Pharmaceutical Industry Story Archives - West Virginia Public Broadcasting

Consolidation Brings Pharmacy Deserts To W.Va.

With the closing and consolidation of pharmacy chains and independent retailers, patients are left wondering where to go for guidance and their medications.

Nationwide, the pharmaceutical industry is undergoing a lot of changes, in part due to the COVID-19 pandemic placing strain on services provided, like vaccinations.

According to a 2021 study by GoodRx, more than 40 percent of counties in the United States are pharmacy deserts, where most people have to drive more than 15 minutes to reach nearby pharmacies.

According to the same study, pharmacy deserts exist in Wirt, Ritchie, Doddrige, Pocahontas and Pendleton Counties in West Virginia.

Pharmacies stepped up by offering vaccinations in West Virginia, helping the state lead the nation in early vaccination rates for COVID-19. Now, pharmacies are finding it hard to employ staff to keep stores open.

Reimbursement with pharmacies is a real problem, according to Krista Capehart, a clinical professor at WVU School of Pharmacy and the secretary of the West Virginia Pharmacy Association.

“Many of our pharmacies right now, when they fill a prescription, they actually lose money on it,” Capehart said. “And so when you cannot even break even, it’s very difficult to keep a pharmacy open, just like any business.”

Pharmacy Benefit Managers (PBM) are the middlemen in the pharmaceutical industry. Health insurance may cover major medical expenses, but a PBM handles the drug benefit.

“And so it’s not anymore that when you process a claim for a prescription, that’s the actual money the pharmacy gets back,” Capehart said. “Months later, the entity will come back and say, ‘You owe us this much money back.’ And so it’s hard for any of these pharmacies to continue to function. And yes, the PBMs play a big role in that. West Virginia has really led the nation I would say in PBM reform, but it’s still very hard to survive in this market.”

Matt Walker is the executive director and registered lobbyist for the West Virginia Independent Pharmacy Association, a 501(C)(3) organization made up of West Virginia-owned and operated independent community pharmacies.

“Over the years, what has happened is these local independent community pharmacies have found it difficult to compete with some of the chain pharmacies,” Walker said. “And there’s several reasons for that.”

Walker said some patients prefer a mail-order pharamacy, but the largest problem for independent pharmacies is PBMs controlling the supply chain.

“What PBMs have become, over the years, instead of only processing pharmacy claims for insurance companies, they’ve really become profit-driven organizations that make a lot of money on every pharmaceutical transaction,” Walker said. “And they’re doing that often to the detriment or at the expense of the pharmacy itself.”

Before prescriptions became integrated with health benefits, consumers would pay for prescriptions in cash, out of pocket.

“Part of that reason is because of this, the really complex nature of the pharmaceutical drug supply chain, from manufacturers to wholesalers to PBM comes to pharmacies and down into patients finally,” Walker said.

PBMs have been a topic of legislation since the 2017 session. That year, the Pharmacy Integrity Act was signed into law creating a registry for PBMs and protecting pharmacies from audits.

In 2018 Senate Bill 46 eliminated gag clauses, kept pharmacists from educating patients about the cost of medication.

In 2019, Senate Bill 489 required PBMs to be licensed to do business in West Virginia by the Office of the Insurance Commissioner, bringing regulatory oversight to the industry.

In 2020 House Bill 4058 passed, determining a PBM can be fined as much as $10,000 each time they violate the Pharmacy Integrity Act.

In 2021 House Bill 2263 established the national average drug acquisition cost (NADAC) plus a $10.49 professional dispensing fee as the reimbursement floor for dispensed prescriptions in West Virginia.

Legislation for pharmaceutical reform continued to pass each year until 2022 when House Bill 4112 refined the definition of health care payer to make clear which health plans the Pharmacy Audit Integrity Act applies to.

According to Capehart, the makeup of pharmacies in West Virginia is about half corporate-owned and half independently owned and operated.

Often, no matter who owns the pharmacy, it is the hub of communities and their loss is felt deeply.

“When that community center of your community pharmacy closes, no matter what that type of center is,” Capehart said. “It really is a health access issue.”

Capehart said even if a pharmacy closes, that does not mean the people in that community stopped needing their medications.

“And what you see is a consolidation of resources,” Capehart said. “And so you put more prescriptions into a single pharmacy. And they just they can’t handle the volume to provide the level of care that was given at other facilities. And every year we see more and more prescriptions written. So it’s not like this issue is going to get better.”

Capehart said payment reform is the first step to improving the pharmaceutical industry.

“You have to have payment reform because if a pharmacy is not able to keep their doors open, that’s going to be first and foremost,” Capehart said.

Innovative solutions through new technology could be a way to bridge the gap in care, but that might not be an effective solution for West Virginia.

