For the first time in decades, U.S. prescription drug spending dropped last year — a phenomenon largely stemming from the fact that, faced with spiraling health costs, Americans are being forced to cut back on their care wherever they can.

According to a new report from IMS Institute for Healthcare Informatics, the nation’s total spending on prescription medications dropped from $329.2 billion in 2011 to $325.8 billion last year. Similarly, the average amount that each American spent on their medications in 2012 fell to $898, representing a decline of $33. This is the first time the IMS has recorded a drop in drug spending in the 58 years that the institute has been monitoring the data.

Part of the decline is due to more cheaper, generics drugs entering the market, a positive trend that helps Americans better afford their medication and ultimately lowers health costs. But that’s not the whole story. According to the IMS’ director of research, Michael Kleinrock, many Americans are skipping out on their prescriptions because they’re struggling to afford all of their medical costs, and are therefore being forced to ration their health care:

IMS found affordability of health care remains a big problem for many Americans, with growing out-of-pocket costs forcing people to go without needed doctor visits, medicines and other treatments.

For some, that was because they lost jobs or homes during the worst recession in decades. But higher costs also are hitting many employed people who have health insurance.

Employers have been raising health costs for their workers well above the inflation rate, through higher copayments, premiums and deductibles. Many commercial insurance plans now have annual deductibles — the amount a patient must pay before insurance kicks in — that exceed $1,000, Kleinrock said. [...]

“Even patients with insurance are feeling the pinch and have been reducing their use of health care,” Kleinrock said.

IMS’ findings are consistent with other studies that have found that low-income Americans are forgoing their medication because they can’t afford it. One out of every five Americans has asked their doctor to prescribe a cheaper medication in order to lower their prescription costs — and, compared to wealthier people, poorer patients are more than twice as likely to avoid taking their medication as directed in order to save money.

Of course, as Americans continue to struggle to afford their prescription drugs, Big Pharma is reaping the benefits. The 11 largest drug companies’ profits have been soaring for the past eight years, and they raked in almost $85 billion in 2012.

Unfortunately, profiting at the expense of workers isn’t exclusive to Big Pharma. As Kleinrock notes, even the Americans who currently have insurance are now being forced to cut back on their care, since their employers continue to shift more of their health care costs onto them. Across the country, employees’ contributions to their health insurance plans have skyrocketed at the same time as those workers’ wages have stagnated. That’s especially true for the low-wage workers who are employed by large chain companies in the restaurant industry, whose CEOs have repeatedly complained about the cost of providing adequate health benefits under Obamacare — and keep attempting to find unscrupulous ways to circumvent the health reform law.

Two pharmaceutical giants — Merck and GlaxoSmithKline — have announced that they will drop their prices for HPV vaccines that help protect against cervical cancer to about $4.50 per dose for the world’s poorest countries. The move may help tens of millions of girls in dozens of developing nations gain access to life-saving medications that they would previously have been unable to afford.

Although some critics noted that the companies could drop their prices even further, spokespeople for Merck and Glaxo emphasized that they expected the vaccines’ costs to plummett further in the future. That’s particularly significant given that 275,000 women in poor countries die from cervical cancer every year, mainly due to the high costs of preventative medical services:

The low price will initially apply to a few million doses for demonstration projects in Kenya, Ghana, Laos, Madagascar and elsewhere, but Dr. Seth Berkley, the alliance’s chief executive officer, said he hoped that by 2020, 30 million girls in 40 countries would get the vaccine at that price or less.

The vaccines cost about $130 a dose in the United States, and each girl needs three doses. The lowest price that any other agency or government has negotiated, Dr. Berkley said, is the $13 paid by the Pan American Health Organization, which negotiates a bulk price for Latin American countries. [...]

Dr. Berkley described the new prices as a ceiling, and said he expected them to go down as millions more doses were ordered and as rival vaccine makers from lower-cost countries like India and China entered the field. Other companies, including the Serum Institute of India, the world’s largest vaccine manufacturer, are developing papillomavirus vaccines, but at the moment only the Glaxo and Merck vaccines have approval from the World Health Organization.

Combined with robust public outreach efforts to administer the vaccinations, the lower prices could swell the ranks of immunized women in developing nations beyond the U.S.’s current rates, which the Centers for Disease Control (CDC) has deemed “unacceptably low.”

