In recent months, some insurers and benefit managers have insisted that patients forgo generics and buy brand-name drugs. “It’s Alice-in-Wonderland time in the drug world,” says one physician.
This article first appeared August 06, 2017 on ProPublica.
by Charles Ornstein, ProPublica, and Katie Thomas, The New York Times
It's standard advice for consumers: If you are prescribed a medicine, always ask if there is a cheaper generic.
Nathan Taylor, a 3-D animator who lives outside Houston, has tried to do that with all his medications. But when he fills his monthly prescription for Adderall XR to treat his attention-deficit disorder, his insurance company refuses to cover the generic. Instead, he must make a co-payment of $90 a month for the brand-name version. By comparison, he pays $10 or less each month for the five generic medications he also takes.
"It just befuddles me that they would do that," said Taylor, 41.
A spokesman for his insurer, Humana, did not respond to multiple emails and phone calls requesting comment.
With each visit to the pharmacy, Taylor enters the upside-down world of prescription drugs, where conventional wisdom about how to lower drug costs is often wrong.
Consumers have grown accustomed to being told by insurers - and middlemen known as pharmacy benefit managers - that they must give up their brand-name drugs in favor of cheaper generics. But some are finding the opposite is true, as pharmaceutical companies squeeze the last profits from products that are facing cheaper generic competition.
Out of public view, corporations are cutting deals that give consumers little choice but to buy brand-name drugs - and sometimes pay more at the pharmacy counter than they would for generics.
The practice is not easy to track, and has been going on sporadically for years. But several clues suggest it is becoming more common.
In recent months, some insurers and benefit managers have insisted that patients forgo generics and buy brand-name drugs such as the cholesterol treatment Zetia, the stroke-prevention drug Aggrenox and the pain-relieving gel Voltaren, along with about a dozen others, according to memos and prescription drug claims that pharmacies shared with ProPublica and The New York Times. At the same time, consumers are sounding off on social media.
Now it appears the practice is spreading to biosimilars, the competitors for expensive, complex biologic drugs that are beginning to arrive on the market.
Consumers have become increasingly angry over what they pay for drugs, and that outrage has caught the attention of lawmakers from both parties. Democrats have identified lowering drug prices as a pillar of their economic agenda, and President Donald Trump has raised the issue repeatedly. But for now, solutions have proved elusive.
The continued success of the brand-name drug Adderall XR, long after generic competitors arrived on the market, is a case in point.
Dr. Lawrence Diller, a behavioral pediatrician in Walnut Creek, California, said he began noticing "very odd things" going on with Adderall XR and other attention-deficit drugs about two years ago. He began receiving faxes from pharmacies telling him that he had to specify that patients required brand-name versions of the drugs.
Consumers taking other medications said they had experienced the same phenomenon. Lisa Hopkins, a disabled food and nutrition supervisor in Pennsylvania, went to fill a prescription for the anti-inflammatory Voltaren gel this year.
Hopkins, 52, said her pharmacist told her that her drug plan, CVS's SilverScript, denied her claim because it was for a generic.
"I said to the lady at the insurance company, ‘That's really, really odd to me,'" Hopkins said. "She said, ‘Yes. It's happening more and more that the name brand is covered but the generic isn't.'"
Hopkins has osteoporosis and bulging spinal disks and has been on disability for almost a decade. She is covered through Medicare and receives extra help from the government for her medications, lowering her out-of-pocket costs. That means that when her drugs cost a lot, taxpayers pay the bill. By law, Medicare cannot negotiate directly with drug manufacturers and instead gets a share of any rebates collected by insurers and benefit managers, like CVS Caremark, which operate Medicare's drug plans.
In an email, a spokeswoman for CVS Caremark, Christine Cramer, said consumers never pay more in the rare instances in which the company favors a brand-name drug over a generic. "This generally occurs when there is limited or no competition among generics," she said.
Pharmacists say they are noticing the trend, too, and it takes time to understand the denied claim and pursue a remedy, including sometimes calling the doctor. While favorable treatment for a brand-name drug doesn't happen all the time, it is startling when it does, said Robert Frankil, president of Sellersville Pharmacy Inc. in Pennsylvania, which owns two pharmacies.
"There's only one reason why they're requiring you to use a more expensive product," Frankil said. "Because somewhere down the road, somebody is earning more money."
Hospitals and pharmacies are required to toss expired drugs, no matter how expensive or vital. Meanwhile the FDA has long known that many remain safe and potent for years longer.
This article first appeared May 31, 2017 on ProPublica.
The box of prescription drugs had been forgotten in a back closet of a retail pharmacy for so long that some of the pills predated the 1969 moon landing. Most were 30 to 40 years past their expiration dates - possibly toxic, probably worthless.
But to Lee Cantrell, who helps run the California Poison Control System, the cache was an opportunity to answer an enduring question about the actual shelf life of drugs: Could these drugs from the bell-bottom era still be potent?
Cantrell called Roy Gerona, a University of California, San Francisco, researcher who specializes in analyzing chemicals. Gerona had grown up in the Philippines and had seen people recover from sickness by taking expired drugs with no apparent ill effects.
"This was very cool," Gerona says. "Who gets the chance of analyzing drugs that have been in storage for more than 30 years?"
The age of the drugs might have been bizarre, but the question the researchers wanted to answer wasn't. Pharmacies across the country - in major medical centers and in neighborhood strip malls - routinely toss out tons of scarce and potentially valuable prescription drugs when they hit their expiration dates.
Gerona and Cantrell, a pharmacist and toxicologist, knew that the term "expiration date" was a misnomer. The dates on drug labels are simply the point up to which the Food and Drug Administration and pharmaceutical companies guarantee their effectiveness, typically at two or three years. But the dates don't necessarily mean they're ineffective immediately after they "expire" - just that there's no incentive for drugmakers to study whether they could still be usable.
ProPublica has been researching why the U.S. health care system is the most expensive in the world. One answer, broadly, is waste - some of it buried in practices that the medical establishment and the rest of us take for granted. We've documented how hospitals often discard pricey new supplies, how nursing homes trash valuable medications after patients pass away or move out, and how drug companies create expensive combinations of cheap drugs. Experts estimate such squandering eats up about $765 billion a year - as much as a quarter of all the country's health care spending.
What if the system is destroying drugs that are technically "expired" but could still be safely used?
In his lab, Gerona ran tests on the decades-old drugs, including some now defunct brands such as the diet pills Obocell (once pitched to doctors with a portly figurine called "Mr. Obocell") and Bamadex. Overall, the bottles contained 14 different compounds, including antihistamines, pain relievers and stimulants. All the drugs tested were in their original sealed containers.
The findings surprised both researchers: A dozen of the 14 compounds were still as potent as they were when they were manufactured, some at almost 100 percent of their labeled concentrations.
"Lo and behold," Cantrell says, "The active ingredients are pretty darn stable."
Cantrell and Gerona knew their findings had big implications. Perhaps no area of health care has provoked as much anger in recent years as prescription drugs. The news media is rife with stories of medications priced out of reach or of shortages of crucial drugs, sometimes because producing them is no longer profitable.
Tossing such drugs when they expire is doubly hard. One pharmacist at Newton-Wellesley Hospital outside Boston says the 240-bed facility is able to return some expired drugs for credit, but had to destroy about $200,000 worth last year. A commentary in the journal Mayo Clinic Proceedings cited similar losses at the nearby Tufts Medical Center. Play that out at hospitals across the country and the tab is significant: about $800 million per year. And that doesn't include the costs of expired drugs at long-term care pharmacies, retail pharmacies and in consumer medicine cabinets.
After Cantrell and Gerona published their findings in Archives of Internal Medicine in 2012, some readers accused them of being irresponsible and advising patients that it was OK to take expired drugs. Cantrell says they weren't recommending the use of expired medication, just reviewing the arbitrary way the dates are set.
"Refining our prescription drug dating process could save billions," he says.
But after a brief burst of attention, the response to their study faded. That raises an even bigger question: If some drugs remain effective well beyond the date on their labels, why hasn't there been a push to extend their expiration dates?
It turns out that the FDA, the agency that helps set the dates, has long known the shelf life of some drugs can be extended, sometimes by years.
In fact, the federal government has saved a fortune by doing this.
For decades, the federal government has stockpiled massive stashes of medication, antidotes and vaccines in secure locations throughout the country. The drugs are worth tens of billions of dollars and would provide a first line of defense in case of a large-scale emergency.
Maintaining these stockpiles is expensive. The drugs have to be kept secure and at the proper humidity and temperature so they don't degrade. Luckily, the country has rarely needed to tap into many of the drugs, but this means they often reach their expiration dates. Though the government requires pharmacies to throw away expired drugs, it doesn't always follow these instructions itself. Instead, for more than 30 years, it has pulled some medicines and tested their quality.