“We also know that one of the things about Appalachia and West Virginia is that our patients prefer face to face, one on one care,” Capehart said. “And so how do we do that in the best manner, ensuring that we’re able to keep the doors open and staff available.”

However, to have a well-staffed pharmacy also means paying pharmacists appropriately.

“They have to be reimbursed and paid at a level that’s appropriate,” Capehart said. “But again, that comes back to reimbursement appropriately. And so there’s there’s lots of different ideas that we can work toward. And I think that the pharmacy leaders in the state are really examining those, as well as kind of what’s happening.”

Appalachia Health News is a project of West Virginia Public Broadcasting with support from Charleston Area Medical Center and Marshall Health.

WVU Professor: Pharma Industry Making Billions On Orphan Drugs

Prescription drugs have changed many lives around the world, treating illnesses that were once thought untreatable — mainly because they were considered to be too small a population for a pharmaceutical company to research. News Director Eric Douglas spoke with Sean Tu, a WVU law professor with a Ph.D. in pharmacology who researches these issues.

An early 1980s law passed by Congress changed all of that, encouraging companies to develop what was called orphan drugs. But today, many of those companies are using the same law to drum up even larger profits.

News Director Eric Douglas spoke with Sean Tu, a WVU law professor with a Ph.D. in pharmacology who researches these issues.

This interview has been lightly edited for clarity.

Douglas: As an adult who watches the evening news, I see an awful lot of specialty advertising for drugs and pharmaceuticals.

Tu: We’re one of two countries that allow direct to consumer ads. It’s the U.S. and New Zealand. That’s it. No other country allows that.

Douglas: And the pharmaceutical companies want you to go to your doctor and ask for a drug by name.

Tu: Exactly right. And it’s really nefarious. You’ll see these drugs, and they go, “Oh, and you can lose weight on this too, right?” And so you’re like, “Okay, I’ll take this as a weight loss drug,” which, by the way, insurance doesn’t cover weight loss drugs, but they will cover diabetes drugs. So you go in and you say, “Hey, I want to use this new drug.”

The average launch price of a new drug nowadays is over $150,000, compared to Metformin, which is a very good diabetes drug, which costs like $10. They want you to switch to the new one and some of these new drugs are actually less effective than older ones.

Douglas: In the 80s, Congress passed a law to encourage pharmaceutical companies to make medications for smaller ailments. Am I summing this up correctly?

Tu: They’re called rare diseases and rare diseases are defined as a disease that affects less than 200,000 Americans.

Douglas: From a financial, money-making standpoint, the pharmaceutical company would love to have a million people or two million people taking their drug. But your research has shown that now the pharmaceutical companies are taking advantage of all those benefits of rare diseases, to the point where they’re maybe not necessarily doing the bigger drugs.

Tu: Right. First of all, drug companies control their prices. They get to decide how much they charge for a drug. The Orphan Drug Act came from a really good place in that there’s a rare disease that only affects 1,000 Americans. But you know, those 1,000 Americans could get left behind because we don’t invest in those drugs because the market is small.

What we did, we gave them benefits, like huge tax breaks, we gave them seven years of exclusivity, instead of five years. We made the FDA process go faster and cheaper for them.

And how do we get repaid? They just set the prices so high that they make the same amount of money on those orphan drugs as they do on non-orphan drugs. And that’s what we’ve shown, right?

The idea that Congress said, “Hey, we want to give you these incentives to invest in these rare diseases, because you’re not going to make enough money on these drugs,” is erroneous now, and that you’re making just as much money on these orphan drugs as you do with the non-orphan drugs.

Douglas: For less effort, I can make just as much money.

Tu: Not only that, but because these are orphan indications, and because Medicare and Medicaid and insurance companies have to cover a drug, if it’s the only one in class, if I have this rare disease, I can charge $10 million for a dose and insurance companies have to cover it, because it’s the only option you have.

That’s the real bad downside of this. In the early 2000s, only like 10 percent of new drugs were orphan drugs, over 40 percent of our new drugs now are orphan drugs. The case has been almost flipped now in that we have too much investment in these rare diseases. I understand why because the money is there, the risk is less, and the risk being less, meaning that I will get paid. I’ll get paid for sure with these orphan drugs, versus non-orphan drugs.

Douglas: And they’re amortizing over five to seven years, they’re making any developmental money back in just a couple of years?

Tu: Not even a couple of years, like a couple of months. The question is why are we giving them all of these bonuses when the underlying assumption was incorrect, which is these things aren’t going to be making a lot of money?

Douglas: In 1983, 40 years ago, I assume it was accurate at the time.

Tu: We revisited the average launch price of a new drug in the early 2000s, and it was about $2,000. Today, the average launch price of a new drug is over $150,000.

Douglas: You say the average launch price. You’re talking about the price to the consumer?

