Healthy Living

Why These Rheumatoid Arthritis Drugs Come with a Price

Why These Rheumatoid Arthritis Drugs Come with a Price

Healthcare and treatment can be extremely expensive. However, it is still hard to believe that one rheumatoid arthritis drug costs $40,000 a year - and even with competition, the price just won't go down.

Renda's story

Renda is a wife and a mom trying to make it work like so many others out there. However, her husband, son, and daughter all have rheumatoid arthritis, and the cost associated with their medications is beginning to seem debilitating.

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Many believe that insurance takes some of the stress off of paying for disabling autoimmune diseases, but Renda knows better than anyone that this simply isn't the case. Even with their insurance, her family had to pay $600 a month (in copayments). However, that's not all. They also had to face $16,000 worth of medical bills in 2016 due to a previous insurer refusing to cover all of the treatments her daughter, only nine years old, required.

The way she feels about it is simple: "The cost should not be this high."

As a result, her husband had to leave his job at an engineering firm to begin work as a machinist at a medical device company in order to be offered an insurance plan that has more affordable copayments. Renda's daughter was accepted into a clinical trial at Cincinnati Children's hospital that pays for the drug, but not the cost of traveling to the center, which can add up significantly.

Drugs for RA

Humira and Enbrel are two of the biggest names in the treatment of rheumatoid arthritis. In the last three years alone, their wholesale prices have risen over seventy percent.

The first drug to treat rheumatoid arthritis became available slightly over ten years ago, but since then over ten more have been presented. According to supply and demand, this would insinuate that prices would drop as there are many competitors. However, industry price-setting practices, marketing tactics, and legal challenges are able to keep these prices exorbitantly high, at the cost of the patient. That same RA drug that initially came on the market cost $10,000 a year, and now costs over $40,000, regardless of its competition.

Peter Bach, the director of Memorial Sloan Kettering's Center for Health Policy and Outcomes explains this unusual economic situation, "competition generally doesn't work to lower prices in branded specialty drugs."

As a result, Humira has the highest revenue of any prescription drug. Revenue is projected to hit around $17 billion this year, for the manufacturer and marketer of the drug, AbbVie. However, Humira is not alone in its exorbitant cost. Other treatments such as Enbrel and Remicade, made by Amgen and Janssen Biotech, respectively, are also in the top five drugs by revenue. Some of these drugs have alternate uses as well, such as Crohn's disease, psoriasis, or psoriatic arthritis.

Pharmaceutical supply chain

In the United States, the pharmaceutical supply chain is different than in many other countries, often to the benefit of many unexpected players. For example, middlemen like pharmacy benefit managers, hospitals, or doctors' offices are able to profit off of prescribing the most expensive drugs to patients. They do this to receive a rebate for the amount of money they gain for the pharmaceutical company. Therefore, the middlemen do not mind when drug producers raise prices, as they receive the same percentage, resulting in a larger rebate.

Often, PBM firms claim that they share the rebates with insurers or employers, but that is rarely the case.

There ends up being an even more detrimental effect in the offering of these rebates: Companies that create new treatments become unable to gain traction among the more costly products, due to all the middlemen exclusively prescribing the high-ticket items.

Andreas Kuznik is a senior director at Regeneron Pharmaceuticals, and he explains this problem: "We could give [our new drug] away for free and ... it would still be more economically advantageous" for PBMs and insurers to recommend Humira to patients.

Thomas Amoroso is a medical director for medical policy at Tufts Health Plan, and said that if insurers offered a lower-cost innovative drug as an alternative, "our Humira rep would be knocking on our door next week and saying, 'Hey, that rebate we gave you? We're taking it back.’"

Clearly, the pharmaceutical supply chain is full of complications that many consumers do not fully understand, and are unaware that there are many great and potentially more affordable drugs that they are not being given access to due to this process of rebates and incentives.

How much are these rebates?

Many are curious as to just how much money is involved in these rebates, but PBMs refuse to offer this information. However, studies have shown that the amounts are massive. A consulting firm called the Berkeley Research Group specializes in advising major employers, and stated that around $106 billion in rebates and other discounts was paid to the government, insurers, and PBMs for their drugs. This number is up almost $40 billion from only two years prior.

Are there other drugs for RA?

So, it's clear that rebates are huge in the industry - but are there really any alternatives to medication for rheumatoid arthritis? Well, the answer seems to be yes and no.

The majority of the drugs used to treat rheumatoid arthritis are biologics, which are considered to be complex due to the fact that they are made in living organisms. Biosimilars are what could be considered clones of these biologics, but they often have lower price tags (much like the generic form of other drugs).

So, for rheumatoid arthritis, many biosimilars have become Food and Drug Administration approved (ranging from those similar to Humira, Remicade, and Enbrel), but the majority of these options are involved in court cases regarding patents - delaying their ability to the public.

One notable example is Pfizer's lawsuit against Johnson & Johnson. Pfizer had produced a lower-priced biosimilar of Remicade, but Johnson & Johnson utilizes such exclusionary contracts and threatens withdrawing rebates, preventing any success of Inflectra - despite its efficacy and lower price tag.

Johnson & Johnson stated that they are "driving deeper discounts that will lead to overall lower costs." However, many have their doubts as to the veracity of this claim.

Are rebates ever good?

Steve Miller is the chief medical officer for Express Scripts, which is one of the largest PBMs in the United States. He explains his views on the matter: "The rebate system exists because [insurers, employers, and other clients] want discounts. While individual patients would get the benefit, everyone else's premiums would go up [because the rebate savings would not flow back to the insurer]. Changing where the rebate goes doesn't lower the price of the drug."

However, many patients are feeling as if they are not receiving any of the benefit that the middlemen receive, and feel as if the system is only benefitting the industries, and not the people that are in dire need of the drug. It is possible that eventually rebates will change, but in the meantime working for a company with good health insurance seems to be the necessary option for those with rheumatoid arthritis.