New cholesterol drugs that hold great promise for combating heart disease carry an eye-popping price tag that could destabilize Medicare if used on a wide scale and add billions of dollars to the nation's drug bill. These expensive new medications may outperform traditional statins and save the lives of some patients. But other patients who gain only marginal benefit also may request the new drugs because the whopping extra cost does not affect them directly. Medicare's lack of controls and authority to negotiate with pharmaceutical companies make these new drugs a textbook argument for why America's fragmented health care system sorely needs to start balancing the price of drugs against their incremental effectiveness.
Medicare has so far managed to absorb the cost of a few extremely expensive drugs, as long as the drugs are aimed at relatively few patients for a limited time. The cholesterol drug market is different. One out four adult Americans take them, often for life. PCSK9 inhibitors, approved last month by the Food and Drug Administration, showed remarkable capacity in clinical trials to reduce dangerous LDL cholesterol levels. Early signs are favorable that they will also reduce heart attacks and strokes, although it is unclear whether they will be more effective than statins. The cost conundrum arises from the multitude of patients who might switch to these $14,000-a-year medicines from traditional statins, which can cost pennies a pill. If PCSK9's become the new normal, Medicare cannot sustain the pharmaceutical industry's unfettered ability to set whatever prices it chooses.
Though statins such as Lipitor, Crestor and their generic equivalents have a sterling track record for managing heart disease, a small number of heart patients have a genetic makeup that neutralizes statin therapy — which makes them perfect candidates for the new PCSK9 inhibitors. It's the majority of statin patients who present the financial challenge. Most improve their cholesterol levels with statins but do not reach ideal targets set by doctors, sometimes because they fudge on diet and exercise. An estimated 1 million to 3 million patients say they cannot tolerate statins, reporting muscle weakness, fuzzy thinking and other side effects that may or may not be caused by the statins. With many of these patients cutting back on dosages or refusing statin therapy altogether, doctors will be hard-pressed to refuse them a shot at the new therapy.
Yet the cost would be unmanageable. Medicare covers 55 million elderly and disabled people. If 4 million switch to the new cholesterol drugs, Medicare would shell out another $50 billion a year, nearly one-tenth of its current spending for all services.
The Veterans Administration, Medicaid, private health plans and other countries negotiate drug prices with manufacturers and often receive deep discounts. Congress, yielding to Big Pharma's lobbying power, forbids Medicare from negotiating drug prices. The industry says this largesse underwrites the steep cost of innovation.
In some cases, expensive drugs make economic as well as moral sense. The new hepatitis C drug Solvadi, for example, costs $80,000 to $100,000 for a full course of treatment. But it cures the disease and justifies its price tag by reducing hospital and doctor bills. The new PCSK9 inhibitors are unlikely to produce similar cost effectiveness if used on a wide scale, with doctors and patients making treatment decisions with no regard to price. Without tighter cost controls, Medicare faces a financial mess.
The new drugs are injected by doctors once or twice a month, which makes them a Part B service, where patients are responsible for a 20 percent co-payment. Most patients on traditional Medicare cover co-payments with supplement policies that usually cost $2,000 to $3,000 a year. If hordes of patients switch to a single drug that generates a $2,800 co-payment, the cost of supplement policies will soar. Monthly Part B premiums, now $104.90 for most people, would also have to rise because they cover 25 percent of Part B costs. Medicare Advantage plans, popular with low-income people, are required to cover approved classes of drugs and will face price pressure, even if they manage to curtail some PCSK9 usage with preauthorization requirements.
Other countries establish formulas that force drug treatments to prove cost effectiveness. By their nature, these systems place a dollar value on human life and suffering, an unpleasant prospect that America has so far avoided. Somehow, though, Congress must allow Medicare to find ways to limit costs — including allowing Medicare to negotiate with the drug companies. Tax money for health care is not unlimited. When a drug that can eat up the average Social Security check can tap into a market with millions of potential users, the era of unbridled drug pricing must end.