The idea that drugs expire on specified dates goes back at least a half-century, when the FDA began requiring manufacturers to add this information to the label. The time limits allow the agency to ensure medications work safely and effectively for patients. To determine a new drug's shelf life, its maker zaps it with intense heat and soaks it with moisture to see how it degrades under stress. It also checks how it breaks down over time. The drug company then proposes an expiration date to the FDA, which reviews the data to ensure it supports the date and approves it. Despite the difference in drugs' makeup, most "expire" after two or three years.
Once a drug is launched, the makers run tests to ensure it continues to be effective up to its labeled expiration date. Since they are not required to check beyond it, most don't, largely because regulations make it expensive and time-consuming for manufacturers to extend expiration dates, says Yan Wu, an analytical chemist who is part of a focus group at the American Association of Pharmaceutical Scientists that looks at the long-term stability of drugs. Most companies, she says, would rather sell new drugs and develop additional products.
Pharmacists and researchers say there is no economic "win" for drug companies to investigate further. They ring up more sales when medications are tossed as "expired" by hospitals, retail pharmacies and consumers despite retaining their safety and effectiveness.
Industry officials say patient safety is their highest priority. Olivia Shopshear, director of science and regulatory advocacy for the drug industry trade group Pharmaceutical Research and Manufacturers of America, or PhRMA, says expiration dates are chosen "based on the period of time when any given lot will maintain its identity, potency and purity, which translates into safety for the patient."
That being said, it's an open secret among medical professionals that many drugs maintain their ability to combat ailments well after their labels say they don't. One pharmacist says he sometimes takes home expired over-the-counter medicine from his pharmacy so he and his family can use it.
The federal agencies that stockpile drugs - including the military, the Centers for Disease Control and Prevention and the Department of Veterans Affairs - have long realized the savings in revisiting expiration dates.
In 1986, the Air Force, hoping to save on replacement costs, asked the FDA if certain drugs' expiration dates could be extended. In response, the FDA and Defense Department created the Shelf Life Extension Program.
Each year, drugs from the stockpiles are selected based on their value and pending expiration and analyzed in batches to determine whether their end dates could be safely extended. For several decades, the program has found that the actual shelf life of many drugs is well beyond the original expiration dates.
A 2006 study of 122 drugs tested by the program showed that two-thirds of the expired medications were stable every time a lot was tested. Each of them had their expiration dates extended, on average, by more than four years, according to research published in the Journal of Pharmaceutical Sciences.
Some that failed to hold their potency include the common asthma inhalant albuterol, the topical rash spray diphenhydramine, and a local anesthetic made from lidocaine and epinephrine, the study said. But neither Cantrell nor Dr. Cathleen Clancy, associate medical director of National Capital Poison Center, a nonprofit organization affiliated with the George Washington University Medical Center, had heard of anyone being harmed by any expired drugs. Cantrell says there has been no recorded instance of such harm in medical literature.
Marc Young, a pharmacist who helped run the extension program from 2006 to 2009, says it has had a "ridiculous" return on investment. Each year the federal government saved $600 million to $800 million because it did not have to replace expired medication, he says.
An official with the Department of Defense, which maintains about $13.6 billion worth of drugs in its stockpile, says that in 2016 it cost $3.1 million to run the extension program, but it saved the department from replacing $2.1 billion in expired drugs. To put the magnitude of that return on investment into everyday terms: It's like spending a dollar to save $677.
"We didn't have any idea that some of the products would be so damn stable - so robustly stable beyond the shelf life," says Ajaz Hussain, one of the scientists who formerly helped oversee the extension program.
Hussain is now president of the National Institute for Pharmaceutical Technology and Education, an organization of 17 universities that's working to reduce the cost of pharmaceutical development. He says the high price of drugs and shortages make it time to reexamine drug expiration dates in the commercial market.
"It's a shame to throw away good drugs," Hussain says.
Some medical providers have pushed for a changed approach to drug expiration dates - with no success. In 2000, the American Medical Association, foretelling the current prescription drug crisis, adopted a resolution urging action. The shelf life of many drugs, it wrote, seems to be "considerably longer" than their expiration dates, leading to "unnecessary waste, higher pharmaceutical costs, and possibly reduced access to necessary drugs for some patients."
Citing the federal government's extension program, the AMA sent letters to the FDA, the U.S. Pharmacopeial Convention, which sets standards for drugs, and PhRMA asking for a re-examination of expiration dates.
No one remembers the details - just that the effort fell flat.
"Nothing happened, but we tried," says rheumatologist Roy Altman, now 80, who helped write the AMA report. "I'm glad the subject is being brought up again. I think there's considerable waste."
At Newton-Wellesley Hospital, outside Boston, pharmacist David Berkowitz yearns for something to change.
On a recent weekday, Berkowitz sorted through bins and boxes of medication in a back hallway of the hospital's pharmacy, peering at expiration dates. As the pharmacy's assistant director, he carefully manages how the facility orders and dispenses drugs to patients. Running a pharmacy is like working in a restaurant because everything is perishable, he says, "but without the free food."
Federal and state laws prohibit pharmacists from dispensing expired drugs and The Joint Commission, which accredits thousands of health care organizations, requires facilities to remove expired medication from their supply. So at Newton-Wellesley, outdated drugs are shunted to shelves in the back of the pharmacy and marked with a sign that says: "Do Not Dispense." The piles grow for weeks until they are hauled away by a third-party company that has them destroyed. And then the bins fill again.
"I question the expiration dates on most of these drugs," Berkowitz says.
One of the plastic boxes is piled with EpiPens - devices that automatically inject epinephrine to treat severe allergic reactions. They run almost $300 each. These are from emergency kits that are rarely used, which means they often expire. Berkowitz counts them, tossing each one with a clatter into a separate container, "… that's 45, 46, 47 …" He finishes at 50. That's almost $15,000 in wasted EpiPens alone.
In May, Cantrell and Gerona published a study that examined 40 EpiPens and EpiPen Jrs., a smaller version, that had been expired for between one and 50 months. The devices had been donated by consumers, which meant they could have been stored in conditions that would cause them to break down, like a car's glove box or a steamy bathroom. The EpiPens also contain liquid medicine, which tends to be less stable than solid medications.
Testing showed 24 of the 40 expired devices contained at least 90 percent of their stated amount of epinephrine, enough to be considered as potent as when they were made. All of them contained at least 80 percent of their labeled concentration of medication. The takeaway? Even EpiPens stored in less than ideal conditions may last longer than their labels say they do, and if there's no other option, an expired EpiPen may be better than nothing, Cantrell says.
At Newton-Wellesley, Berkowitz keeps a spreadsheet of every outdated drug he throws away. The pharmacy sends what it can back for credit, but it doesn't come close to replacing what the hospital paid.
Then there's the added angst of tossing drugs that are in short supply. Berkowitz picks up a box of sodium bicarbonate, which is crucial for heart surgery and to treat certain overdoses. It's being rationed because there's so little available. He holds up a purple box of atropine, which gives patients a boost when they have low heart rates. It's also in short supply. In the federal government's stockpile, the expiration dates of both drugs have been extended, but they have to be thrown away by Berkowitz and other hospital pharmacists.
The 2006 FDA study of the extension program also said it pushed back the expiration date on lots of mannitol, a diuretic, for an average of five years. Berkowitz has to toss his out. Expired naloxone? The drug reverses narcotic overdoses in an emergency and is currently in wide use in the opioid epidemic. The FDA extended its use-by date for the stockpiled drugs, but Berkowitz has to trash it.
On rare occasions, a pharmaceutical company will extend the expiration dates of its own products because of shortages. That's what happened in June, when the FDA posted extended expiration dates from Pfizer for batches of its injectable atropine, dextrose, epinephrine and sodium bicarbonate. The agency notice included the lot numbers of the batches being extended and added six months to a year to their expiration dates.
The news sent Berkowitz running to his expired drugs to see if any could be put back into his supply. His team rescued four boxes of the syringes from destruction, including 75 atropine, 15 dextrose, 164 epinephrine and 22 sodium bicarbonate. Total value: $7,500. In a blink, "expired" drugs that were in the trash heap were put back into the pharmacy supply.
Berkowitz says he appreciated Pfizer's action, but feels it should be standard to make sure drugs that are still effective aren't thrown away.
"The question is: Should the FDA be doing more stability testing?" Berkowitz says. "Could they come up with a safe and systematic way to cut down on the drugs being wasted in hospitals?"
Four scientists who worked on the FDA extension program told ProPublica something like that could work for drugs stored in hospital pharmacies, where conditions are carefully controlled.
