Samford University’s Healthcare Ethics and Law Institute (HEAL) reviewed the most egregious examples in recent drug pricing increases, explored the ethics of drug pricing at both patient and manufacturer level, and awarded two Pellegrino Medals during its recent annual conference.

Sponsored by Samford’s McWhorter School of Pharmacy, the HEAL conference this year was designed to help Alabama institutional ethics communities at all levels with some of today’s most pressing health-care ethics, law issues and problems. The theme of the conference was “The Ethics and Policy of Drug Pricing in the U.S.”

Citing such headlines as “Skyrocketing Prices for Generic Drugs Compromise Health Care,” David Kimberlin, M.D., director of pediatric infectious diseases at the University of Alabama at Birmingham (UAB), noted that prescription drug costs had increased a record 14 percent in 2014 and another 10 percent in 2015. He asked if this has become the new normal in drug pricing and if consumers can afford it.

Kimberlin also noted increases for medicine for common diseases such hepatitis C and cancer, insulin products and new generics, which historically should result in decreases of 80–85 percent. He asked if something could be done to slow down the rising cost of life-saving prescription drugs, and if so, what.

With the assistance of pharmacist April Yarbrough with Pediatric Infectious Diseases at Children’s of Alabama, Kimberlin gave examples of  increases in the price of new drugs ranging from 67 to 5,000 percent, and patient outcome if the new drugs were used.

Both Kimberlin and Yarbrough agreed that the cases cited were “egregious and indefensible,” but questioned “how to punish the extreme outliers” without impacting the overall incentives of pharmaceutical companies to develop and produce the next “big drugs.”

A view that the current system of pricing and value is blocked by biased or unknown effectiveness and costs was offered by Donald W. Light, professor of psychiatry and comparative health policy at Rowan University’s School of Osteopathic Medicine in New Jersey. Additionally, he is a medical and economic sociologist who does policy research on institutional and global bioethics concerning access and quality problems for medical services and drugs. Much of his presentation is documented in his recent book, Good Pharma: The Public-health Model of the Mario Negri Institute. 

Some of the biased or unknown effectiveness and costs he suggested were “rights-violating, corporate-driven agents” to maximize profits, research and development for profits rather than for the relief of disease in patients, and conflict of interest in testing designed to minimize evidence of adverse side effects.

Such practices create ethical concerns about medicines, Light noted. These include biased trial designs that preclude clinically and scientifically valid outcomes; deceptive biased methods of trial organization and analysis for better marketing points and profits; selective transparency and/or hiding weak and negative results; biased medical journal articles and medical knowledge; and market-based over-prescribing.

“Why do we trust drug companies to test drugs?” Light asked, noting that we know research by tobacco companies downplays the harm of smoking and that the National Football League does the same as it relates to concussions. “Why have them test their own products?”

Quoting Edmund Pellegrino, the founder of bioethics for whom the Pellegrino Award is named, Light noted that “medicine is a special moral enterprise . . . grounded in a special personal relationship between one who is ill and another who professes to heal.

“The end of medicine is humanitas, a love of mankind,” Light quoted Pellegrino.

The other Pellegrino recipient, Patricia Danzon in the Health Care Department of Wharton School of Business of the University of Pennsylvania, presented an overview of the basic pricing principles of pharmaceuticals. She presented a way forward for the industry based on value-based pricing.

“Pricing to capture perceived value and willingness-to-pay of customers maximizes profit,” Danzon said. She warned against pricing to recover costs and/or hiding the cost of research and development as irrelevant to pricing. “Expected prices and expected return of investment do influence investment decisions,” she explained.

Danzon suggested several reasons for the high and rising drug prices in the United States, including status quo insurance and reimbursement rules, at-risk provider payments, growing interest in value measurement to assist in drug choice and guideline setting, and tying reimbursement to evidence of value.

“Outcomes data are critical,” she noted, warning that the U.S. lags many other counties in this area.

From the industry’s perspective, however, the pricing of drugs is in line when looking at the entire health system, of which drugs are only a part,” said Richard I. Smith with Pharmaceutical Research and Manufacturers of America (PhRMA), claiming 14 percent of prescription drugs as the amount. He cited several diseases such as HIV, cancer, cystic fibrosis and cardiovascular as success stories of the industry.

He listed several built-in factors in cost containment of drugs, including the life of the drug (9 out of 10 prescriptions are generic, which promotes affordability) and the patent system.

More can and needs to be done, Smith suggested, but it must be done together. He mentioned cost containment, pay for value and solutions (new approaches) to the condition.

Jack Brymer is a news and feature writer in the Division of Marketing and Communication.