{"items": [{"author": "Bernadette", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890811364762", "anchor": "fb-890811364762", "service": "fb", "text": "I can think of a few plausible reasons.
First would be the very high cost of developing drugs. One ways companies make the chances of return on investment higher is to do a \"non inferiority\" trial, proving they're not worse than what's on the market. They are more likely to show this in a trial (you need much higher numbers to have power to show superiority). So it's pretty uncommon for a new drug to come out and be proven to be better.
If they set the price incredibly high, companies could possibly limit their coverage of it by only covering in the very limited setting that it is proven to be better than an existing alternative. (This is how NICE attempts to control the spending on very expensive drugs in the U.K.)", "timestamp": "1501353180"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890811364762&reply_comment_id=890825716002", "anchor": "fb-890811364762_890825716002", "service": "fb", "text": "→ I thought in the UK an effective drug could be not covered if it was too expensive, based on cost per QALY being too high?", "timestamp": "1501359214"}, {"author": "Bernadette", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890811364762&reply_comment_id=890827776872", "anchor": "fb-890811364762_890827776872", "service": "fb", "text": "→ Jeff Kaufman true for new treatments. But if a new drug came on the market that was under that threshold, but has no proven benefit over a cheaper one it might not be recommended (eg hospitals choose not to put it on formulary).", "timestamp": "1501360645"}, {"author": "Bernadette", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890811364762&reply_comment_id=890832467472", "anchor": "fb-890811364762_890832467472", "service": "fb", "text": "→ I was involved in a clinical trial for a drug that was probably superior, but they did a non inferiority trial. They launched it here at a stupidly high price (~\u00a31000 for a 1 week treatment), so it's hardly ever used (in most hospitals needs specialist approval, and GPs can't prescribe it). If they'd made it \u00a3200, I'm pretty sure it would have become default for the indication.", "timestamp": "1501363006"}, {"author": "Daniel", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890814977522", "anchor": "fb-890814977522", "service": "fb", "text": "IIRC, the insurance will cover the drug but pay what they think it's worth. Then the provider can try to collect the excess bill from either the insurance company (which has political connections) or the patient (who has no money) or they can just accept what the new price is. The resulting price is in the window where neither the provider nor the insurance thinks it's worthwhile to fight.", "timestamp": "1501354602"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890814977522&reply_comment_id=890825022392", "anchor": "fb-890814977522_890825022392", "service": "fb", "text": "→ Pretty sure this is not how this works. Why do you think it works this way?", "timestamp": "1501359054"}, {"author": "Ben", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890818809842", "anchor": "fb-890818809842", "service": "fb", "text": "Forumularies are approved by a Pharmacy and Therapeutics committee of the insurer, and they look at things like cost vs benefit - if a drug is too expensive they may not add it", "timestamp": "1501356246"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890818809842&reply_comment_id=890825456522", "anchor": "fb-890818809842_890825456522", "service": "fb", "text": "→ My understanding is in the US they're only allowed to look at benefit in deciding whether to cover, not cost (which, yes, is very strange).", "timestamp": "1501359134"}, {"author": "Balint", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890830326762", "anchor": "fb-890830326762", "service": "fb", "text": "Don't patients end up paying a lot for most prescription drugs?", "timestamp": "1501361820"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890830326762&reply_comment_id=890830706002", "anchor": "fb-890830326762_890830706002", "service": "fb", "text": "→ Sure, but what would keep a drug company from charging $1M/treatment if they came up with a new drug that was as much of an improvement as penicillin was?", "timestamp": "1501362081"}, {"author": "Varun", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890830326762&reply_comment_id=890839273832", "anchor": "fb-890830326762_890839273832", "service": "fb", "text": "→ Jeff Kaufman nothing, really. As long as formularies approve it, they're able to. Hence Gilead's $1000/pill for Sovaldi - calculated using overall total cost of previous Hep C regimens.
The question posed in the post in interesting, and the answer is market forces (patients' willingness to pay) as well as threat of regulation.", "timestamp": "1501364287"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890830326762&reply_comment_id=890851524282", "anchor": "fb-890830326762_890851524282", "service": "fb", "text": "→ Patient's willingness to pay wouldn't be a factor: I think insurance companies aren't allowed to consider cost, and insurance is mandatory. Threat of regulation is a check though.", "timestamp": "1501367870"}, {"author": "Josh", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890832497412", "anchor": "fb-890832497412", "service": "fb", "text": "In some places, the maximum covered amount for a treatment depends on how much more effective it is than the currently available treatments.
https://www.youtube.com/watch?v=XTl8JCvSqec
https://www.youtube.com/watch?v=QwF2BdhaPHg", "timestamp": "1501363046"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890832497412&reply_comment_id=890851075182", "anchor": "fb-890832497412_890851075182", "service": "fb", "text": "→ I'm talking about the US in this post, and skimming your videos I think those aren't?", "timestamp": "1501367764"}, {"author": "Josh", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890832497412&reply_comment_id=890863190902", "anchor": "fb-890832497412_890863190902", "service": "fb", "text": "→ The second one is about a program CALPERS (the state worker pension/healthcare system in California) used to control costs for a variety of procedures.