Greg Burel, director of the CDC's stockpile, says he worries that if drugmakers were forced to extend their expiration dates it could backfire, making it unprofitable to produce certain drugs and thereby reducing access or increasing prices.
The 2015 commentary in Mayo Clinic Proceedings, called "Extending Shelf Life Just Makes Sense," also suggested that drugmakers could be required to set a preliminary expiration date and then update it after long-term testing. An independent organization could also do testing similar to that done by the FDA extension program, or data from the extension program could be applied to properly stored medications.
ProPublica asked the FDA whether it could expand its extension program, or something like it, to hospital pharmacies, where drugs are stored in stable conditions similar to the national stockpile.
"The Agency does not have a position on the concept you have proposed," an official wrote back in an email.
Whatever the solution, the drug industry will need to be spurred in order to change, says Hussain, the former FDA scientist. "The FDA will have to take the lead for a solution to emerge," he says. "We are throwing away products that are certainly stable, and we need to do something about it."
Some Medicare beneficiaries are being prescribed opioids by 10 or more doctors. Hundreds of doctors appear to be prescribing indiscriminately, says the inspector general of Health and Human Services.
This article first appeared July 13, 2017 on ProPublica.
In Washington, D.C., a Medicare beneficiary filled prescriptions for 2,330 pills of oxycodone, hydromorphone and morphine in a single month last year – written by just one of the 42 health providers who prescribed the person such drugs.
In Illinois, a different Medicare enrollee received 73 prescriptions for opioid drugs from 11 prescribers and filled them at 20 different pharmacies. He sometimes filled prescriptions at multiple pharmacies on the same day.
These are among the examples cited in a sobering new report released today by the inspector general of the U.S. Department of Health and Human Services. The IG found that heavy painkiller use and abuse remains a serious problem in Medicare's prescription drug program, known as Part D, which serves more than 43 million seniors and disabled people. Among the findings:
Of the one third of Medicare beneficiaries in Part D (or roughly 14.4 million people) who filled at least one prescription for an opioid in 2016, some 3.6 million received the painkillers for at least six months.
Consistent with data released last week by the Centers for Disease Control and Prevention, there were wide geographic differences in prescribing patterns. Alabama and Mississippi had the highest proportions of patients taking prescription painkillers - more than 45 percent each - while Hawaii and New York had the lowest - 22 percent or less.
More than half a million beneficiaries received high doses of opioids for at least three months, meaning they took the equivalent of 12 tablets a day of Vicodin 10 mg. The figure does not include patients who have cancer or those who are in hospice care, for whom such doses may be appropriate.
Almost 70,000 beneficiaries received what the inspector general labeled as extreme amounts of the drugs - an average daily consumption for the year that was more than two and a half times the level the CDC recommends avoiding. Such doses put patients at an increased risk of overdose death. Extreme prescribing could also indicate that a patient's identity has been stolen, or that the patient is diverting medications for resale.
Some 22,000 beneficiaries seem to be doctor shopping-obtaining large amounts of the drugs prescribed by four or more doctors and filled at four or more pharmacies. All states except for Missouri operate Prescription Drug Monitoring Program databases that allow doctors to check whether their patients have received drugs from other doctors before writing their own prescriptions.
More than 400 doctors, nurse practitioners and physician assistants had questionable prescribing patterns for the beneficiaries most at risk (meaning those that took extreme doses of the drugs or showed signs of doctor shopping). One Missouri prescriber wrote an average of 31 opioid prescriptions each for 112 patients on Medicare. And four doctors in the same Texas practice ordered opioids for more than 56 beneficiaries who seemed to be doctor shopping. "The patterns of these 401 prescribers are far outside the norm and warrant further scrutiny," the inspector general said.
To be sure, many seniors suffer from an array of painful conditions, and some opioids are seen as more harmful and addictive than others. Tramadol, often used to treat chronic osteoarthritis pain, was the most frequently prescribed opioid and carries a lower risk of addiction than other opioids, according to the Drug Enforcement Administration.
Moreover, last week's report from CDC shows that painkiller use is ticking downward after years of explosive growth.
Still, officials in the inspector general's office said more can and should be done to combat the problems they observed, even if the numbers are beginning to subside.
"I think what we're saying here is this is still a lot of Medicare beneficiaries," said Jodi Nudelman, regional inspector general for evaluation and inspections in the New York regional office, who supervised the report. "Regardless of if you are turning a corner, you're still at these really high levels."
The inspector general previously has called for Medicare to use its data to focus on doctors who are prescribing drugs in aberrant ways.
The inspector general's numbers differ somewhat from an April report from the Centers for Medicare and Medicaid Services, which runs Medicare. The CMS report said that 29.6 percent of Part D enrollees used opioids in 2016, down from 31.9 percent in 2011. The inspector general pegged the 2016 figure at 33 percent but did not offer any historical comparisons. It was unclear why the two agencies came up with different figures.
In a statement, CMS said opioid abuse is a priority for the Trump administration. "We are working with patients, physicians, health insurance plans, and states to improve how opioids are prescribed by health care providers and used by patients, how opioid use disorder is diagnosed and managed, and how alternative approaches to pain management could be promoted," it said.
Officials have known for years that opioid prescribing has been a problem in Medicare. ProPublica first highlighted the problem in 2013 when we published data on the drugs prescribed by every physician in the Part D program. Following that report, CMS put in place what it called an Overutilization Monitoring System, which tracked beneficiaries at the highest risk for overdoses or drug abuse. It asked the private insurance companies that run the drug program on its behalf, under contract, to review the cases and provide a response.
In a memo released in April, CMS said its monitoring system has been a success. From 2011 to 2016, it said, there was a 61 percent decrease in the number of beneficiaries who were labeled as "potential very high risk opioid overutilizers." People were flagged that way if they were taking high doses of opioids for 90 consecutive days and received prescriptions from three or more doctors at three or more pharmacies. But the agency also said it would be implementing changes in January to better target those at highest risk of abuse.
Separately, in 2014, CMS told health providers they would have to register with the Medicare program in order to prescribe medications for beneficiaries. That way, the government could screen them and take action if their prescribing habits were deemed improper. Up to that point, doctors could prescribe drugs to Medicare patients even if they weren't registered Medicare providers. Delay after delay has pushed back the requirement until 2019.
Dr. Cheryl Phillips, senior vice president for public policy and health services at LeadingAge, an association of nonprofit service providers for older adults, said managing pain in seniors is complex. Seniors are more likely to have conditions, such as orthopedic problems, cancer or degenerative joint disorders, which result in chronic pain. They sometimes don't react well to non-prescription pain relievers, such as Tylenol, aspirin or nonsteroidal anti-inflammatory medicines. Health care providers like nursing homes are still evaluated, in part, on how well they manage pain, creating an incentive to turn to drugs.
"We have to challenge the notion that being pain free is a goal," Phillips said. "It's not that I want to see people suffering, but being pain free is perhaps a myth that not only society has been seduced with but physicians have as well."
Phillips said she encourages physicians to explore nondrug alternatives, including meditation, mindfulness, moist heat and exercise.
A number of drug companies have recently entered into outcomes-based contracts. But there is scant evidence this new approach lowers costs.
This article first appeared May 31, 2017 on ProPublica.
by Charles Ornstein, ProPublica and Katie Thomas, The New York Times, July 10, 2017, 11 a.m.
This article was produced in partnership with The New York Times.
More than a decade ago, Italy tried a novel approach to help bring down drug costs: asking pharmaceutical companies to return money to the national health system if some of their medicines failed to work as expected. The effort largely flopped.
The Trump administration is now considering whether to encourage a similar approach. Pharmaceutical executives presented the idea to President Trump at a meeting in January, and the general concept was raised last month in a draft executive order aimed at combating rising drug prices.
A number of drug companies have recently entered into such deals, which they call outcomes-based contracts. Merck has done so for its diabetes drugs Januvia and Janumet, promising to return money if patients' diabetes did not meet goals for control. And Novartis, which makes the heart failure treatment Entresto, is refunding money if too many patients taking the drug are hospitalized. In more typical deals, drugmakers pay rebates to insurers based on the number of drugs sold and to gain easier access for members to their products.
But there is scant evidence this new approach lowers costs. Pharmaceutical companies still set the drug's list price and have to agree to the criteria upon which they will be measured. Some experts say such arrangements are a ploy to deflect attention from substantive changes that could hurt companies' bottom lines, such as allowing Medicare to negotiate drug prices. Moreover, the savings don't always trickle down to consumers.
"Most of them get launched with great fanfare," said Dr. Steve Miller, the chief medical officer at Express Scripts, which manages the drug benefits of more than 80 million Americans. "But then you never hear anything about it after the launch because most of them collapse under their own weight."
