October 19, 2018

WATCH: Cassidy Joins National Academy of Medicine’s Discussion on Affordable Drugs

WASHINGTON—U.S. Senator Bill Cassidy, M.D. (R-LA), a member of the Senate health committee, recently joined National Academy of Medicine President Victor Dzau for a panel discussion on “Affordable Medicines: Access, Innovation, and the Public Interest.”

The panel also featured former Lockheed Martin CEO Norman Augustine, Anthem President and CEO Gail Boudreaux, Merck CEO and Board Chair Kenneth Frazier, and U.S. Department of Health and Human Services Deputy Assistant Secretary for Planning and Evaluation John O’Brien.

In May, Cassidy unveiled a white paper of new ideas to make health care affordable again. As a gastroenterologist who cared for uninsured patients for years, Cassidy has seen first-hand how patients are hurt by high prescription drug costs.

Key excerpts of Cassidy’s remarks during the discussion are transcribed below.


CASSIDY: [T]he financial burden of drug costs is something that can cripple our nation and also obviously can cripple families, and does. Now let me quickly point out that there are really rarely villains in any of the supply chain, but there’s villainous incentives. There are terrible incentives which work against that which should be primary, which is the patient, and then just after that, the taxpayer. I can give you examples. I can give you examples that we perhaps all know of, of two over the counter drugs which together would cost you $20 out of pocket. They’re packaged together and sold on Medicare for $2,000 a month. Twenty bucks of generic for $2,000 a month.

The Medicare rebate system which actually was supposed to render to the benefit of the patient and of the taxpayer, and now probably cost them more while saving pharma and saving the manufacturers money. That’s slick. I’m just telling you, that’s slick.

Pay for the delay. A drug which has been off of patent for years which is $48,000 in the U.S. and $8,000 in Canada.

Or the 340B program, where there is evidence that hospitals and facilities on the 340B program actually are less likely to treat the Medicaid [patient] and the uninsured. Now that’s upside down.  

Now there’s a tension: profit-driven innovation, which means that no longer am I scoping somebody at three in the morning at a public hospital for the uninsured, banding varices secondary to hepatitis C-induced cirrhosis. Isn’t that fantastic. 

Versus the exploitation of regulations for profit. That is existential for our country and for many families. This is what we must resolve. I personally favor market solutions. Right now we do not have it. We have entities that are on both sides of the transaction. They know both sides, but the payer does not. Guess who does a heck of a lot better in that transaction? And so I think we need to return to where we do have market-based solutions. 

My fear is, my fear is that the hard left will take over and they will have less visceral respect for the profit-based innovation that I have so seen, and more disregard for the exploitation of regulations for profits, and that which is—as Ken mentioned—bringing us to the advent of cures of cancer that we just never thought could be cured before. Somehow that will die aborning. Not right away, but it will gradually, before we get that cure for Alzheimer’s, or the cure for other cancers.  

So wearing my doctor hat and my Senate hat, I try and put them together and say, the solution would be if we go back to making that patient and that taxpayer primary, and if we do that not just as a matter of rhetoric or as a throwaway line at a conference like this, but looking at each regulation and say, does the end result mean that it’s going to be, all things considered, better for that patient. Right now it’s not, not for the diabetic who can’t afford her insulin. If we can make it that, then we will have accomplished our goals.


CASSIDY: I’m always afraid of monopsony pricing whereby the purchaser is such a major purchaser that the purchaser can dictate the price. Now, again, we have this tension between profit-fueled innovation or profit-taking. … But if it’s a monopsony-based type pricing mechanism then I truly think it’s going to be so tempting for someone to say, ‘ah, we can lower cost, we’re just going to pay you this.’ And venture capital flees. And again, it flees before we have a cure for Alzheimer’s, as one example.

Now it may seem a little counterparadoxical, I’m also fearful on the other side of industry capturing the regulators. And coming up with this byzantine type of negotiations, which we have now, in which on the backside folks end up making far more money than as apparent. And so, I’ll lay it out like that. I’m not adverse to it, but I think there has to be safeguards as to how we do it.


CASSIDY: It’s also important to note that the initial price of a drug does not necessarily have a relationship to that cost of R&D. And there was an article in the Wall Street Journal from a couple years ago where Pfizer had basically figured out, you know, this is how much oncologists will pay for a medicine and not be sticker shocked. But it was quoted in the paper, in the article, it had no relationship to the R&D. I’ll also point out that the drug Gleevec, which has been off patent for years, $48,000 in the U.S., $8,000 in Canada, that’s not R&D. That drug has gone up dramatically since I was prescribing it way back when. And so, yes, we need to get profit-driven investment, but some of this is just profit-taking.


CASSIDY: Insulin, it may be $100 net cost but a $400 cost. Now, industry is trying to make a [profit], at least some industry. But I can tell you, my diabetics, there’s a guy in Lafayette, Louisiana, who just wears me out because his daughter the diabetic is just paying so much. So there are some Part D drugs in which rebates are an incredible percent of that list price, and if the patient’s in the portion where she is paying 100 percent, she’s getting hosed. She’s getting hosed.


