Opinion

California’s crucial first step in drug-pricing transparency

The drug and vitamin section of a big-box store in Folsom, California. (Photo: Cassiohabib, via Shutterstock)

In signing first-in-the-nation legislation to force greater transparency in drug pricing practices, Gov. Brown has signaled the beginning of a new era on controlling health care costs. But more can and should be done to rein in out-of-control drug prices.

Drug costs have been increasing by about 10% per year and there are notorious examples of products that have increased by 500%.  Even when insurance pays for medications, the costs always go back to the consumer.

Anthem Blue Cross recently attempted to raise premiums by 35% to cover the unanticipated costs of prescription medications. Some new drug prices are almost beyond comprehension. A new Norvartis cancer drug for leukemia will cost $475,000 per round of treatment. And, any of the potential side effects remain unknown. Real transparency requires that we know all facts.

Despite achievements in pharmaceutical science, there is a disconnect between what we expect from modern drugs and the evidence for the effectiveness of the products.

Better drugs have contributed to gains in life expectancy and wellness. But, independent of new medicines, better medical procedures and a successful campaign against cigarette smoking also deserve much of the credit.  Although life expectancies are increasing in the US, they are not improving nearly as quickly as they are in other countries.

Life expectancy in the United States has fallen to last place in a comparison of 17 rich countries after gradually losing ground over the course of the last 30 years.  The 16 countries we now trail all spend considerably less per capita on pharmaceutical products.

As consumers, we may be suffering from irrational exuberance. Despite achievements in pharmaceutical science, there is a disconnect between what we expect from modern drugs and the evidence for the effectiveness of the products.

For example, new drugs, sometimes costing over $100,000 per year, may only increase average life expectancy from 34 to 36 weeks among patients with advanced cancers and several expensive new cancer drugs have no effect on life expectancy.  These modest benefits are well understood by oncologists, yet patients are led to expect much more — including total cure.

The transparency required by the new California law will start the discussion, but the real problem is much deeper.

Although it is common for industry sponsored clinical trials to show benefits of medications, positive results are actually rare in the largest clinical studies sponsored by the independent National Institutes of Health.

The pharmaceutical industry has a history of burying results that are not favorable to their products.

One recent review considered all of the large randomized clinical trials funded by the National Heart, Lung, and Blood Institute (NHLBI) over the last 50 years. To be included in the review, studies needed to include important outcomes such as heart attacks, strokes, or death.  Prior to the year 2000, positive results were relatively common. They occurred in 57% of the published studies. But in 1997, the NHLBI changed their standards and required all of their funded research to follow much stricter transparent registration and reporting standards. Following the implementation of these stricter disclosure requirements, the success rate for large trials plunged to just 8%.

There are a few things we can do to assure better information.

First, we could devote more research to cost control. Uncontrolled health care spending confiscates resources needed for schools, roads, and citizen protection. Remarkably, perhaps in a bow to the pharmaceutical industry lobbyists, the lead public-private research agency that studies the effectiveness of medical treatments is legally restricted from funding cost/effectiveness studies. This makes no sense in a society being crushed by uncontrolled healthcare spending. We need to demand that restriction to be lifted.

Health care costs now consume nearly one of each five dollars spent in the United States.

Second, we need greater transparency around reporting of scientific evidence. The pharmaceutical industry has a history of burying results that are not favorable to their products. Although the FDA requires detailed reporting of trial results, it does not require public access to the original data from the studies.  Data emancipation is needed so that independent statisticians can replicate the analyses. Research agencies, like the National Institutes of Health, now require data from the studies they sponsor to be shared publicaly. We need a parallel process for industry sponsored research.

Finally, we need to connect costs of medications to their potential to make patients better. What if patients could get rebates on drugs that are later shown to produce more harm than benefit? That would reduce the incentive to sell medications that do not work.

The California transparency law is an important step. But real change will require several more leaps in ensuring the information disclosed to patients and purchasers has the integrity and clarity required to inform health care decisions. Health care costs now consume nearly one of each five dollars spent in the United States.  We must take some simple steps to assure a greater value for our investment.

Ed’s Note: Robert M. Kaplan is Research Director at the Stanford School of Medicine, Clinical Excellence Research Center.  He is a former Chief Science Officer at the US Agency for HealthCare Research and Quality and a former Associate Director of the National Institutes of Health.


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