To put it mildly, prescription drug prices are surging.
Some of the most egregious examples of price-gouging fueled anger that help buoy U.S. Sen. Bernie Sanders’ insurgent presidential campaign last year. Absurdities such as laws that prohibit Medicare and other healthcare programs from negotiating drug prices explain the constant increase in the cost of pharmaceuticals, though some analysts say the dynamics between industry, healthcare providers and government indicate that changing these policies change may not necessarily work.
Other tactics, such as a more stringent enforcement of U.S. patent law, have been suggested in Congress. Even President Donald Trump called for action on skyrocketing drug costs – though his fractious relationship with Congress could get in the way of significant change at the policy level.
But at a time when advertising revenues on television are stagnant or even declining, pharmaceutical companies continue to spend billions on commercials – and it's fueling the rise in drug prices. Despite the drug companies’ insistence that they need to charge these prices to cover their research and development costs, Ana Swanson of the Washington Post argued two years ago that 9 out of 10 large pharmaceutical firms spent more on marketing than scientific research. Watch television during one of the few remaining soap operas or the networks’ evening news, and the evidence suggests those trends have not budged much.
Nevertheless, public pressure and outrage could nudge more companies to become more conscious about their impact on public health, notably by changing how they market and price some of the most needed drugs on the marketplace.
To that end, two companies -- a retailer and drug manufacturer -- are seeking to capitalize on American patients’ growing angst.
On Thursday, Novo Nordisk and CVS Health announced a new savings program that would offer immediate discounts on several medications. Diabetes drugs -- including insulin brands Novolin R, Novolin N and Novolin 70/30 -- will be sold for $25 per 10-milliliter vial. Novo Nordisk says this could result in savings up to $100 per purchase for patients who do not benefit from a pharmaceutical drug coverage plan.
Those drugs will be available at over 67,000 retail stores, including at CVS drugstore and Target locations.
If scale and consumer reach can turn an industry around, then watch for Novo Nordisk’s competitors to follow suit. One study suggested that the cost of insulin more than tripled in the U.S. between 2003 and 2013.
Concern over insulin’s affordability led to one lawsuit, accusing three insulin makers of price-fixing, to be filed in a Massachusetts federal court in January. Novo Nordisk, Sanofy and Lilly were named in the litigation, which alleges those companies violated the 1970 federal Racketeer Influenced and Corrupt Organizations Act. Novo Nordisk's stock price slumped 5 percent since the lawsuit was filed and remains stagnant. Rebuilding consumer trust could help the company improve its reputation as well as the performance of its stock shares.
Meanwhile, CVS appears to have remained above the fray as consumers and politicians demand accountability from drug companies. In fact, the retail chain’s partnership with Novo Nordisk is another step in what CVS says is its work to keep the price of pharmaceuticals affordable.
In a progress report issued earlier this week, CVS says customers of its benefit management program saw overall costs increase by only 3.2 percent between 2015 and 2016, the smallest uptick in four years. Furthermore, the company claimed 38 percent of its customers actually saw a reduction in pharmaceutical drug spending.
With at least 29 million Americans dealing with diabetes and 6 million of them regularly taking insulin, CVS is on track to see that trend repeat at the end of 2017.
Image credit: Brian J. Matis/Flickr
Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's worked an lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.