In a recent note to investors, David Maris, an analyst at Wells Fargo, described the approach as a "carnival game" and said he did not know of any such arrangements "where a drug company did not consider it a win for them."
Robert Zirkelbach, a spokesman for the Pharmaceutical Research and Manufacturers of America, the industry trade group, said the approach was in keeping with a trend toward paying doctors and hospitals for the quality of care they deliver rather than the number of services they provide.
"We recognize that as science is moving forward, the way we pay for medicines needs to evolve as well," Zirkelbach said. The group has been promoting the idea in an advertising campaign.
To understand how these deals work, consider the one that the drugmaker Amgen made with Harvard Pilgrim Health Care, a nonprofit insurer in Massachusetts and one of the insurers to most aggressively test the concept. It has entered into at least eight such deals over the past two years. This spring, Amgen agreed to pay a full refund to Harvard Pilgrim if patients who took its pricey new cholesterol drug, Repatha, suffered a heart attack or stroke. Repatha is intended for patients with very high cholesterol levels, for which cheaper drugs, known as statins, do not work.
As part of such deals, insurers eased restrictions on which patients could gain access to the drug, said Dr. Joshua J. Ofman, a senior vice president at Amgen. Sales of Repatha and similar drugs have disappointed in part because insurers have been reluctant to pay for them given their price. Repatha can cost up to $16,000 per year.
If Harvard Pilgrim patients taking Repatha have a heart attack or stroke, they share in the refund, getting back all out-of-pocket payments that they have made toward the drug, said Dr. Michael Sherman, chief medical officer at Harvard Pilgrim.
Doctors who prescribe Repatha said the deals do not affect how they treat patients. "We're completely agnostic to it," said Dr. Frederic S. Resnic, chairman of cardiovascular medicine at the Lahey Hospital & Medical Center in Burlington, Massachusetts, who sees patients with Harvard Pilgrim insurance. The drugs are so costly that doctors still only prescribe them when patients really need them, he said.
Dr. Peter B. Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center in New York, is skeptical. He said the pharmaceutical industry is conflating setting drug prices based on the value they bring to patients and the health care system, which he supports, with negotiating givebacks when patients don't respond to drugs, which he sees as too little, too late.
The arrangements, he said, carried "bells and whistles" that made them look good in theory. "But as long as you control all the contract terms, it can be a lot of optics but no substance," he said.
Bach and others say the pharmaceutical industry is using this approach to justify seeking major changes to federal regulations that could benefit them even more - including rolling back a requirement that Medicaid programs for the poor get the lowest drug prices, and another that bars companies from giving kickbacks to health providers. The industry says the changes are needed to allow more flexibility in the type of deals they can offer.
Drug companies and insurers touted these contracts when they were announced, but participants in several deals either declined to comment recently or provided little information about their programs.
At a conference last month in Virginia, a senior director with Prime Therapeutics, a pharmacy benefit manager, offered a blunt assessment of such contracts, saying they were not cost-effective. But in a phone interview, his boss, David Lassen, the chief clinical officer, was a bit more measured, saying that though the deals carry promise, the work to track patient outcomes is expensive and burdensome. "In their current state, where they're falling short is where you look at the return on investment," Lassen said.
Sherman at Harvard Pilgrim said the deals would not work for every drug and that drugmakers typically showed no interest when there were no competing brand-name drugs that worked in a similar way.
Some pharmaceutical executives acknowledge the model should not be seen as a panacea. Leonard S. Schleifer, the chief executive of Regeneron, questioned how such pricing would work for a drug like Dupixent, an eczema drug his company makes that was approved this year.
"Are we going to start calculating the surface area of the rash that's improved?" said Schleifer, whose company has entered into some outcomes-based deals for Praluent, a competitor to Repatha.
Other drugmakers said proof that the concept works can be seen in the interest they are getting from insurers. "No one is going to enter into these contracts if they don't believe the prices they are paying are of good value," Ofman, of Amgen, said.
Italy's experience is instructive.
Beginning in 2006, the Italian National Health System negotiated deals with drugmakers for certain medicines. It required doctors to track whether their patients were meeting certain goals, and if they were not, the pharmaceutical company would reimburse a share of what it was paid.
In 2015, researchers studying Italy's experiment concluded that the amount of money refunded by the companies was "trifling."
"The performance of this system was very, very poor," said Filippo Drago, director of the Department of Biomedical and Biotechnological Sciences at the University of Catania in Italy and an author of the study. He attributed the low savings to the administrative complexity of tracking the results and said drug companies fought efforts to reimburse for bad outcomes.
Italy now asks drug companies to provide some of their products for free - at first. Manufacturers are only paid once results are demonstrated.
"This system is working very well," Drago said.
Correction, July 10, 2017: An earlier version of this article referred incorrectly to deals between drugmakers and health plans for coverage of drugs like Repatha. The deals made it easier for patients to gain access to Repatha through their insurer; they did not ease restrictions on which patients were prescribed the drug.
The scheduled unveiling of data on patients enrolled in Medicare Advantage health plans was canceled, catching researchers — and even some former Medicare officials — off guard.
This article first appeared June 29, 2017 on ProPublica.
In the past few years, many seniors and disabled people have eschewed traditional Medicare coverage to enroll in privately run health plans paid for by Medicare, which often come with lower out-of-pocket costs and some enhanced benefits.
These so-called Medicare Advantage plans now enroll more than a third of the 58 million beneficiaries in the Medicare program, a share that grows by the month.
But little is known about the care delivered to these people, from how many services they get to which doctors treat them to whether taxpayer money is being well-spent or misused.
The government has collected data on patients' diagnoses and the services they receive since 2012 and began using it last year to help calculate payments to private insurers, which run the Medicare Advantage plans. But it has never made that data public.
Officials at the Centers for Medicare and Medicaid Services have been validating the accuracy of the data and, in recent months, were preparing to release it to researchers. Medicare already shares data on the 38 million patients in the traditional Medicare program, which the government runs. (ProPublica has created a tool called Treatment Tracker that enables people to compare how doctors and others use services in the traditional Medicare program.)
The grand unveiling of the new data was scheduled to take place at the annual research meeting of AcademyHealth, a festival of health wonkery, which just concluded in New Orleans.
In a letter from prison, Genene Jones appeared to acknowledge her guilt and asked Texas nursing regulators to forgive her for a crime she allegedly committed when she was not “of sound mind.”
This article first appeared June 29, 2017 on ProPublica.
By Peter Elkind
In a newly obtained letter sent to Texas authorities, Genene Jones- the former nurse suspected of killing more than a dozen infants- apologized "for the damage I did to all because of my crime." This marks the first time that Jones, who has maintained her innocence, seems to acknowledge guilt for her alleged crimes.
In March 2011, Jones authored a letter to the Texas Board of Nursing from prison. "I look back now on what I did and agree with you now that it was heinous, that I was heinous," Jones wrote. The letter came as a surprise to prosecutors, who have brought new charges against Jones to prevent her scheduled March 2018 release from prison. Jones, who was convicted in 1984 of murdering a toddler and injuring a month-old baby, had adamantly maintained her innocence during her criminal trials and in two prison interviews in 1987. She has since left standing instructions with prison officials to decline media requests.
"My only defense is that I was not of sound mind then or any time before 1994," Jones wrote in the letter. "That is not an excuse just a fact. God, in His infinite wisdom and mercy, granted me a sound mind upon receiving Him as Lord of my life."
The case of Genene Jones, now 66 and once dubbed an "Angel of Death with a needle," has dramatically resurfaced. Over the past five weeks, a Bexar County grand jury has indicted her for murder in the early 1980s deaths of four children in the pediatric intensive-care unit at San Antonio's county hospital, where she once worked. (Two new murder charges were handed down today.) The indictments resulted from a fresh investigation into more than a dozen suspicious deaths during that period, led by new District Attorney Nicholas "Nico" LaHood.
After a jury found her guilty in 1984, Jones was sentenced to serve 99 years for the murder of 15-month-old Chelsea McClellan, who died after Jones injected her with a powerful muscle relaxant at a pediatric clinic in Kerrville. Jones had gone to work there after the San Antonio hospital- despite suspicions that she was harming children- sent her off with a good recommendation. Jones later received a second, 60-year sentence, to run concurrently, for nearly killing 1-month-old Rolando Santos with repeated overdoses of the blood thinner heparin in the pediatric ICU.
At the time, the Bexar County DA suspected her of involvement in other murders of children but declined to bring charges, reasoning that the cases would be difficult to prove and that Jones' 99-year sentence guaranteed she'd be spending the rest of her life in prison.