Both videos are only tangentially related to your question though (just trying to provide some broader context for ways this sort of thing has been addressed).", "timestamp": "1501373380"}, {"author": "Glenn", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890848141062", "anchor": "fb-890848141062", "service": "fb", "text": "I am not familiar with the idea that US insurance companies are not allowed to refuse to pay for expensive drugs? This article suggests that there is no such rule: http://www.npr.org/.../fight-to-lower-drug-prices-forces...", "timestamp": "1501366853"}, {"author": "Sophia", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890848141062&reply_comment_id=890873869502", "anchor": "fb-890848141062_890873869502", "service": "fb", "text": "→ I have definitely had the experience of my insurance covering a generic, but not a brand-name prescription. (It's possible that experience is outdated but it was ~2 years ago.)", "timestamp": "1501378896"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890848141062&reply_comment_id=890874143952", "anchor": "fb-890848141062_890874143952", "service": "fb", "text": "→ The insurance company can say they won't cover an expensive drug/treatment if they cover a cheaper option that they can argue is equally effective. In the case of generics this is very common (it's easy for the company to argue that the generic works just as well) but it also happens when there's an expensive option that doesn't have strong evidence that it's better.", "timestamp": "1501379115"}, {"author": "Peter", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890876464302", "anchor": "fb-890876464302", "service": "fb", "text": "So your description of how US insurance works isn't quite right. Not even medicare part D covers all FDA approved drugs and private insurance certainly need not. I'm unclear if they need to cover everything in say medicare part D or some other minimal requirement: https://www.cancer.org/.../formularies-and-drug-coverage...
However, according to healthcare.gov if your insurance was purchased on an exchanged and doesn't cover a drug you can use the exceptions process to request coverage. After being denied by your insurer (and maybe only after being denied again on an internal appeal) you can appeal a denial to the relevant independent body (usually a state agency of HHS but apparently there are other private options presumably like arbitration). source: https://www.healthcare.gov/usin.../prescription-medications/
Not sure what the restrictions on co-pay are for that. However, given the extensive time, bother and burden on your physician it certainly, at the very least deters people from purchasing such drugs that are disfavored by insurers. This, if at all possible, drug companies will choose to invest in drugs which they can price cheaply enough not to be limited to a few people who make it through this process.", "timestamp": "1501380187"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890876464302&reply_comment_id=890877422382", "anchor": "fb-890876464302_890877422382", "service": "fb", "text": "→ Insurers can't choose to cover just the drugs they want to, they have to include the most effective ones. But that's just \"effectiveness\", not \"cost effectiveness\". According to the people I've talked to in the industry and some looking online, they're not allowed to consider cost.", "timestamp": "1501380854"}, {"author": "Peter", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890876464302&reply_comment_id=890878520182", "anchor": "fb-890876464302_890878520182", "service": "fb", "text": "→ Jeff Kaufman Yes, it appears you are correct. However, they need not cover the whole cost of the drug (unclear if they can just cap total drug coverage amount). So insurers can insist the patients pay 20 or even 40% http://khn.org/.../got-insurance-you-still-may-pay-a.../
That is a pretty effective price cap. If patients just can't buy your drug then why go to the trouble of making it?", "timestamp": "1501381313"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890876464302&reply_comment_id=890879009202", "anchor": "fb-890876464302_890879009202", "service": "fb", "text": "→ Good point Peter! That seems like it could go pretty far:
> Drugs are most typically defined as specialty because they are expensive. They are high cost \"both in total and on a per-patient basis\". High-cost medications are typically priced at more than $1,000 per 30-day supply. The Medicare Part D program \"defines a specialty drug as one that costs more than $600 per month\".
https://en.wikipedia.org/.../Specialty_drugs_in_the...", "timestamp": "1501381676"}, {"author": "Peter", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890876464302&reply_comment_id=890880311592", "anchor": "fb-890876464302_890880311592", "service": "fb", "text": "→ Jeff Kaufman Wait maybe there is a loophole at high end: https://www.cato.org/.../complicated-dynamics-insurance...
If an ICER report concludes that a medication is overpriced, insurers can argue that they should not have to cover it-to the detriment of patients seeking treatment and of providers seeking long-term savings by pursuing future medical developments.
