Martin Shkreli is the face of evil pharma. Four years ago his company, Turing Pharmaceuticals, ratcheted the price of a drug used by AIDS patients from $13.50 a pill to $750 — increasing their bills nearly 55 times over. Two years later, the thirtysomething “Pharma Bro” was sent up the river for securities fraud and conspiracy. Today he lives in southern New Jersey as a guest of the federal government at Fort Dix Federal Correctional Institution.
Turing’s profit-making from a drug that had been on the market for decades, along with other controversies such as Mylan’s price hike for EpiPens used to arrest life-threatening allergic reactions, has focused public attention on drug prices. Indignation over their sky-high costs resonates with pretty much anyone who has gone to the pharmacy to pick up an important prescription only to find their wallets lightened by several hundred dollars.
Indeed, one could practically etch Shkreli’s name on legislation now being weighed on Beacon Hill as part of the next state budget that would force the disclosure of the value of certain drugs bought under MassHealth, and require drug makers to report pricing information to the state. It it weren’t for the ire inspired by Shkreli and others in his industry, Gov. Charlie Baker and lawmakers might not be acting so aggressively today.
We can all hope that Shkreli is only a caricature, an exaggeration of the worst characteristics of an industry that serves the dual needs of healing and making money. Regardless, the fact that drug pricing is such a black box clearly disadvantages paying patients, as well as the taxpayers who underwrite programs such as Medicaid, which is known to the low- and middle-income families it serves in Massachusetts as MassHealth.
Baker and those on Beacon Hill advocating for better, more widely available price information are absolutely right. A marketplace only improves with better pricing information. Giving consumers a clear look at the value of a drug, as the Baker administration proposes for remedies found to be “unreasonably priced” by the state health officials, helps to inform patients as well as health care managers.
A Pioneer Institute white paper from April 2016 urged caution and noted that “reprehensible, exploitative actors are the outliers.” Setting aside the Martin Shkrelis of the world, it advocated better enforcement of price disclosures that are already required, including for the costs of other health care services, though it warned against disadvantaging drug makers by forcing them to divulge data their competitors can use.
A later study by Pioneer went on to question the effectiveness of transparency laws in lowering overall drug prices, and it noted that in some cases, they may actually inflate costs for companies by layering on onerous regulations.
Strict price controls inflicted on even the more forthright drug makers are sure to have unintended effects, which should give pause to those of us in a state with a flourishing bio-tech industry.
At the same time, it’s critically important that the state not only help educate the public but find better ways to wrangle the cost of MassHealth, which consumes about $2 of every $5 spent by our Massachusetts government. As state Rep. Lenny Mirra, R-West Newbury, recently pointed out to Statehouse reporter Christian Wade: “We all want drug prices to be transparent, and we need Medicaid to negotiate lower prices because it’s eating away at the state budget.
Improving our health care delivery systems so that everyone is clear on the costs — of all health care services, including prescription drugs — benefits taxpayers and patients alike.