The High Cost – A Different View

The High Cost – A Different View

While the Senate works towards their version of a health care plan the debate over the high cost of drugs remains front and center. In the diabetes world, this debate centers around the high out of pocket cost of insulin. The amount the patient pays when they pick up their insulin from their local pharmacy.

In the past, we have attempted to bring some much-needed perspective to this issue. When this debate began it was the insulin makers who were cast in the role of villains. A role which seemed to fit as they were raising the wholesale price of insulin in lockstep. However, as we noted this one factor alone was not responsible for what a patient pays out of pocket. Blaming insulin companies ignored the role played by pharmacy benefit managers, insurance companies and retail pharmacies. As we stated many times the out of pocket of insulin was not a simple math problem rather a complex algebraic problem with multiple variables.

Thankfully people have begun to realize that while Lilly (NYSE: LLY), Novo Nordisk (NYSE: NVO) and Sanofi (NYSE: SNY) may have contributed to the issue, they are not solely responsible. Still the fact remains for a portion of the patient population it’s a choice between getting the drug that saves their lives or paying their mortgage.

This situation has sparked calls for price controls, greater transparency over pricing and subsidies for patients who cannot afford this cost. On the flip side the drug companies argue that price controls will lead to less innovation, that if they are not rewarded for successful drugs they will not spend billions on the many drugs that don’t reach the market. While many, including Diabetic Investor, favor greater transparency this is easier said than done. When it comes to subsidies the question is always who gets them, how much do they get and of course who pays for them.

Lost in this debate is an issue that no one talks about, or at least they do not talk about it publicly. What would happen if insulin was given away for free? What then? Would it solve anything?

These are questions that are never asked by patient advocates. These well-meaning people just assume that if insulin was given away for free that everything will be great. They assume that the high out of pocket cost is standing between patients and better outcomes. Now this may be true in some cases but to date Diabetic Investor has yet to find one study that proves this to be true. Quite frankly we have yet to see a study that even quantifies the problem. We have no idea if this issue impacts 1000, 10,000 or 1,000,000 patients.

This focus on the high out of pocket of insulin also ignores other items used by a patient that aren’t cheap either. Just by way of example look at the high out of pocket cost of insulin pump therapy. Now that sensor augmented pumps are all the age this cost has increased yet again. Thankfully the insulin pump and sensor companies have hard data that proves their products have a positive impact on patient outcomes. Sure, insulin pump therapy may not be cheap but it is very effective when judged by the one standard, the only standard that should matter, better patient outcomes.

To bring even greater clarity to the cost debate let’s take a walk down memory lane. Years ago, these same patient advocates argued that the cost of glucose test strips were too high. That the reason patients were not testing their glucose levels regularly was directly linked to the high cost of test strips. Just as today with high out of pocket of insulin there was no hard data that backed up this contention.

Back then we argued that cost had little to do with why patients did not test their glucose. Our argument was and continues to be that the reason patients do not test is they don’t know what these numbers mean, they have no value. Our contention was and is test strips could be given away for free and nothing would change.
Well as it turns out the patient advocates got what they wanted when market forces combined with competitive bidding drove down the cost of test strips. Did this increase test frequency? Not by a long shot. About the only thing lower prices did was decimate the industry.

Not yet convinced that cost is not the factor everyone thinks it is; consider this. Metformin is the most prescribed oral medication and in many cases the drug is given away for free to patients. Yet even with the drug being given away for free we are not seeing an improvement in patient outcomes. The fact is almost two thirds of all patients are not under good control.
Now just in case anyone has forgotten the real cost to our health care system is not the cost of drugs and devices. No, the real cost comes from poorly controlled diabetes and all the complications that come from poorly controlled diabetes. A cost that is borne dis-proportionally by Medicare. The fact is complications do not develop overnight, complications develop over years of poorly controlled diabetes.

Our view is that as well intentioned as these efforts are to lower the cost of diabetes management, these efforts are misguided. Our perhaps we should say these patient advocates are focusing on the wrong cost. Given that there is no hard evidence that proves there is link between the cost of diabetes management and poor patient outcomes, perhaps it’s time we start focusing on what really matters. Perhaps we should look at the real reasons we are not seeing better patient outcomes. It just might be wise to consider that the real cost to the system is not drugs and devices but the complications from poorly controlled diabetes.

By our way thinking this focus on the cost of drugs and devices is like taxing cigarettes. While the cost of smokes may have a mild impact on whether a person smokes or not. The reason most people do not smoke is they know smoking can kill them. They also know if they don’t smoke they will pay less for health and life insurance. Simply put they have a vested interest in not smoking.

Sadly, this is not the case with diabetes. Yes, intensively managed may understand the benefits of practicing good diabetes management. However, for the majority of patients, those non-intensively managed, they do not. To this huge patient population diabetes management is just one more thing they are told to do that they would rather not do. Our contention is that for this segment of the patient population all the drugs and devices could be given to them for free and nothing would change. That they have no vested interest in better diabetes management. That better diabetes management does not translate into them saving time and/or money.

What should matter to everyone is patient outcomes not the cost of the drugs and devices that the patient uses to achieve these outcomes. This focus on the high out of pocket of insulin as noble as it may be won’t solve the real problem. For even if insulin was given away for free nothing will change.

The harsh reality is that patient advocates and politicians are failing to address the real problems facing patients with diabetes. They do not talk about issues like medication adherence, by far the biggest obstacle standing between patients and better outcomes. They seem to believe that if drugs were free that patients will take them as they are supposed to. What’s ironic is they maintain this belief even though there is no hard evidence that backs up this belief. Even worse there is hard evidence to support our contention that cost and outcomes are not linked.

The biggest obstacle of all, that huge pink elephant in the room that no one talks about, is that cost is one variable in the complex algebraic equation otherwise known as diabetes management. That even if this variable was solved for, there are other variables that impact patient outcomes. And is that not what we all want, better patient outcomes. Is that not the goal?

As Momma Kliff used to say; “You will never find a solution when you’re looking at the wrong problem.”