Note that this definition of overpricied seems like it might include the $ per additional life year calc.
---
But ultimately it seems this does happen there seem to be drugs costing 300k/year and maybe more.
EDIT: I'm a little unsure if the 300k figure was actually for a drug that would be taken over a whole year but the wikipedia page you link above includes a 100k/year cancer drug.", "timestamp": "1501382223"}, {"author": "Sophia", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890876484262", "anchor": "fb-890876484262", "service": "fb", "text": "It's unfortunate this article doesn't have more detail, but it seems to imply that the scenario you're positing--a new drug so revolutionary it has no real competitors--is extremely infrequent. Are there examples of new drugs you think are priced surprisingly low? https://www.forbes.com/.../on-the-pricing-of-new-drugs/...", "timestamp": "1501380207"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890876484262&reply_comment_id=890877651922", "anchor": "fb-890876484262_890877651922", "service": "fb", "text": "→ I agree it's extremely infrequent, maybe only a few drugs have been that good ever. But when the next drug that's really without parallel comes along, it seems to me like the manufacturer can force insurers to pay for it at arbitrarily high prices until the patent expires.", "timestamp": "1501380956"}, {"author": "Michael", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890876484262&reply_comment_id=890949882172", "anchor": "fb-890876484262_890949882172", "service": "fb", "text": "→ Currently happening: https://www.pharmacybenefitnews.com/.../PRICE-FLASH...", "timestamp": "1501425591"}, {"author": "Chris", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890944802352", "anchor": "fb-890944802352", "service": "fb", "text": "http://www.medscape.com/viewarticle/879422
Interesting tangential read. These may well be examples of what you're talking about...", "timestamp": "1501423596"}, {"author": "David", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=890950815302", "anchor": "fb-890950815302", "service": "fb", "text": "This is an interesting conversation. The drugs that immediately come to mind as recent case studies would be the hep C drugs and the PCSK9 inhibitors.", "timestamp": "1501425738"}, {"author": "Beth", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=891158883332", "anchor": "fb-891158883332", "service": "fb", "text": "As you say, insurers typically cover specialty drugs only for the specific circumstances in which the drug has been proven more effective than cheaper alternatives. They also may require that the patient first exhaust those alternatives before they will approve the drug. I can't find the documentation from my own insurer that explains the details but the prerequisites this document describes are almost identical to those I had to meet at my last 3 insurance companies: https://providers.bcbsal.org/.../bb94bec3-0f09-4ee6-9c61...", "timestamp": "1501524903"}, {"author": "Beth", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=891158883332&reply_comment_id=891159352392", "anchor": "fb-891158883332_891159352392", "service": "fb", "text": "→ My current insurer has also changed the rules a bit to require me to pay 20% of the cost, which comes to about $1.5k for a two month supply.", "timestamp": "1501525084"}, {"author": "Beth", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=891158883332&reply_comment_id=891160255582", "anchor": "fb-891158883332_891160255582", "service": "fb", "text": "→ Although the full cost that these different insurers have claimed to be covering has varied by tens of thousands per treatment, and who knows what price they've really negotiated with the manufacturer.", "timestamp": "1501525271"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=919473460692", "anchor": "fb-919473460692", "service": "fb", "text": "\"In an interview, Marrazzo said his company chose a lower price: $425,000 per eye, because insurers indicated that pricing the drug higher would trigger restrictions on which patients could get access.\"
\"The company will offer financial assistance to patients, including travel support to help them and their caregivers reach treatment centers and other out-of-pocket costs. The company said that means commercially insured patients should pay nothing for the treatment, despite its $850,000 price tag.\"
https://www.washingtonpost.com/.../gene-therapy-for.../", "timestamp": "1515069822"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=919473460692&reply_comment_id=919473899812", "anchor": "fb-919473460692_919473899812", "service": "fb", "text": "→ Also:
\"But the savings card cannot be used by people without insurance or by people who are in government-funded health programs. The cards are not allowed in federal health care programs because they are considered a kickback: Companies use the discounts to incentivize patients to buy a product while leaving the federal government on the hook for the remaining cost of the drug.\"
https://www.washingtonpost.com/.../under-pressure.../...", "timestamp": "1515070022"}, {"author": "Jim", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=919473460692&reply_comment_id=919547971372", "anchor": "fb-919473460692_919547971372", "service": "fb", "text": "→ Why is it allowed with private health insurers? Do they just not have the enforcement ability to prevent it?", "timestamp": "1515102920"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/890809323852?comment_id=919473460692&reply_comment_id=919555501282", "anchor": "fb-919473460692_919555501282", "service": "fb", "text": "→ Jim: Good question! I don't know.", "timestamp": "1515106191"}]}