There’s an aspect of the U.S. health care system that has become so common, we really don’t question it anymore. Most of us are aware that drug makers can offer the exact same medication in branded and unbranded (or generic) formulations. And most of us accept the idea that a drug company can charge different prices for the same drug — and that patients may have to pay different prices, depending on which version is covered by their health plan. But a new Harvard study is shedding light on just how vast the disparity in drug pricing has become and its impact on the rising cost of health care in the United States. According to its findings, the cost of one pre-term birth medication can vary from $200 to nearly $11,000. But here’s the frustrating part: the study also found that the high-priced drug formulation was no more effective than the cheaper version. This, my friends, is exactly why we need to talk about health care reform.
The hormone used for the analysis was 17-P, a form of progesterone proven to prevent preterm birth. According to the March of Dimes, progesterone in early pregnancy guards against miscarriage by helping the uterus to grow and stopping it from contracting. Later on, the hormone plays a role in preparing a woman’s breasts for lactation and boosting oxygen to her growing fetus.
When a person's body can't produce an adequate level of the hormone naturally, a doctor will often prescribe a synthetic form to be delivered via injection or in a cream form, according to the March of Dimes website. For women with a history of early miscarriage or spontaneous preterm birth, the medication is, quite literally, a lifesaver.
The researchers studied insurance claims and prescriptions issued between Jan. 1, 2008 and Dec. 31, 2015 to 4,000 women at high risk for premature birth; 535 women were given a compounded form of the drug and some 3,350 others received the brand-name version. They found that not only were both forms of 17-P equally safe for patients, the two versions were equally effective in preventing preterm birth or miscarriage.
In fact, the only difference that researchers found was in how much women paid for the potentially life-saving medication. The average per pregnancy price that women paid for the branded version was close to $11,000, according to the study abstract, versus the $200 total that women paid for the individually compounded version over the course of their pregnancy.
Speaking to WBUR, Harvard researcher and study co-author Andrew Beam explained why drug pricing is the crucial, missing part of the health reform puzzle:
One of the things that drives me crazy about the U.S. health care debate is we seem to argue only about who’s going to pay for what. We don’t step back and have a debate about how much we’re going to pay in the first place. These extremely high markups on brand name drugs are one component of why health care in the U.S. is so expensive relative to every other country on the face of the planet.
And Makena seems a perfect example of how high pricing (rather than changes in the drug's effectiveness) has made a once-inexpensive drug less available to those who need it.
According to the study abstract, 17-P was once widely available as an inexpensive drug compounded by most pharmacists. But in February 2011, KV Pharmaceutical Company (now known as Lumara) was granted exclusive rights by the FDA to manufacture and market the drug, branded under the name Makena. Without any other competition, the researchers wrote, KV was able to set pricing for Makena wherever it chose.
Initially, the company set a price of $1,500 per dose, according to an ABC News report, then cut the per-dose pricing down to $690, after considerable pushback from the medical community about Makena's initial pricing. In addition, the company introduced options for patients to obtain financial assistance or financing for the company's branded medication.
AMAG Pharmaceuticals, which bought Lumara in 2014 tells Romper that the distinction between FDA-approved branded drugs versus custom-made by pharmacists is a crucial reason for the pricing difference.
AMAG Pharmaceuticals is committed to advancing the health of mothers and babies. Makena (hydroxyprogesterone caproate injection) is the only FDA-approved drug to reduce the risk of preterm birth in women who meet the indication, which represents about 3.5% of pregnancies annually.
The research letter published in JAMA was a retrospective claims database review that compared Makena to an unapproved compounded formulation, not a generic. A generic is a pharmaceutical product that has been approved by the FDA according to strict safety and efficacy standards and is considered equivalent to a brand-name pharmaceutical. There is no generic to Makena, and compounded products are not generics.
The company added that because Makena was FDA-approved, the medication was also held to certain quality controls not seen in compound versions.
Furthermore, it is against federal legislation to make a compounded copy of an FDA-approved branded medication like Makena. FDA-approved medications are required to be produced in accordance with Good Manufacturing Practices that ensure consistency and quality; compounded formulations are not held to the same standards.
Still, while the recently released data review seems focused on the earlier pricing of the drug, the pricing disparty between the branded and unbranded versions — and the impact on that disparity on patients who might have needed the drug — could add to today's debate over the future of health reform in the U.S. Researchers at the time argued that KV's ability to set pricing meant that thousands of women who might benefit from Makena would be priced out of the market. The Harvard study didn’t include women on Medicaid, for example. That could be because some Medicaid programs have refused to pay for Makena and some 40 percent of women on Medicaid don’t have access to either version of the drug, WBUR reported.
In response to that point, AMAG pharmaceuticals said in a statement to Romper that the company "has worked to ensure broad commercial and Medicaid coverage of Makena." Further, the company reiterated a commitment "to invest significantly in comprehensive financial assistance and clinical research to advance maternal and child health."
If all women at high risk of preterm birth received weekly injections of 17-P, as many as 10,000 pregnancies per year could be saved — and it would save at least $12 in medical costs for every dollar spent on the medication, according to another study. The Harvard group told WBUR that if 17-P were given to each of the estimated 133,000 women in the U.S. who needed it, Makena would cost patients more than $1.4 billion per year, versus only $27.5 million for the generic compound.
Questioning why drugs are priced the way they are could be as crucial to health reform as figuring out how much coverage people can afford. But, that issue has gotten less traction in the national debate than it deserves. And, as this study points out, under-insured patients — most often women and babies — will be the ones to suffer most.