That expectation proved faulty. Thanks to a Texas law aimed at reducing prison overcrowding, Jones is now due to be freed next March, after serving 34 years and eight months.
Responding to a growing public uproar, DA LaHood in late May began bringing new murder charges to prevent her release. Jones will now be transferred to Bexar County Jail ahead of March 2018 and held there until trial unless she is able to post the four $1 million appearance bonds set for the new charges.
In the new murder indictments today, the grand jury accused Jones of killing 8-month-old Ricky Nelson in July 1981 and 4-month-old Patrick Zavala in January 1982 by injecting each of the two babies with "a substance unknown." After learning about Jones' letter on Wednesday, assistant DA Jason Goss, who leads the DA's trial team, said he planned to tell the grand jury about it today in addition to presenting testimony of Zavala's mother.
It is not clear exactly how Jones' newly disclosed 2011 letter- which was received and quietly filed away- will affect her pending cases at trial. Jones has not yet entered a plea, and she does not explicitly discuss the deaths of any specific children in her letter. But it is not likely to help her defense.
"It's a confession," says assistant DA Goss. "That's a big deal. It's an incredibly important piece of evidence. We already knew she was guilty. The fact that she's saying it to this nursing board just strengthens that belief. Just the fact that she's acknowledging that means she's not an innocent person in her own mind."
LaHood, the Bexar DA, said Jones' profession of faith is not relevant to the question of whether she should face additional charges. "Forgiven and exonerated are two different things," said LaHood, who is himself a vocal Christian. "Can she be forgiven? Absolutely. Should she be exonerated? No. I can forgive her and still want her to take her last breath behind bars. It doesn't change what we're going to do."
Petti McClellan, the mother of the murdered Chelsea McClellan, was similarly unmoved. "It almost makes me angry that she did this but she didn't apologize to any of us, not just me, but any of the families in San Antonio," she said in an interview. "She must have thought it was going to benefit her. I don't think there was anything sincere about it."
ProPublica and Texas Monthly obtained a copy of Jones' letter- which was summarized in an order revoking her nursing license- through a Texas public-records request. We first learned about the letter from a Texas registered nurse, who had found the order on the state nursing board's website after becoming "fascinated" with the Jones story. She then mentioned the letter in a Facebook comment on a posting about the latest murder indictment of Jones.
It is, of course, remarkable, that Jones retained her nursing license until 2011. The Board of Vocational Nurse Examiners- which then regulated vocational nurses such as Jones- didn't even suspend her license until January 1986, nearly two years after her murder conviction. ("If you have, as you say, investigated my case, you are already aware of my innocense (sic)," Jones wrote in protest before the decision. ") Jones lost her criminal appeal that August. Yet no further regulatory action followed over the next 25 years.
The Texas prison system also struggled to make sense of Jones' status as a nurse. In August 1984, a state prison official wrote to the Bexar County Hospital District to ask if there was any problem with inmate Jones being assigned to work in the prison hospital's dispensary. After word of the inquiry leaked out, a prison spokesman offered a public assurance that the state would find Jones work that had nothing to do with medicine.
In February 2011, a Huffington Post story about the prospect of Jones' future release prompted the Texas Board of Nursing, which now regulates all state nurses, to revisit the issue and initiate revocation proceedings, says board general counsel James "Dusty" Johnston. The goal, says Johnston, was "just basically putting closure to the matter."
Notice of this proposed action went out on March 18, 2011, to Jones, then in a prison-system medical facility in South Texas, where she was being treated for health issues. In an undated four-paragraph reply the board received on April 1 of that year, Jones expressed "total bafflement" that her nursing license remained an open issue.
"What does the Board have to do with me after almost 28 years of incarceration?" she wrote. "My license was suspended … after my conviction. I have not applied for renewal in almost 30 years." Anyone can search the internet "and find out all they wish to know, though most is untrue." Jones then went on to offer what amounts to an unsolicited confession:
As a response, I will take this opportunity to apologize to the Board and to the nurses it represents for the damage I did to all because of my crime. My only defense is that I was not of sound mind then or any time before 1994. That is not an excuse just a fact. God, in His infinite wisdom and mercy, granted me a sound mind upon receiving Him as Lord of my life. I look back now on what I did and agree with you that it was heinous, that I was heinous. But, God's mercy is new every morning to remind me that I am forgiven by Him. I pray that someday you will forgive me also.
I have no plans to ever renew nursing in my lifetime or a license that I am sure, if your records go back that far, was revoked somewhere down the line of time. If you need anything more of me, please let me know."
Sincerely,
Genene Jones
The board finally revoked Jones' license to practice nursing on June 10, 2011.
Though separated by decades, Jones' letter was entirely at odds with her long-held insistence about her innocence. She pleaded not guilty at both her trials in 1984. In the days after her first conviction, for the McClellan murder, Jones, who had declined to testify, spoke to reporters for hours and happily posed for photographs. "I'm not afraid of jail, because I'm innocent," she declared. "If I had to spend 99 years in solitary, I could live with myself because I didn't do anything."
Prior to the 2011 letter, Jones' most recent public statements came during two conversations I had with her in 1987 at the state prison in Gatesville for a book I wrote about the case.
Furiously combative while working as a nurse and during earlier interviews, Jones had mellowed considerably by then. The four-letter epithets that once salted her conversation were gone. Once quick to rage, Jones now seemed placid and relaxed, even gentle. She attributed the change to a newfound religious faith. "I've been given time to sit down and understand the Lord," she told me. Jones had replaced the cross she wore on a chain around her neck during her murder trial with a Star of David. "I'm leaning toward the Jewish religion," she explained.
Yet Jones, in 1987, remained adamant that she'd been railroaded. "The story of my conviction is about big money," she declared, railing about how much the state had spent to put her behind bars. I finally asked her directly: Did she still believe she bore no personal responsibility- no blame for what had happened?
"That's not a belief," Jones insisted. "That's a definite fact. I know I am responsible in a way for bringing it to the public viewpoint, but as far as being responsible for any death- no, I am not."
So I asked her another way: Did she think she could perhaps be the victim of a disease of the mind that led her to harm children without her conscious knowledge? "No, I don't," she replied immediately. "Not at all. I've had a lot of time to think. I don't have any doubts in my innocence."
Decades after prosecutors convicted Genene Jones of killing a single infant, a Texas grand jury has indicted the former nurse on a second new charge of murder. Prosecutors hope to prevent Jones’ release from prison, which is scheduled for next year.
This article first appeared June 21, 2017 on ProPublica.
By Peter Elkind
A San Antonio grand jury today brought a second new murder charge against former nurse Genene Jones, advancing prosecutors' campaign to keep the suspected serial killer of babies behind bars for the rest of her life. The indictment - in a case that dates back more than three decades - charges Jones with killing 2-year-old Rosemary Vega, by injecting her with "a substance unknown." In an interview this week, the child's mother recalls watching Jones push a drug into her daughter's IV line shortly before she went into cardiac arrest.
Jones, now 66, is suspected of killing more than a dozen infants in the pediatric intensive care unit at San Antonio's charity hospital during the early 1980s. But she was never charged with any of those deaths at the time - partly because it was expected that she'd never leave prison after receiving a 99-year sentence for murdering a child in Kerrville, a nearby town. That assumption proved faulty. Thanks to a Texas law aimed at reducing prison overcrowding, it became clear a few years ago that the state would be forced to release Jones in March 2018, after she'd served about one-third of her sentence.
With that date fast approaching, San Antonio prosecutors last year launched a secret investigation to see if they could bring a new murder charge against Jones. It led to her May 25 indictment for murdering 11-month-old Joshua Sawyer in December 1981 with a massive overdose of the anti-seizure drug Dilantin. That charge - paired with a $1 million appearance bond - seemed likely to keep Jones behind bars at least until her new trial, perhaps two years off.
But at the time, Bexar County District Attorney Nicolas "Nico" LaHood vowed to bring further charges. "My goal is not to leave one baby behind," he declared. "In a perfect world, we believe she'd be held accountable for every baby we believe she stole from their families."
Indeed, the grand jury that indicted Jones for the death of Joshua Sawyer last month also heard tearful testimony that same day from Rosemary Vega's mother, Rosemary Cantu, in anticipation of today's charges.
Jones has always insisted she was innocent of any crimes. A prison spokesman says she has instructed officials to decline requests for interviews. She has yet to receive a court-appointed lawyer.
Rosemary Vega was admitted to Bexar County Hospital on September 13, 1981 for a relatively routine "de-banding" operation, required to treat a congenital heart defect. Her mom, Cantu, was 18 at the time. She worked in the housekeeping department at Bexar County Hospital, where her duties included cleaning the rooms when children left the pediatric ICU. She knew Genene Jones.
