Drug pricing in ads means nothing

  • The Trump administration is moving forward with new rules that would require drug companies to disclose their prices, rejecting the industry’s efforts to preempt those regulations
  • The “list price” of prescription drugs doesn’t mean anything to patients.
  • Alex Azar is “sticking it” to PhRMA, pharma’s trade organization.

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The quest for online health information

  • Nearly 80 percent of the patients who looked up things online before seeing a doctor reported that their searches actually improved their experience. (Source: Anthony M. Cocco, a doctor at St. Vincent’s Hospital in Melbourne, and the lead author on a recent scientific study about the search habits of people before they show up in an E.R.)
  • In one study, researchers found that only one of the top 54 results for “endometriosis” — the subject of over 4.5 million searches annually — led to a page that contained what was deemed to be accurate information about the condition.
  • The study’s author recommends skipping the kind of scientific papers you might find on Google Scholar or PubMed; they often contain unusual cases and bewildering terminology.

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Are patients going to replace their doctor with an app?

  • Ada, a London and Berlin-based health tech startup just received major funding from Bill and Melinda Gates.
  • Ada isn’t claiming to replace your doctor anytime soon, but patients may do just that which could worsen a serious health problem.
  • A Harvard Medical School study found that symptom checkers, those tools that ask for information and suggest a diagnosis, are accurate only about half of the time.

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Reducing the number of companies between a product and a consumer

  • Merck CEO Kenneth Frazier thinks something has to change within the pharmaceutical industry to fix the issue of drug pricing.
  • “I don’t understand where we live in a world where 50% of the value goes to the supply chain, ” Frazier said at an event at the Economic Club of New York last week.
  • Merck has published reports outlining the company’s average list and net price increases for its products. Merck’s average net prices after factoring in those discounts decreased by 1.9% in 2017 as list prices increased 6.6%.

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What if PBM’s disappeared?

  • PBMs are primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims.
  • While drug distributors convert 45% of their gross profit to EBITDA, and insurers and pharmacies around 30%, PBMs convert 85%.
  • Just three PBMs control eighty percent of the prescription market, driving enough revenue to put them way ahead of all drug manufacturers on the Fortune 500.
  • Express Scripts, by some estimates, the company’s profit per prescription has increased an average of 38% every year between 2003 and 2016. That kind of growth has landed Express Scripts at number 22 on the Fortune 500 list in 2017.

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Pharma’s primary customer is Wall Street, not patients

  • The S&P 500 healthcare sector has been on a tear in recent months, on track for its best quarter in five years and surging to an all-time high on Friday.
  • A forensic accounting of available financial data of the pharmaceutical giants Johnson & Johnson, Pfizer, Merck Sharp & Dohme, and Abbott—shows that from 2013 to 2015, these four multinational drug makers collectively avoided paying about $3.7 billion in taxes.
  • Publishing in JAMA Internal Medicine the median estimated cost of the full range of studies: $19 million to get new drug approval.
  • Pharma’s primary customer continues to be Wall Street.

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