CASSIDY: Australia has a way of evaluating medications and if they decide that the medication doesn’t really bring value, you can still get it but you just have to pay the difference. So, if there is a combo drug of over-the-counter Motrin with over-the-counter Pepsid, which would cost you $20 a month, but as a combination is going to cost you $2,000, well if you want to pay [the difference], then you can still get it if you wish.

On the other hand, I used to treat Crohn’s patients, now there’s someone in this room you has Crohn’s disease and you’re in this room, you’re not in a hospital. And it used to be that the major cause of a surgery in a Crohn’s patient was previous surgery. And you would keep snipping away a portion of her bowel, portion of her bowel, portion of her bowel, because you could not control the inflammation. You gave her high-dose steroids and it was just a mess. And now they take an infusion once a month and they’re great. They’re great. Talk about value! And they would figure that out just like that. You don’t need National Academy of Medicine to do that because you have insurance companies saying, ‘wait, one hospitalization pays for heck of a lot of infusions, we’re going the infusion route.’ So, I think a two-track period, and I applaud the administration, I think we can also rely upon market phenomena. I will tell you, it is amazing the databases that once they’re crossed together can give you information regarding patient outcomes. … 

I totally agree it’s fragmented. … So we’ve been working in Louisiana, what if we get X amount of dollars and we treat all of our Hepatitis C patients who are on Medicaid and in prison, and what would that do to real cost? Now, I’m a hepatologist, I know how to do a spreadsheet, I put it together using Medicaid data, which is difficult to come by. But Medicaid data is different then your data. … It is going to be very hard for anybody, unless they are all-seeing and all-knowing, and that turns out to be God, in order to get everybody’s data in a way that would be effective not just for Medicaid, but also for Medicare, and also for the prison system. So I do think that at some point you’ve got to introduce it into the real world, and introducing it into an [Medicare Advantage] plan may work. 


CASSIDY: Everybody recognizes that 340B has a very important role, and as originally intended, was to bring lower cost drugs to those which need it. But in some hands, it’s become a racket, and I mean that, and the benefit is not getting to the patient. So much so that there are some entities in which the patient who is uninsured will go and pay the full cash list price and not get the benefit of the 340B pricing, and the delta goes back to the hospital.

And keep in mind that this is structured on inpatient population but has nothing to do with outpatient, so unlike charity hospital where you and I trained, the patient can come in through the ER, get treated, get sent back home, but now is when they need the medicine, and they don’t have follow-up through that facility. And I spoke earlier of evidence that there is actually less oncologic treatment for Medicaid and uninsured in 340B facilities relative to those which are not 340B. 

Now, I will tell you, I worked in a hospital for the uninsured and 340B made medicines available to those who otherwise would not have. So on the one hand I see it as an incredibly important lifeline, and on the other hand, it’s something which is being exploited for profit, but not for the original purpose, and that’s kind of maybe my theme throughout this whole time.


CASSIDY: Obviously the drug market is not monolithic, there’s generic, there’s name brand, there’s small molecule, there’s specialty, but within that you have a great deal of variation. Consumer Reports sent out secret shoppers as if they were uninsured paying cash for medicine. Uninsured, paying cash, and seven different drugs. One drug, as an example, the price the consumer could pay ranged from $44 to $740—a generic drug. Clearly the acquisition price is somewhere south of $44 and some were getting charged $740. Now this in my mind is unconscionable, and this is where I think there needs to be, you should have consumer choice, and you should push it out there, not just, okay I knock on the door, ‘I can’t believe it’s $740, I guess that’s what they charge.’ No. It’s like when I was a kid and the newspaper used to have a listing of everything that things cost, it should be like that in that generic space, where the patient should know when she goes to the pharmacy, or when she goes online she is able to comparatively shop. 

On other things, you’re right, if it’s a branded drug for which there is no alternative, you’re going to need a physician to guide you through, I get that. But there’s a lot of savings to be achieved outside of that situation. And by the way, going back to—and again Gail and I will disagree—you can look at the list price, not net of rebate, but with rebate, and patients who are in a $6,000 deductible are getting hosed, they’re getting hosed, and they’re paying full price, not the post-rebate price, and then that of course gets clawed back by some of the PBMs. You can argue it goes back to subsidized insurance premiums. What we’re saying is the sicker patient paying for the more expensive drug is subsidizing those who are better off. 


CASSIDY: As regards to sickle cell, I think that’s also something where there needs to be this symbiosis between what research is and value-based purchasing. Man, aside from just the tragedy of a sickle child, it is the expense of a sickle child. And if you can do gene therapy and find that one gene—I was in a conversation walking to LSU’s big victory over Georgia, boom, and the doc walking with me was telling me, so this is a little bit of hearsay, but there’s really a very small gene that could be replaced in the genome of a sickle patient and make a huge difference. Talk about something where compassion meets value-based purchasing. And so the degree to which we can do that I think should be opportunities for that directed research. 


CASSIDY: Your guiding principle should be market forces with transparency, not opaqueness, and making sure that the patient and the taxpayer are cared for, as opposed to being those who are exploited.