Tu: Part of the problem is, consumers don’t really feel the pain of these prices. Insurance and Medicare actually picks up the majority of the cost, because once you hit your deductible, you don’t see the price.

Douglas: People say, “Well, if you control the pharmaceutical industry, then they won’t have money for new programs, new product development.”

Tu: A total bogus argument. And the reason why is most of the innovation is not coming from the pharmaceutical companies, it’s coming from the universities, like the National Institutes of Health (NIH). One of our studies has shown that 100 percent of all drugs have some NIH funding associated with it. And 25 percent of all drugs have late-stage NIH funding associated with it.

Where all of this revenue is going, it’s going to stock buyback. The brand companies spend about 20 percent of their revenue on r&d (research and development), they spend about 30 percent of their revenue on advertising and marketing. So they actually spend more on marketing than they do on r&d. All of those commercials that you see, they have to come from somewhere.

Douglas: That’s exactly what I was just thinking back to where we started with the commercials during the six o’clock news there. So they’re paying more to advertise their new drugs than they are to develop them in the first place by a significant amount.

Tu: Yeah. Billions of dollars. Why? Because all of this research, all of that risky stuff is happening at the university level. And this is what’s really bad, who sponsors the universities? Our taxpayer dollars, so we’re paying twice for the same thing.

If you really want to incentivize new innovation, double the budget for NIH, you’re gonna get way more for your money.

Douglas: What is the next step? What do we need to do? Do we need to change the 1983 law?

Tu: As far as the orphan drug stuff goes, we suggest clawing back some of those benefits. If we give you these huge tax breaks that amount to millions of dollars, sometimes hundreds of millions of dollars, maybe you should pay that back. I don’t blame Congress for any of this. It came from a good place. I blame the manufacturers for exploiting a group that really has no other options. To me, that is predatory behavior.

I think drug firms have kind of come to the realization that they can charge whatever they want for two reasons. One is the actual patients don’t see the cost. It’s being borne by insurance companies and Medicaid and Medicare. And then second, what is the quote? “They charge as much as they can and are only really limited by two things. One is shame and the fear of being called into Congress.” Even now, the fear of being brought into Congress is mattering less and less to them.

Douglas: Why doesn’t the insurance industry push back? I mean, I get why Medicare, Medicaid they have to do what Congress allows them to do. And the members of Congress have been lobbied to the point that that will not go down that road right now. But why don’t the insurance companies push back harder on this?

Tu: If Medicare and Medicaid cover the drug, insurance companies have very little choice, but to cover the drug. Okay. This is why our insurance rates have gone out of control, because these drugs are getting very expensive. And the formularies have to cover stuff that’s covered by Medicaid and Medicare usually. So hopefully, the IRA, the Inflation Reduction Act, will help with these negotiations because before the IRA, the government, by statute, was not allowed to negotiate pricing, which is crazy to me. Whatever lobbyists got that into the bill gets a lifetime achievement award.

And the funny thing is, they’re complaining about the negotiation now, but Medicaid has been allowed negotiations for decades. Same with the VA. And their drug prices are way lower, like 30 cents to the dollar, compared to Medicare. Why? Because they’re allowed to negotiate.

Douglas: I don’t guess I realized that. I assumed Medicare and Medicaid were the same.

Tu: The problem is because Medicaid covers poor people. They can’t afford this kind of stuff. So, Medicare covers old people, and they can cover more of the share here.

Opioid Settlement Disbursement Process Begins

Now that the state has reached a $400 million settlement with the “Big Three” pharmaceutical distributors, the process of getting the money where it’s needed will begin as quickly as possible.

Monday, AmerisourceBergin, Cardinal Health and McKesson agreed to the settlement. Now, attorneys for the state are preparing to meet with representatives from more than 100 cities and counties across West Virginia to explain the terms of the settlement.

Of the $400 million, about 75 percent will go to the statewide program. Three percent will go to the Attorney General’s office for settlement related expenses with counties receiving the remaining amount for various abatement programs.

Those include preventative, treatment, and recovery services to help those struggling with opioid addiction.

For Fitzsimmons Law Firm attorney Mark Colantonio, there is still a lot of work to do.

“There’s a lot of controls built in,” he said. “So it’s not like people give money and go out and do things. It’s going to be stuff that is vetted very well and stuff that is implemented in an effective way.”

The local government entities must first approve the agreement before the money can be distributed. The first payments are expected within 30-90 days of that approval process being completed.

A board comprised of representatives from affected local governments and the attorney general’s office will decide how funds will be used to address specific needs in the different geographical regions impacted by the opioid crisis.

The six regions of the Department of Health and Human Resources are expected to be used as a blueprint to structure and implement services.