In fact, the financial and medical benefits of the price cut for poor women could be even greater if the shots are given to younger girls aged nine to 13. A recent study published in the Journal of the American Medical Association (JAMA) found that just two doses of the vaccine were enough to immunize girls in that age range, as opposed to the usual three — meaning that women in developing nations could be protected for a lifetime for just $9 or even less.

Drug accessibility in developing nations has always been a major problem in the public health community, since brand name pharmaceutical companies tend to charge much more for their products than residents of such countries can afford. These drug makers also extend the life of their product patents through gimmicks such as adding “inactive ingredients” to the original medications. The Indian Supreme Court recently ruled against pharmaceutical giant Novartis for precisely this, instead siding with a generic drug manufacturer that distributes a much cheaper — but equally effective — version of the brand name company’s cancer drug. Merck and Glaxo’s proactive decision to cut their HPV vaccine prices means that there are even bigger savings in the future as generic drug makers step up their efforts to compete in the pharmaceutical marketplace.

A group of over 100 doctors who specialize in chronic myeloid leukemia (CML) published a detailed editorial in the medical journal Blood on Friday that slams pharmaceutical companies for jacking up cancer medication prices to unaffordable degrees. The open letter also calls for immediate reform to help patients access drugs that mean the difference between life and death for millions of Americans.

The doctors argue that, despite the creativity and innovation involved in creating cancer drugs, pharmaceutical companies still charge far more than they are objectively worth, knowing that patients have no other choice than to pay the prices they dictate. The writers then urge an all-in approach to reforming the U.S. medical culture that facilitates price-gouging at the expense of Americans’ physical and financial health:

If drug price reflects value, then it should be proportional to the benefit to patients in objective measures, such as survival prolongation, degree of tumor shrinkage, or improved quality of life. For many tumors, drug prices do not reflect these endpoints, since most anti-cancer drugs provide minor survival benefits, if at all. For example, in pancreatic cancer, where the median survival is 6 months, a new drug that may prolong survival by 2 months, and is priced at $100,000 per year, will cost $67,000 over 8 months survived, or $33,500 per additional month lived, equivalent to $400,000 per additional year lived. [...]

As physicians, we follow the Hippocratic Oath of “Primum non nocere”, first (or above all) do no harm. We believe the unsustainable drug prices in CML and cancer may be causing harm to patients. Advocating for lower drug prices is a necessity to save the lives of patients who cannot afford them. Pricing of cancer and other drugs involves complex societal and political issues which demand immediate attention, and which will need to consider many factors and involve many constituencies…We propose to begin the dialogue by organizing regular meetings, involving all parties concerned, to address the reasons behind high cancer drug prices and offer solutions to reduce them. For CML, and for other cancers, we believe drug prices should reflect objective measures of benefit, but should also not exceed values that harm our patients and societies.

The doctors’ assertions are borne out by the facts. The high costs of treating chronic conditions causes one in four American seniors to go bankrupt. With regard to cancer specifically, the trend is even more pronounced. One study conducted over 14 years in Washington state found a clear relationship between cancer registry data and bankruptcy court records. “Patients diagnosed with cancer may face significant financial stress due to income loss and out-of-pocket costs associated with their treatment,” said health care economist and study author Dr. Scott Ramsey. “On average, bankruptcy rates increased fourfold within five years of diagnosis.”

Pharmaceutical companies often argue that the bloated costs are necessary to cover the substantial research investments and trials-and-error of creating a successful drug. But that logic is undermined by these same companies’ profit-maximizing gimmicks, such as adding inactive ingredients to pills so as to extend expensive brand name drugs’ patents, and paying kickbacks to pharmacies and generic drug manufacturers in exchange for higher market share.

Some developing nations have actually gone beyond the doctors’ suggestions and ruled against brand name cancer drug makers in favor of less costly generic drugs in an effort to help their poor populations access the critical medicines.

Novartis Pharmaceuticals Corp. isn’t having the greatest year — and things just got much worse for the drug giant. In a civil suit that builds on a separate, sealed whistleblower case, federal prosecutors charged Novartis on Wednesday morning with paying out kickbacks in an effort to get pharmacies to switch kidney transplant patients’ anti-transplant rejection generic drugs with the brand-name Novartis product Myfortic.

