Drug Costs vs. Charges: You Can. Should You?

Sunday, 30 July 2017

Vincent F. Maher, JD, MSN
Management and Health Care Management, Iona College, New Rochelle, NY, USA
George V. Priovolos, PhD
Marketing and International Business, Iona College, New Rochelle, NY, USA
Barbara M. Cohen, PhD, JD, MS, MEd, BSN
School of Nursing and Health Sciences, Simmons College, Boston, MA, USA
Elisabeth J. Maher, MSN
Behavioral Health Center, Westchester Medical Center Behavioral Health Unit, Valhalla, NY, USA

Purpose: Pharmaceutical manufacturer Mylan increased the cost of Epi-Pens by 400 percent. The new list price for a two-pack of EpiPens is just above $600 which charge was just over $100 when Mylan acquired the product in 2007. The company’s CEO, Heather Bresch, whose salary was $2.4 million in 2007 also raised her salary to 18 million dollars per year. Her acts recapitulate those of former Turing Pharmaceuticals CEO Martin Shkreli who imposed drug charge increases from $13.50 to $750 a pill for the price of Daraprim, a medication used by HIV patients, and also of his recommended increases in executive compensation by Turing following his departure. Mental health outpatient drug costs have risen roughly 20% a year in each of the past 5 years for which national data are available (1996-2001). Antipsychotic drugs billed to Medicare have risen 71% in recent years.

Methods: Analysis is based on media and pharmaceutical industry sources and social media response to these actions.

Results:  There seems to be a default setting in most people’s psyches that cost and charge are supposed to resemble some unspoken reasonable relationship to one another and are not to enter the realm of beyond the pale or even of obscenity. Most would agree that the one producing a product is entitled to a profit. How much profit and its reasonableness are two entirely different issues and not infrequently evade norms on many number of levels. Choice differentials are utilized by consumers pertaining to transportation, housing, education medication and recreation: first class and economy seats will get you to the same place as will a Rolls Royce or a Vespa. Generic versus brand name ibuprofen will provide analgesia. Consumers make a choice. The process of research, price setting and charges practices are typical in the pharmaceutical industry. When speaking of life saving medications however, such differentials are rendered moot and necessarily, many would argue, become the object of public policy scrutiny. Specifically, one needs a particular medication when one needs it or one dies. There isn’t an alternative for those who need products like Epi-Pens, Daraprim or Naloxone.

Conclusion: This paper will examine contemporary cost versus charge as applied to commonly used medications and to those that are life-saving and with limited markets, the funding of pharmaceutical research, the impact of direct to consumer advertising, the issue of executive compensation, the realities that legislators around the world have engaged in to remove the immediate charges of emergency medications from the individual to the public realm and product branding issues faced by the manufacturer. The authors will propose recommendations for Nursing and public health advocacy in this regard and will invite discussion by participants.