In a statement, AmerisourceBergen Vice President of Public Relations Lauren Esposito said:

“The years of legal actions leading up to this point have shown time and time again that pharmaceutical distributors must walk a legal and ethical tightrope between providing access to necessary medications and acting to prevent diversion of controlled substances.”

Plans For New Pharmaceutical Company In Works For W.Va.

West Virginia native and entrepreneur Crystal Mersh announced the development of a new pharmaceutical company.

The Department of Homeland Security has identified the supply of pharmaceutical drugs to the United States as a critical concern. Much of the prescription generic drug supply is made in foreign countries, raising serious worries about supply chain interruptions.

West Virginia native and entrepreneur Crystal Mersh hopes to help fix that. At Thursday’s 2022 Women’s Leadership Summit at the Greenbrier, Mersh announced the development of a new pharmaceutical company.

“American Medicines Company will provide medicines for the American people for chronic disease,” she said. “Medicines that we take everyday. Things for high blood pressure, for diabetes, for thyroid, for heart disease.”

Mersh explained that the company has been in “stealth mode” for eight months while it worked through regulatory issues. After a 25-year career in the industry, she said some of those issues were a challenge for her and her management team.

“What we’ve been doing the past eight months, is really getting our business plan together, getting our development plan together, and starting pre-formulation development on some of these drugs, working with the different federal agencies on pathways and funding strategies,” she said. “So we’re well on our way. And the next step is to locate a manufacturing site.”

Mersh said the company has looked at a number of potential locations for the facility, but it has several more possible locations to review. She expects to employ between 500 and 600 people in high tech manufacturing jobs when the plant is up and running.

The issue of creating a supply of generic drugs for the American public that can’t be held up with shipping issues or international problems is a serious concern for Mersh.

“These are really medicines that are life sustaining, life extending for the American public,” she said. “And right now, the situation is that the majority of those, and we estimate it to be greater than 95 percent, are manufactured offshore. So we want to bring manufacturing back to the U.S. and make American-made medication for Americans.”

Drug Prices are Increasing – Not Necessarily Because They're New

The cost of prescription drugs is rising, both for existing brand-name drugs and for newly produced generic drugs. This finding comes from a University of Pittsburgh study.

For instance, the cost of insulin has risen dramatically, though it is the same product that people have been using for years. The study’s authors say that the reason is simply that companies are jacking up their prices to make more money.

To track the changes, Pittsburgh’s researchers examined the list prices of tens of thousands of drugs from a national database between 2005 and 2016.

They found that each year the price of brand-name oral medications increased by about 9 percent, which is nearly five times the rate of general inflation during the same time period. And the price of brand-name injectable drugs increased by 15 percent a year.

The researchers concluded that soaring prices were largely caused by companies hiking the prices on their existing drugs rather than introducing newer, more effective drugs into the market.

The study was published this month in the journal Health Affairs.

Appalachia Health News is a project of West Virginia Public Broadcasting, with support from the Marshall Health and Charleston Area Medical Center.

Lawsuit Seeks W.Va. AG Morrisey's Pharma Industry Records

A lawsuit seeks to force Republican U.S. Senate nominee Patrick Morrisey of West Virginia to release public records related to his communications with the pharmaceutical industry.

The Democratic Senatorial Campaign Committee filed suit Monday in Kanawha County Circuit Court against Morrisey, who is running against Democratic incumbent Sen. Joe Manchin on Nov. 6.

Morrisey represented Cardinal Health and lobbied for wholesalers in Washington, D.C., before winning the state attorney general’s race in 2012. He was re-elected in 2016.

The lawsuit says Morrisey has failed to provide records sought a year ago in a Freedom of Information Act request for correspondence starting in 2013 with drug companies such as Cardinal Health, McKesson Corp., AmerisourceBergen, the trade group Healthcare Distribution Alliance and others.

Morrisey’s predecessor sued more than a dozen pharmaceutical companies accusing them of fueling the state’s opioid crisis. West Virginia leads the nation by far in the rate of drug overdose deaths. Morrisey’s wife, Denise Morrisey, stopped doing work as a lobbyist for Cardinal Health in May 2016.

“If Morrisey has nothing to hide, voters across West Virginia are right to wonder why he fought to keep these records hidden for nearly a year,” DSCC spokesman David Bergstein said in an email. “What’s the former opioid lobbyist hiding?”

Morrisey spokesman Curtis Johnson said Morrisey’s office is a strong FOIA advocate, has already responded to the Democratic committee with significant information and continues to sort through tens of thousands of documents in an effort to comply with the request.

Johnson said the group’s request “amounts to nothing more than an effort to secure a political hit.”

Earlier this year the U.S. Drug Enforcement Administration approved a rule change requiring drugmakers to identify a legitimate need for opioids to justify their production in an attempt to rein in their diversion for illicit purposes. Morrisey sought to limit how many opioid pills can be manufactured each year.