The scope of Novartis’ alleged fraud is staggering. In the civil complaint, prosecutors charge that the company’s U.S.-based wing “used a program of rebates and discounts to boost sales of its anti-rejection drug.” Since Myfortic is far more expensive than its generic counterparts, this market share-gouging cost government health entitlements such as Medicare and Medicaid “tens of millions of dollars in reimbursements to pharmacies for which they were never entitled,” with Myfortic sales at companies that received the bribes totaling over $100 million. Some of those pharmacies allegedly received kickbacks making up a full 20 percent of their total Myfortic sales, while the U.S. government drove an outsized 47 percent of the drug’s total sales by specialty pharmacies.

If the allegations are true, then not only did Novartis brazenly defraud the United States government — the corporation and its co-conspirators also compromised public safety and patient health. As the civil complaint states, “Hundreds, possibly thousands, of transplant patients have undergone switches in their medication as a result of the recommendations from pharmacies that were based on undisclosed financial, rather than independent critical, considerations.”

Medicare and Medicaid fraud by pharmaceutical companies is the main driver of Justice Department settlements under the False Claims Act — the same statute that Novartis is being sued under. In 2012 alone, the Justice Department nabbed $3 billion from doctors and pharmaceutical companies that swindled the public entitlement programs by charging the government more than their services were actually worth. In fact, in 2010, Novartis had to settle a separate case involving kickbacks and misuse of drugs, paying out $420 million in criminal and civil damages. The newest slate of charges against the drug giant prompted Manhattan U.S. Attorney Preet Bharara to call Novartis “a repeat offender.”

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Over the past decade, deadly prescription drug overdoses have soared to record levels. But, since abusers often get their drugs from a friend or family member who obtained them legally, it’s difficult for authorities and public health advocates to effectively crack down on this issue. But new technologies could help — specifically, as group of Brigham Young University (BYU) students suggest, an electronic pill bottle that regulates how many painkiller pills can be dispensed at once.

The high-tech regulator, a project that began as part of BYU’s Engineering Capstone program, allows pharmacists to use USB technology to ensure that people aren’t accessing more pills than they’re supposed to be taking. The pill bottle will only dispense the accurate dosage that the pharmacist specifies, preventing their patients from abusing the drug:

Their invention, called Med Vault, basically lets a pharmacist give instructions to the bottle, which then dispenses painkillers accordingly to the patient. Via a USB connection, a pharmacist can use special software to load the pills and program how many can be dispensed per day.

“They can dispense one pill every four hours or two pills every 24 hours or whatever the doctor prescribes,” said BYU senior Madison Clark, the team’s electrical engineer.

It’s a pretty complex design that the team claims is tamper-resistant and break-resistant. The Med Vault requires users to put in an access code to get a pill, making it harder for the drugs to get into the wrong hands (e.g., a small child).

The students specify that their device is intended for drugs like painkillers, not life-critical medication that could be jeopardized if the technology were to malfunction.

The project was sponsored by Blackstone president Chris Blackburn, who is also a paramedic. According to Mashable, Blackburn was especially interested in the students’ idea after witnessing firsthand the effects of prescription drug overdoses that send people to the hospital. He has already filed a patent and hopes to begin producing the prototype — so even though the smart pill bottle began as a school project, it could eventually be available for mass consumption.

It’s not the first creative method to attempt to curb prescription drug abuse, which is the United States’ fastest growing drug problem. In New York City, the police force is experimenting with implanting GPS chips in pill bottles to better track stolen drugs and prescription stockpiles.

A new government report from the Department of Health and Human Services (HHS) finds that Medicare Part D — the prescription drug benefit that helps eligible seniors afford the medication they need — could have made over $111 million in 2009 alone with a simple change to the way it pays insurers. The findings illustrate that smart systemic tweaks to Medicare’s payment structure could significantly reduce the program’s costs without the need to slash benefits for elderly Americans.

Medicare Part D currently subsidizes the cost of medications on private prescription drug plans — but as the program is structured right now, those private plans can make money off of payments from the federal government without having to provide benefits. Under current law, Medicare has to make advance payments to seniors’ prescription drug plan provider at the beginning of every month. So even if a senior doesn’t submit a claim for drug coverage that month, their plan provider still gets paid.