According to a doctor's detailed two-page "narrative report," a pre-surgical physical examination of Vega found "an alert child, playing, and in no acute distress." Dr. J. Kent Trinkle, a star cardiothoracic surgeon who later went on to perform San Antonio's first heart transplant, operated on Rosemary. According to medical records, "the procedure went without difficulty."
Rosemary was then taken to the pediatric ICU to recover, where Genene Jones worked. During the 3-11 p.m. shift, under Jones' care, Rosemary began experiencing breathing problems, was placed on a respirator, and suffered seizures. At 2:15 a.m., a surgery resident noticed the breathing machine had been feeding her too little oxygen. "...Ventilator setting had been altered by unknown source," the doctor's narrative report noted.
After a difficult night, Rosemary "seemed to stabilize" throughout the next day, according to the doctor's notes. Then, at 5:30 p.m. - again under Jones' care - she suffered the first of three episodes of cardiac arrest resulting in severe, irreversible brain damage. She was pronounced dead at 7:52 p.m. on Sept. 16, 1981. According to a later internal hospital review, "Nurse G. Jones was in attendance during the final events."
In an interview, Rosemary Cantu told me she had watched Jones inject something into her daughter's intravenous line shortly before her first arrest. "Everything was good," said Cantu. "I was sitting by her bed after the surgery. Then Genene Jones came on in the afternoon, and that's when it all happened."
"She walked in with the injection," recalls Cantu. "I saw her and asked her: 'What was she doing? What are you going to give her?' The [other] nurse had just left and took all Rosemary's vital signs. She said, 'I'm giving her something to help your baby rest.' After she walked out, not two minutes later, my daughter started turning purple. The monitors went off; people started running. She was doing good until Genene injected her. Then she started getting the code blue."
After so many episodes, Rosemary's "neurologic status deteriorated to the point of being unresponsive to pain ..." according to the doctor's narrative. Recalls Cantu: "I had to make the choice, me and my husband, to let her go, because there was nothing more they could do."
Cantu said she had planned to make a career at the Bexar County Hospital. "I liked working with babies," she said. But a short time after burying her daughter, she quit. "I went back, tried it and I couldn't take it." Cantu, now 54, has five surviving children and 20 grandchildren.
Rosemary Vega's demise, along with other post-surgical deaths, surprised and infuriated Trinkle, who demanded that something be done about care in the ICU. Suspicions about Jones had been so widespread that other nurses had begun calling her hours on duty "the Death Shift." After a secret internal investigation, the hospital ultimately handled the problem by removing Jones - along with the six other licensed vocational nurses - under the pretext of upgrading the ICU to an all-RN staff. All - including Jones - were given a good recommendation.
Jones went off to work in a pediatric clinic in Kerrville, where the death of a 15-month-old child named Chelsea Ann McClellan triggered criminal investigations in both Kerrville and San Antonio that generated international headlines. Jones was convicted of murder in the McClellan case and sentenced to 99 years; a two-year investigation in San Antonio resulted in only a single injury to a child charge, with a 60-year sentence, to run concurrently - but with the expectation that she'd spend the rest of her life behind bars.
The effort to bring new murder charges in San Antonio began in earnest last December, leading to the May 25 grand jury session that produced Jones' indictment for the Sawyer murder. Rosemary Cantu was among three mothers who testified before the grand jury that day. Each left the grand-jury room in tears.
Left to deliberate on their own after prosecutors left the room, the grand jurors took less than two minutes to hand down the Sawyer indictment. They took less than five more minutes to set a $1 million appearance bond. As the grand jurors exited the courthouse meeting room, most of them were themselves in tears, and they hugged the three waiting mothers.
After the Sawyer indictment, Larry DeHaven, the 70-year-old DA's investigator who made the Jones case his personal crusade, delivered the news to Jones at the Texas state prison system's Murray Unit in Gatesville. DeHaven says Jones was "real polite." On hearing about the new murder charge, he recalls, "she teared up a little bit. I don't think she was expecting it."
The same grand jury panel indicted Jones today for the murder of Rosemary Vega, setting a second $1 million appearance bond. "I've been waiting for this moment since my daughter passed away," said Rosemary Cantu, in anticipation of today's action. "It just hurts me that I waited so long before somebody would hear me."
"It’s a scam," says one healthcare economist. But the Food and Drug Administration is authorized to review new drugs like Vimovo only for safety and effectiveness, not prices.
This article first appeared June 20, 2017 on ProPublica.
Everything happened so fast as I walked out of the doctor's exam room. I was tucking in my shirt and wondering if I'd asked all my questions about my injured shoulder when one of the doctor's assistants handed me two small boxes of pills.
"These will hold you over until your prescription arrives in the mail," she said, pointing to the drug samples.
Strange, I thought to myself, the doctor didn't mention giving me any drugs.
I must have looked puzzled because she tried to reassure me.
"Don't worry," she said. "It won't cost you any more than $10."
I was glad whatever was coming wouldn't break my budget, but I didn't understand why I needed the drugs in the first place. And why wasn't I picking them up at my local CVS?
At first I shrugged it off. This had been my first visit with an orthopedic specialist and he, Dr. Mohnish Ramani, hadn't been the chatty type. He'd barely said a word as he examined me, tugging my arm this way and bending it that way before rotating it behind my back. The pain made me squirm and yelp, but he knew what he was doing. He promptly diagnosed me with frozen shoulder, a debilitating inflammation of the shoulder capsule.
But back to the drugs. As an investigative reporter who has covered health care for more than a decade, the interaction was just the sort of thing to pique my interest. One thing I've learned is that almost nothing in medicine - especially brand-name drugs - is ever really a deal. When I got home, I looked up the drug: Vimovo.
The drug has been controversial, to say the least. Vimovo was created using two readily and cheaply available generic, or over-the-counter, medicines: naproxen, also known by the brand Aleve, and esomeprazole magnesium, also known as Nexium. The Aleve handles your pain and the Nexium helps with the upset stomach that's sometimes caused by the pain reliever. The key selling point of this new "convenience drug"? It's easier to take one pill than two.
But only a minority of patients get an upset stomach, and there was no indication I'd be one of them. Did I even need the Nexium component?
Of course I also did the math. You can walk into your local drugstore and buy a month's supply of Aleve and Nexium for about $40. For Vimovo, the pharmacy billed my insurance company $3,252. This doesn't mean the drug company ultimately gets paid that much. The pharmaceutical world is rife with rebates and side deals - all designed to elbow ahead of the competition. But apparently the price of convenience comes at a steep mark-up.
Think about it another way. Let's say you want to eat a peanut butter and jelly sandwich every day for a month. You could buy a big jar of peanut butter and a jar of grape jelly for less than 10 bucks. Or you could buy some of that stuff where they combine the peanut butter and grape jelly into the same jar. Smucker's makes it. It's called Goober. Except in this scenario, instead of its usual $3.50 price tag, Smucker's is charging $565 for the jar of Goober.
So if Vimovo is the Goober of drugs, then why have Americans been spending so much on it? My insurance company, smartly, rejected the pharmacy's claim. But I knew Vimovo's makers weren't wooing doctors like mine for nothing. So I looked up the annual reports for the Ireland-based company, Horizon Pharma, which makes Vimovo. Since 2014, Vimovo's net sales have been more than $455 million. That means a lot of insurers are paying way more than they should for their Goober.
And Vimovo wasn't Horizon's only such drug. It has brought in an additional $465 million in net sales from Duexis, a similar convenience drug that combines ibuprofen and famotidine, AKA Advil and Pepsid.
This year I have been documenting the kind of waste in the health care system that's not typically tracked. Americans pay more for health care than anyone else in the world, and experts estimate that the U.S. system wastes hundreds of billions of dollars a year. In recent months I've looked at what hospitals throw away and how nursing homes flush or toss out hundreds of millions of dollars' worth of usable medicine every year. We all pay for this waste, through lower wages and higher premiums, deductibles and out-of-pocket costs. There doesn't seem to be an end in sight - I just got a notice that my premiums may be increasing by another 12 percent next year.
With Vimovo, it seemed I stumbled on another waste stream: overpriced drugs whose actual costs are hidden from doctors and patients. In the case of Horizon, the brazenness of its approach was even more astounding because it had previously been called out in media reports and in a 2016 congressional hearing on out-of-control drug prices.
Health care economists also were wise to it.
"It's a scam," said Devon Herrick, a health care economist with the National Center for Policy Analysis. "It is just a way to gouge insurance companies or employer health care plans."
Unsurprisingly, Horizon says the high price is justified. In fact, the drug maker wrote in an email, "The price of Vimovo is based on the value it brings to patients."
