Let’s shed some light on the high price of drugs

AIDS advocates participate in a rolling protest caravan against soaring drug prices in Southern California June 8, 2016.
AIDS advocates participate in a rolling protest caravan against soaring drug prices in Southern California June 8, 2016. The Associated Press

The Affordable Care Act has done much to rein in the rising cost of health care, not least in subjecting the system to some much-needed transparency.

Hospitals now have to provide price lists, the better to comparison-shop for treatments. Medical groups have to let consumers know if they’re financially solvent. Insurance plans have to submit detailed reports justifying premium increases.

Apples-to-oranges language that once confused consumers has been clarified across the health care economy – with one exception: Drug prices have been exploding. And no one seems able to pinpoint why.

Total spending on prescription drugs in the United States rose more than 12 percent in 2015, to nearly $425 billion. Even with rebates and price breaks, the average patient share of a prescription filled through commercial insurance has risen more than 25 percent since 2010, to $44 per prescription last year, according to the research arm of the health care data provider IMS Health.

In the public sector, the wake-up call came last year, after a breakthrough drug for hepatitis C was approved by the U.S. Food and Drug Administration. The medication was life-altering for patients suffering from the blood-borne disease, which ravages the liver. But a regular course of treatment cost $1,000 per pill or $84,000 per person, and much of its market was on Medi-Cal or in prison.

Lawmakers in the Assembly should follow the Senate’s lead and approve SB 1010. Sunshine is the best medicine.

On the hook for that publicly funded care, the state saw its health care costs spike by a breathtaking $387.5 million between July 2014 and November 2015 – enough to cover a year’s tuition for nearly 30,000 University of California students. Since then, getting health care costs under control has become a big priority in California, with an initiative limiting the state’s drug costs headed for the November ballot.

But the problem isn’t confined to just a couple of high-demand medications. A Reuters analysis in April also found that, since 2011, prices for the nation’s top 10 drugs, for conditions ranging from asthma to arthritis, have spiked by more than 50 percent and four have doubled. Even the costs of generics has gone up.

Pharmaceutical companies say prescriptions account for only about 10 percent of health care spending, and prices have to be initially high to cover risky research and development and trial-and-error innovations. Consumer groups say the percentage is more like 17 percent, and the prices are high simply because Big Pharma can charge what the market will bear.

But there’s no way to know for sure, which is why Sen. Ed Hernandez, D-West Covina, has been pushing legislation to bring some transparency to drug pricing.

Senate Bill 1010, pending in the Assembly, would require drugmakers to give purchasers some notice and justification before they hike the price of big-ticket drugs on the market, and require health plans and insurers to identify which drugs are driving spending.

It’s basic stuff, really, but drug companies are kicking and screaming. At least 25 pharmaceutical makers, biotech companies and pharma trade organizations reported lobbying on SB 1010 just in the first quarter of this year.

They say that, despite the bill’s good intentions, it will hurt innovation, generate paperwork, make drugs more expensive, underestimate the impact of informal discounts and encourage “gray market” stockpiling of medication. All that, just from a heads-up on major price hikes and a list of the 25 drugs costing insurers the most money? That’s hard to believe.

SB 1010 supporters include business, labor, patients, health care providers and organizations from the AARP to the Valley Industry and Commerce Association. It doesn’t impose price caps or tamper with the market. It simply asks for some basic information.

Lawmakers in the Assembly should follow the Senate’s lead and approve it. Sunshine is the best medicine.