There’s nothing wrong with that; it’s just how insurance works. But the 2003 law that created the drug benefit also allows private Part D plans to “invest these Medicare funds in interest-bearing instruments until the funds are needed to pay for drug costs and administrative services.” That allows private insurers to take federal Medicare dollars, invest them in an account that garners interest, and then keep netting those interest profits until the beneficiary submits a claim and forces the insurer to pay out. There are no limits to how much money insurers can make off interest payments in this fashion.

And as it turns out, this is costing the government millions of dollars in potential savings every month. The HHS report found that in calendar year (CY) 2009, Part D plans held onto — and profited off of — federal Medicare funds for an average of 20 days before having to pay out pharmacy claims. The auditors go on to explain that if the situation were simply reversed, and the federal government was allowed to hold on to and invest those funds for 20 days before having to pay the private insurer, then Medicare would have netted “$111.2 million of interest income in CY 2009.” Although the Center for Medicare Services claims that such a policy change would just lead Part D providers to raise the price of their bids to the government, the report points out that any decreased savings from such a move would be offset by “the higher interest earned by Medicare trust funds” compared to that earned by Part D plans.

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22-year-old Chris Reed of Algonquin wants to give young former addicts a place to indulge in some R&R — recovery and recreation, that is. The former heroin addict and president of the recovery nonprofit New Directions Addiction Recovery Services has — with the help of some fellow recovery patients — led the charge in creating “The Other Side,” a completely volunteer-funded “sober bar” set to open in Crystal Lake, Illinois at the end of the month.

Although alcohol and substance abuse are often stratified in everyday conversation, they are rooted in similar dependencies and have a fair amount of interplay. Substance abusers are much more likely to have an alcohol dependency than vice versa, and young people between the ages of 18 and 24 are at the highest risk of having co-occurring alcohol and substance abuse problems. That’s why The Other Side aims to be a space in which young Americans recovering from a drug habit can take a breather — without the temptation of booze and its potential to cause a relapse. “If you’re choosing a sober lifestyle, this will be a healthy atmosphere. It’s an important place for people in recovery,” Reed told the Daily Herald. “We’re still young, and we want to hang out. You can’t hang out with 40 people at your house.”

The whole effort is not-for-profit, intertwined with other recovery groups, and will hopefully become an additional therapeutic resource for recovering addicts:

The Other Side is not a business — everyone involved is keeping a day job, and it’s only open four nights a week, Thursdays through Sundays. Any money raised will fund drug education and treatment initiatives by their nonprofit and others, including Wake the Nation, a Facebook-based drug awareness group led by New Directions board member Cassandra Wingert, 23, of Western Springs. [...]

Falling somewhere between “nightclub” and “rec center,” The Other Side is opening in the warehouse loft space behind Reed’s construction company on Berkshire Drive. It has room for people to relax on couches, watch TV, play pool or video games, listen to live bands, or dance along with a disc jockey. There will be security, and people will be carded at the door to make sure they’re at least 18 years old — and sober. [...]

The Other Side’s creators hope their bar will help people in various stages of recovery by providing them a place to go, and a place to be with others who understand the struggle of addiction.

The space also features photographs of late addicts who succumbed to their struggles with drugs — a solemn reminder of what can happen without a robust support system for Americans who are trying to get clean. Social exclusion, loneliness, and isolation are all significant risk factors for both mental illness and substance abuse, making group-based recovery efforts particularly important. What makes efforts such as The Other Side promising is that they close the gap between the social and therapeutic spheres of recovery, giving former addicts a place to be with both non-addict and addict friends.

The New York Times recently reported that rates of ADHD diagnosis among school-aged children has risen to 11 percent — a record high. That number is partially a consequence of more accurate ADHD diagnoses — but it presents a stark choice for parents debating the best treatment options for their kids. Medications such as Adderall and Ritalin are a common choice — but a new analysis of previous ADHD studies suggests behavior training “that teaches parents to understand their children’s needs” might be a better long-term care option for young children.

