Saturday, April 25, 2015

The Price of a Pill

Commerce. Alliances. Supply and demand.  At their core, each is a basic concept that is relatively easy to understand. But drop any into the real world, and it gets complicated. After all, things are never that neat when you extrapolate those roots to global trade, world diplomacy or monetary policy. That's why Harry Truman's explanation of economic cycles is so powerful. It takes a system that is complex and reduces it back to its essence: "It's a recession when your neighbor loses his job; it's a depression when you lose yours." Of course, politics being politics, Ronald Regan added the corollary "And recovery is when Jimmy Carter loses his."

Drug pricing would seem to fall into this arena. On the surface it would seem to be a pretty simple and straightforward equation. You take the cost of the materials, add in the overhead it costs to make and market the pills, tack on some profit, and you arrive at a price to charge the public. There might be variances for the brand, premiums for specific features or discounts for stuff that faces competitive pressures. But in concept it should be no different from buying shoes or potato chips.  

But pharmaceuticals also boast factors that are somewhat unique and complicate the picture. For instance, it can take 10 to 15 years to develop a new medication, so R&D is a hard number to quantify.  And since only about 20% of products actually make their way out of the lab and onto the shelf at CVS, there's a lot of time and effort that has to be accounted for that goes into failures.

And that's just on the development side. On the delivery side, it's not just doctors and pharmacists, but giant prescription fulfillment firms and insurance companies that all have a say. The result is that who you are, where you are and what kind of coverage you have all factor into how much you shell out to relieve your aching back or silence your cough.

I bumped into the system head first when I opened a bottle of pills to find it nearing the end. Like millions of people, for several years I have taken simvaststain to help control cholesterol. While our coverage has shape shifted with the ongoing remake of the healthcare landscape, I have been able to get the pills at a cost of about thirty bucks for a 90 day supply, a price which seems to be the about average, regardless of supplier.

Finding no more refills allowed on my current script, I reached out to my physician and asked her issue a new one. The office said they would e-scribe it, and I checked online to make sure the order had been transmitted. Sure enough, it was shown as "in progress." But I noticed one itty-bitty discrepancy from my last order: the $30 price tag had jumped to $248.40.

Perhaps I missed the notice since I last ordered the pills that they were now being made with diamonds. So I picked up the phone and called in, seeking to talk to an actual person. The rep I got was most helpful: "Yes sir, I have your account right here. How can I be of help?" When I pointed out the mismatch, she said, "Wow! Quite a difference, huh? Let me see. Well, it says here you have no health insurance. And the uninsured price is indeed $248.40." I assured her that I did have coverage , that nothing had changed on my side since I last ordered. She asked for a minute, went away, and came back shortly. "Sorry about that. Indeed, there was a miscoding in the file. I have reset it, and the price is now the same as it was before, $30. Sorry for the scare. Can I put a rush on that for you?"  In the space of 60 seconds, the price of my medication dropped 800%.  

A look at any medical bill shows the same kind of imbalance. Nominal charges or uninsured costs seem insanely high, while the insured variant seems to undervalue the service being provided. Regardless of your politics, it hard not to agree that the system is wildly out of whack. There are no easy answers, but experts say I experienced the first step: between payment and product we need to reconnect the disconnect.


Marc Wollin of Bedford thinks he is basically healthy. His column appears regularly in The Record-Review, The Scarsdale Inquirer and online at, as well as via Facebook, LinkedIn and Twitter.

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