Thousands of patients die and suffer injuries every year, the company said, because of gastric complications from naproxen and other non-steroid anti-inflammatory drugs (NSAIDs). Providing pain relief and stomach protection in a single pill makes it more likely patients will be protected from complications, it said.
And Horizon stressed Vimovo is a "special formulation" of Aleve and Nexium, so it's not the same as taking the two separately. But several experts said that's a scientific distinction that doesn't make a therapeutic difference. "I would take the two medications from the drugstore in a heartbeat - therapeutically it makes sense," said Michael Fossler, a pharmacist and clinical pharmacologist who is chair of the public-policy committee for the American College of Clinical Pharmacology. "What you're paying for with [Vimovo] is the convenience. But it does seem awful pricey for that."
Public outrage is boiling over when it comes to high drug prices, leading the media and lawmakers to scold pharmaceutical companies. You'd think a regulator would monitor this, but the Food and Drug Administration told me they are only authorized to review new drugs for safety and effectiveness, not prices. "Prices are set by manufacturers and distributors," the FDA said in a statement.
Horizon acquired Vimovo in November 2013 from the global pharmaceutical giant AstraZeneca. Horizon knew it faced challenges trying to get top dollar for inexpensive ingredients. "Use of these therapies separately in generic form may be cheaper," it said in its 2013 report to investors. But the company executed a shrewd strategy to give everyone - insurers, patients, doctors and pharmacies - the incentive to use Vimovo. It's instructive to review its playbook.
To get Vimovo covered, Horizon made deals with insurance payers and pharmacy benefit managers - the intermediaries who help determine which drugs get reimbursed. The contracts generally included special rebates and even administrative fees for these intermediaries, the Horizon reports said, so the drug maker got paid much less than the sticker price, though it wouldn't say how much. But the company's net sales show the deals worked.
Horizon put boots on the ground to get the prescriptions rolling, expanding its sales force by the hundreds and focusing its marketing and sales efforts on doctors who already liked to prescribe brand-name drugs. The company's message to doctors emphasized the convenience of prescribing the two ingredients in a single pill and that the single pill protected patients by making it more likely they would take their medication as directed.
Horizon also primed the medical community by giving donations totaling $101,000 to the American Gastroenterology Association, a specialty nonprofit for physicians. Some doctors refuse drug-industry money, if only to at least avoid the appearance of a conflict of interest. ProPublica has done loads of stories showing why doctors taking money is indeed problematic, including one about drug makers' influence on physician specialty groups. When I went on the American Gastroenterology Association's website, the first thing I saw was a pop-up ad from a drug company. Several of the association's board members have received drug-company money, too. Horizon has made clear in its annual reports that donations to the group "help physicians and patients better understand and manage" the risks of pain relievers causing gastric problems.
Horizon also zeroed in on patients' worries about drug costs. To encourage them to fill their prescriptions, Horizon covered all or most of their out-of-pocket costs. That's why my doctor's office could promise me I wouldn't spend too much for my Vimovo. The program, Horizon told investors in reports, addressed the impact of pharmacies switching to less expensive alternatives and could "mitigate" the effect of payers searching for cheaper alternatives.
The strategy worked on me. I didn't even know why I was getting the prescription, but when they told me it wouldn't cost more than I would spend on lunch with a friend, I gave it the OK. A pharmacy I'd never heard of sent me a bottle of Vimovo for $10, even though my insurance company rejected the claim.
Turns out paying the patient's costs motivated my doctor, too. I waited until the end of my next visit to bring up Vimovo, and then we had a follow-up conversation on the phone. Ramani didn't know the price of the drug and found it "disturbing" when I told him. That was a surprise to me, but not to him. He said he leaves billing to his staff and doesn't even know how much he gets paid for a lot of the procedures he performs, let alone how much insurers are being charged for drugs. The marketing arms of companies like Horizon must count on this sort of blindness.
Ramani doesn't receive money or gifts from Horizon. (I confirmed this on ProPublica's Dollars for Docs website, which lists drug-company payments.) He said he likes Vimovo because Horizon covers the patient's out-of-pocket costs, entirely in many cases. Prescribing the generics or over-the-counter medications separately would actually cost more, he said. Which of course is exactly the company's plan. But Ramani agreed that the high cost of the drug to insurers ultimately raises overall health care costs for all Americans.
Knowing Vimovo's price, I asked him if he would continue to prescribe it. "It changes my thought process," he said. "But at the end of the day, I have to think about the patient and whether the patient will be able to pay out of pocket or not."
Ramani said the Horizon drug rep told him Vimovo prescriptions had to go through a particular pharmacy for the patient to receive financial assistance. In its 2016 annual report, Horizon wrote that prescriptions for its drugs might not be filled by certain pharmacies because of insurance-company exclusions, co-payment requirements, or incentives to use lower-priced alternatives. So that's why they didn't give me the option of picking up my pills at my neighborhood drugstore.
Instead, my Vimovo was mailed to me from White Oak Pharmacy in Nutley, New Jersey, which is about 45 minutes from my house. I drove there to find out why. The neighborhood pharmacy is on the bottom floor of a two-story brick building on a street corner, next to a hair salon.
Vishal Chhabria, the pharmacist who owns White Oak, told me the drug company sets the price of Vimovo. He insisted his pharmacy has no special relationship or contract with Horizon. Maybe the drug company steers prescriptions his way, he said, because his pharmacy will process the coupons that reduce or eliminate the patient costs, which some pharmacies don't.
Chhabria said there is no approved generic alternative to Vimovo, so he can't suggest one to patients. And while other drugs, like over-the-counter medications, would be cheaper for the health system overall, they are more expensive for the individual patient, he said.
In poring through Horizon's financial filings, it appears the drug's run may be ending. Horizon said in its report for the first quarter of 2017 that fewer insurance companies have been willing to cover Vimovo and many that do have demanded larger rebates. As a result, Horizon has been eating more of the costs of providing the drug to patients, as they must have in my case. The prescriptions have still been coming in, but net sales were just under $5 million in the first quarter of this year, down 81 percent from the first quarter of 2016.
Critics of Vimovo say that's still more than patients should be spending on the drug. "That number should be zero," said Linda Cahn, an attorney who advises corporations, unions and other payers to help reduce their costs. "If you want to talk about waste, that's waste."
Herrick, the health care economist, said Horizon cashed in by eliminating many of the barriers in the system that are meant to control costs. The company got patients on board by covering their out-of-pocket costs. It appealed to doctors by promoting the benefits to patients. And it did an end-run around chain pharmacies, which typically might suggest a lower-priced alternative, by steering prescriptions to pharmacists who would participate in their patient-assistance program.
"Somebody brainstormed: ‘How can we nullify any consumer check and balance in this supply chain? What can we do to keep the customer from asking questions?'" Herrick said.
The scheme that played out with Vimovo is bound to happen again, Herrick said. Maybe it already is. Drug companies are always on the lookout to deploy similar strategies.
I dutifully took my Vimovo for several days, until I noticed it kept me awake until 3 in the morning - a rare side effect. (Perhaps they need to add a third drug to the combo.) I probably have more than 50 pills left in the bottle on my bedside table. Maybe I could sell it back to Horizon for $1,500.
Before he was named Trump’s health secretary, Price took a congressional trip to Australia and pressed officials to extend protections for drug companies in an international trade agreement.
This article first appeared May 31, 2017 on ProPublica.
In the spring before the 2016 presidential election, the Obama administration’s 12-nation trade agreement known as the Trans-Pacific Partnership, or TPP, was still alive. Negotiators worked on details as Congress considered whether to ratify the pact.
The Australian government was getting in the way of one change demanded by U.S. pharmaceutical companies. Makers of cutting-edge biological drugs wanted to have data from their clinical trials protected from competitors for 12 years, as they are under U.S. law — not the roughly five years permitted under the TPP. Australian officials insisted that an extension would deprive consumers of cheaper alternatives for too long.
On April 5, 2016, a bipartisan group of U.S. lawmakers arrived in Canberra, Australia’s capital, for meetings with government officials on a broad range of subjects. Among those on the routine congressional trip was Rep. Tom Price, a Georgia Republican who would go on to become President Trump’s secretary of health and human services. Three weeks before the trip, Price had purchased up to $90,000 worth of pharmaceutical stocks — trades that would come under scrutiny after his nomination to Trump’s cabinet.
In Canberra, Price and another Republican, Rep. John Kline of Minnesota, pressured senior Australian trade officials to modify their position on the 12-year extension, according to a congressional aide who was on the trip. The Australians explained that they had no intention of changing their laws or rules in ways that could increase drug prices. Price and Kline continued pushing, according to the aide, asking for a side letter or other written guidance that the period would be extended in Australia even if it weren’t spelled out in the TPP itself.