The new study, led by Dr. Alice Charach of the Hospital for Sick Children in Toronto, examined eight past analyses on the effect that parental behavior training “which consists of about 10 to 12 sessions that teach parents how to better understand their child” had on preschoolers with ADHD. Those studies found that the parent-oriented treatment led to about the same behavioral improvement in children as medication, but without causing the negative side effects associated with ADHD drug use by young kids:

“The main thing is really helping the parent understand their child and read their child,” [Charach] said.

For example, the sessions may help parents understand their child acts up after an hour of being at a birthday party, and that they should leave earlier.

Only one “good” study evaluated Ritalin use in preschoolers. That study showed a similar improvement in behavior, but the preschoolers were at risk for side effects, including irritability and slowed growth.

“For whatever reason children in this age group are more sensitive to the Ritalin side effects,” said Charach.

Questions surrounding the long-term efficacy of ADHD medications have stirred debate among pediatricians and psychiatrists. In a 2012 editorial for the New York Times, a professor emeritus of psychology at the University of Minnesota’s Institute of Child Development argued that there is considerable evidence showing that medication was effective in the short-term, but “after three years, these effects had faded, and by eight years there was no evidence that medication produced any academic or behavioral benefits.”

Early intervention by parents trained to approach their children in an appropriate way could end up being more beneficial in the long term, and could be particularly effective in a regimen that also includes medications if necessary. That’s particularly important considering that ADHD has lingering long-term effects well past childhood and is a strong indicator of co-occurring mental illness in both adults and children.

Still, beneficial or not, the question of costs will weigh heavily on parents considering the potentially high out-of-pocket costs associated with the personalized training sessions. A combination of factors — including poor reimbursement rates by government insurance programs and private insurers to mental health care providers, as well as a lack of school-based resources for treating mental health — could price out parents looking to take advantage of this treatment approach.

On Monday, India’s Supreme Court rejected a patent application by pharmaceutical giant Novartis for Veenat, a generic version of the company’s top-selling cancer treatment drug Gleevec. As the New York Times reports, public health advocates cheered the decision as a major victory for the country’s low-income population, as continued access to the affordable generic could save millions of lives. But the underlying differences in how intellectual patents function in India versus the U.S. also reveals a major source of Americans’ inflated prescription drug costs.

India, which exports $10 billion worth of generic medications every year, didn’t pass a robust intellectual property patent law until 2005. This law allowed for patents on medications discovered after 1995. At first glance, that would appear to qualify Novartis to pursue a patent on Veenat. But as the Times explains, the Indian justices concluded that an older, patented Gleevec version was too similar to the post-1995 version to qualify the later iteration as a “new” drug — a heightened standard of scrutiny that the U.S. does not share:

In 1993, Novartis patented a version of Gleevec that it later abandoned in development, but the Indian judges ruled that the early and later versions were not different enough for the later one to merit a separate patent. [...]

Anand Grover, a lawyer who argued the case on behalf of Cancer Patients Aid Association in India, said the ruling had a sweeping effect since it confirmed that India has a very high bar for approving patents on medicines.

“What is happening in the United States is that a lot of money is being wasted on new forms of old drugs,” Mr. Grover said. Because of Monday’s ruling, “that will not happen in India.”

Indeed, the vast majority of drug patents given in the United States are for tiny changes that often provide patients few meaningful benefits but allow drug companies to continue charging high prices for years beyond the original patent life.

In a classic example, AstraZeneca extended for years its franchise around the huge-selling heartburn pill, Prilosec, by performing a bit of chemical wizardry and renaming the medicine Nexium. Amgen has won so many patents on its hugely expensive erythropoietin-stimulating drugs that the company has maintained exclusive sales rights for 24 years, double the usual period.

This culture of Big Pharma companies reauthorizing U.S. drug patents by instituting negligible changes to the “inactive ingredients” in their products perpetuates high costs for both the American people and public insurance plans that must subsidize the price of expensive, brand name drugs. Pharmaceutical companies’ ability to extend their intellectual property protection (IPP) is a consequence of a series of laws that were passed beginning in the 1980s. While these laws were meant to encourage drug innovation, they have also had the adverse effect of extending patents on certain drugs’ active ingredients to as many as 20 years, as this data compiled in a National Institute for Health Care Management (NIHCM) Foundation report shows:

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