I had on my list was this idea that we should use foreign drug prices to control prices in the United States. Like we do what they do? We do what they do. We pay what they pay. Sure. We do what they do. We pay what they pay. If the United States is being charged $1,000 for a drug and Canadians or the UK are being charged $500 for a drug, under a proposal like this, the American price would just come down to meet what these other countries are paying.

The idea being that the United States should not be subsidizing drug cross across the rest of the country. Is that what we're doing? I mean, that's sort of, that's the argument. The idea being that we have a remarkable amount of innovation here, but we pay the highest prices in the world. And so like, but it's not like when new innovative drugs are released in the United States that they aren't released elsewhere. Right. Those drugs tend to migrate out across to the rest of the globe.

And yet those countries, because they have these more stringent regulatory systems in place, end up paying much lower prices. And so to make up for that, that's part of the reason that we see prices in the United States go so high. And so the idea would be to kind of to break that chain, so to speak, and to create sort of a link between what foreign countries pay and the United States pay. Sounds sensible. I just Googled how much an EpiPen costs elsewhere,

and as of April 2018, it was $300 in the U.S., $100 in Canada, and $38, roughly, in the U.K. That is the disparity that a proposal like this is trying to solve. Hmm, all right, so we got taking everyone else's prices into consideration as number five. What's number six? So this idea comes from Elizabeth Warren and Jen Schakowsky, an Illinois Democrat. And what they would propose is that under limited circumstances, the federal government could actually manufacture prescription drugs when price hikes have become so egregious. And so in these cases, they're focusing on generic drugs.

And so these are drugs that are supposed to be off patent. There's no longer a monopoly on them. Any company could in theory produce these drugs. Okay. But if we've seen – if we see situations where there could be a generic version of a drug, but one isn't currently being produced, or if there are only a couple of generic versions out there and we have seen either a price hike or a drug shortage, that in those circumstances, the federal government could actually step in and start producing its own version of the drug. And they would have to sell it, obviously, at a price to cover the costs of manufacturing it. But other than that, the drug would more or less be sold for as cheaply as it could be.

And so the idea here is if generic drug prices are going up, that's a market failure because the whole idea of generic drugs is to bring prices down. And so in those limited circumstances, Warren and Schakowsky would propose actually having the federal government step in and become a drug manufacturer itself to address those failures. This would sort of be a big new function for the federal government. And that kind of thing is just not usually going to be politically practical in divided government. And yet there's an idea, let's call it the seventh idea, that's even more... Even crazier. This comes from Bernie alone. I think it's worth noting. The most recent version of this bill, he was the only person who sponsored it.

So the idea is to basically build a new drug market. So we would reward companies with a sizable monetary prize for producing new medical treatments. But we would not grant with a sizable monetary prize for producing new medical treatments. But we would not grant them a monopoly. Once a drug has kind of been approved and come through and a prize has been awarded, then other companies would be allowed to start producing versions of it. And the idea being that if you have a bunch of different companies producing variations on the same kind of drug,

that helps to drag prices down. It's impossible for me to imagine that this could go anywhere anytime soon, given current political realities and the amount of influence that pharma wields in Washington, D.C. But I think more than anything, it shows us sort of the outer bounds of what could be possible and shows us how big lawmakers are willing to think to try to tackle this really thorny problem. So we ran the gamut there from things that are basically already happening, more generic drugs, to some wild Bernie Sanders, quasi-socialist, still pretty capitalist idea of giving huge gifts to drug companies when they do good. It's a wide spectrum, for sure.

So, I mean, obviously the first thing is already happening, so that could potentially come through Congress. But what about the rest of them? Do they have any viability? Drug importation, I think, is the most interesting one to watch because that's an idea that has gotten support from Republicans in the past. Senator Grassley indicated he wanted to take up an importation bill this year. It would definitely be the most sizable change, I think you could say, to the prescription drug market that would

have been enacted in recent history. But that's the one I'm going to be watching because it's something Trump has handed support for before. There are some Republicans in Congress who seem to like it. And if that manages to start going somewhere, then I think we know that this Congress is more serious than any before it about trying to do something about drug prices. You mentioned the amount of influence that pharmaceutical companies have in this town. With the president and Democrats and Republicans on board here, does that make it harder for pharma to fight changes like these? I think pharma has recognized in the last couple of years that the ground may be changing underneath them. That doesn't mean it's going to come easy. They're going to fight every step of the way. And it's been a couple of years now that drug prices have been atop concern for Americans

and lawmakers have been saying they want to do something about it. And nothing super substantive has happened yet. This problem isn't going anywhere. If you need a medication, you absolutely need it. And so that is, I think, going to always be the kind of driving force that's going to prevent lawmakers from ever being able to ignore this until something is done. Dylan Scott writes about Congress and health care for Vox. I'm Sean Ramos from This Is Today Explained. Thanks again to HelloFresh for the support of the show today. You can take advantage of HelloFresh's special offer for 2019.

You get $80 off your first month by going to HelloFresh.com slash Explained80. When you enter the promo code Explained80. They made it easy for you. They're both the same. Hellofresh.com slash Explained 80. And the promo code is Explained 80.