Price’s lobbying abroad, which has not previously been reported, is another example of how his work in Congress could have benefitted his investment portfolio. He traded hundreds of thousands of dollars’ worth of shares in health-related companies while taking action on legislation and regulations affecting the industry. ProPublica previously reported that Price’s stock trades are said to be under investigation by federal prosecutors.
Price, who did not respond to an interview request for this story, has said he did nothing wrong, that his broker generally chose stocks without his knowledge and that all of his trades were publicly disclosed.
Price’s financial disclosures submitted to the House Office of the Clerk show that on March 17, 2016, he purchased shares worth between $1,000 and $15,000 each in Eli Lilly, Amgen, Bristol-Meyers Squibb, McKesson, Pfizer and Biogen. All six companies had an interest in biological drugs, which are grown from live cells and are known for short as biologics. Eli Lilly, for example, is behind Portrazza, the first biologic approved to treat a common type of lung cancer. Amgen makes a top-seller for rheumatoid arthritis and psoriasis. Biogen developed a biologic for people suffering multiple sclerosis relapses.
Kline, who has since retired from Congress, said he could not recall if he or anyone else raised the biologics issue. His financial disclosures do not show direct holdings in pharmaceutical companies.
Australia has played another role in Price’s financial activities. In 2015 the congressman bought about $10,000 worth of shares in Innate Immunotherapeutics, a small biologics firm with an office in Sydney. After the congressional trip, which also made a stop in Sydney, Price purchased a larger stake in the company, about $84,000 worth, in two private placements, the first of which was announced in June. Price was invited to purchase the shares at a discounted rate.
It’s not known if Price had any contact with the firm while in Sydney. Price didn’t respond to questions about when and where he discussed the discounted offering with company officials. The company’s officials also did not respond.
Traveling congressional delegations typically meet with a variety of local officials, and at the time of the visit to Australia it wasn’t unusual for Republican lawmakers to side with the pharmaceutical industry on the trade deal’s protections for biologics. Price’s advocacy stands out because he pushed the cause directly with foreign officials, while at the same time owning stakes in companies that could have benefited.
An itinerary for the trip reviewed by ProPublica mentions TPP in relation to one of the meetings, but does not list the biologics provision. A former Australian trade official, who asked not to be named and attended one of the meetings, confirmed that the 12-year lockup was addressed, but said he could not recall which Congress members were pushing it.
Others on the trip, organized by the House’s Education and the Workforce Committee, were Robert Scott, D-Va., Ruben Hinojosa, D-Texas, Erik Paulsen, R-Minn. and Dan Benishek, R-Mich. Those members who responded to requests for comment said they could not recall whether the provision was discussed.
The data collected during clinical trials of drugs can save competitors time in developing the cheaper alternatives to biologics known as biosimilars. Keeping the data proprietary longer extends the original drugmaker’s monopoly. While some big brand-name pharmaceutical companies also make biosimilars, they and their trade association — the Pharmaceutical Research and Manufacturers of America — advocated strongly for longer exclusivity.
In the end, the debate over the provision became moot. Trump scrapped the TPP days after taking office. Price divested his drug stocks upon taking the cabinet post. His investment in Innate Immunotherapeutics yielded a profit of at least $150,000.
Special correspondent Anne Davies in Sydney contributed to this story.
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Amid public concern over spiking drug prices, a powerful middleman is suing a tiny drugmaker over unpaid rebates and fees. The maker calls the suit baseless; analysts say the suit offers a window into an opaque world.
by Charles Ornstein, ProPublica, and Katie Thomas, this article is a collaboration between ProPublica and The New York Times, May 31, 2017
A company that manages prescription drug plans for tens of millions of Americans has sued a tiny drug maker that makes an emergency treatment for heroin and painkiller overdoses, increasing the tension between the companies that make drugs and those that decide whether they should be covered.
Express Scripts, the nation’s largest pharmacy benefits manager, is suing Kaléo, the manufacturer of Evzio, the injectable overdose treatment whose price quintupled last year, drawing widespread outrage and inquiries from members of Congress. Express Scripts claims it is owed more than $14.5 million in fees and rebates related to Evzio, and it has dropped the drug from its preferred list.
In recent months, anger over rising drug costs set off a civil war within the pharmaceutical industry, pitting drug makers against other players in the health care system, including the little-known pharmacy benefit managers who negotiate with drug makers on behalf of insurers, large employers and government health programs. Drug makers and some members of Congress have accused Express Scripts and other benefit managers of operating in the shadows, pocketing an undisclosed share of the payments they exact from drug makers even as consumers are asked to pay inflated prices for the medicines they need.
The lawsuit was heavily redacted because Express Scripts said it contained “sensitive business information,” but nevertheless it provides some tantalizing details about the company’s dealings. Consultants and brokers — who advise employers on their prescription drug plans — said it showed that Express Scripts is collecting fees that keep rising as drug prices go up.
For example, according to the lawsuit, which was filed in federal court in St. Louis, Express Scripts charged Kaléo “administrative fees” that climbed sharply at the same time that Evzio was rising in price. In January 2016, when Evzio carried a list price of $937.50 for two injectors, Express Scripts billed Kaléo monthly administrative fees of about $25,000 for its commercial clients. But three months later, Evzio’s price had climbed to $4,687.50, and these fees totaled nearly $130,000. That’s on top of charges that included “formulary rebates,” or drug discounts, and “price protection rebates,” which are triggered when a drug jumps in price. Those price-protection rebates totaled $14 million — most of the money that Express Scripts is trying to recoup.
Benefit managers like Express Scripts typically pass the rebates they collect from manufacturers along to their clients — insurers and large employers — after taking a portion of the rebates for themselves. But critics, like Linda Cahn, the chief executive of Pharmacy Benefit Consultants in Morristown, New Jersey, say that the benefit managers are not transparent about what share of fees they keep, and what share they pass along to clients.
Administrative fees are particularly murky, she and others said. Some of the fees are passed to clients, but benefit managers also collect other fees that are not returned to clients.
“The lawsuit reveals that Express Scripts is collecting immense sums of money. No one knows what they’re passing through and what they’re retaining,” said Cahn, who flagged the lawsuit in a note to clients Monday. “Every client and the federal government and taxpayers should insist that they do.”
But Brian Henry, a spokesman for Express Scripts, disagreed with her assessment and described Kaléo as a “deadbeat dad.” “They owe rebates and administrative fees that we share with our clients and we are working to get that money back,” he said in a statement.
Henry also said, “The vast majority of the administrative fees are passed back to our clients.” In cases in which they are not, he said, it is with the consent of the client. While Henry initially said that all administrative fees are passed along to Medicare plans, he later said he misspoke and that he should have said the “vast majority” of such fees were passed along to Medicare plans.
Spencer Williamson, the chief executive of Kaléo, said in a statement that the lawsuit was “baseless” and that the company was committed to providing affordable access to its drug “without burdensome paperwork or high out-of-pocket costs.”
The lawsuit is the latest piece of bad news for Kaléo, a private Virginia company with just two products on the market. When Evzio arrived on the market in 2014, it was sold as an easy-to-use device, similar to an EpiPen, that could be stowed in a pocket or medicine cabinet and quickly used by friends or relatives to reverse the effects of a drug overdose.
But while the device was initially hailed by addiction experts who said it would make it easier to stop fatal overdoses, the company came under heavy criticism in 2016, when it quintupled the price of Evzio. The price increase — which came in the midst of a national opioid abuse epidemic — prompted letters from members of Congress, demanding to know what had prompted the change.
Kaléo has said it sharply raised the price of Evzio to cover the cost of a new patient-assistance program that lowers the out-of-pocket costs for people who cannot afford the product. Kaléo covers all of the out-of-pocket costs for patients with private insurance, and offers Evzio free of charge to uninsured people who make less than $100,000 a year.
But critics have said that such patient-assistance programs serve to drive up the cost of drugs to the health care system because while they ease the burden on patients, they leave insurers with the bulk of the bill, especially when a less expensive alternative is available. Other forms of naloxone, the active ingredient in Evzio, are available at a much lower price.
This is not the first time Express Scripts has sued a drug maker with expensive products. In 2015, Express Scripts filed suit against Horizon Pharma, also over unpaid fees. Horizon agreed to pay Express Scripts $65 million in September 2016 to settle the case. After initially dropping coverage of Horizon’s drugs, Express Scripts added them back to its preferred drug list.
Express Scripts is also being sued. Last year, the insurance giant Anthem sued Express Scripts in federal court in New York for $15 billion and claimed the company had been overcharging it for drugs. Express Scripts, which denied the claims, said recently that it would most likely lose Anthem, its largest customer, beginning in 2020, leading to speculation about how the company will replace the business it is losing.