Biden advocates for lower drug costs 2:40
(CNN Business) -
It is an experience that millions of Americans have lived: you go to the doctor, they give you a prescription, you take it to the pharmacy and you find yourself with an astronomical bill, sometimes amounting to hundreds of dollars, even if the insurance covers a portion of the cost.
"In the US, we are the only ones who basically let drug companies set their own prices," Andrew Mulcahy, a senior policy researcher at the RAND Corporation who focuses on prescription drugs, told CNN Business.
According to the latest available OECD data, Americans spend an average of $ 1,200 a year on prescription drugs, more than any other country.
High drug prices have been a major problem in the United States that the government and legislators have tried to solve for years.
But those efforts have advanced slowly and with limited success, prompting private companies to step in to try to bridge the gap.
Biden advocates for lower drug costs 2:40
A Texas-based company, funded by billionaire businessman Mark Cuban, tries to solve the problem in part by making its own drugs. The Mark Cuban Cost Plus Drug Company aims to bypass the many middlemen involved in the sale of generic drugs, buying them directly from pharmaceutical companies and selling them almost at factory prices. It is also developing a facility in Dallas where it can make drugs from scratch, which is expected to open next year.
"We try to bypass the middlemen and the pharmaceutical supply chain, trying to avoid the cartel that inflates prices," said Dr. Alex Oshmyansky, founder of the company.
"And we will pass the savings of eliminating the intermediary to patients, to the people who really need it at the end of the day."
The first Cost Plus product was albendazole, an antiparasitic drug used to treat hookworm infections.
By targeting the manufacturer directly, the company was able to reduce the price of the drug from $ 225 to $ 20 per tablet.
Cost Plus says it expects to add more than 100 additional drugs by the end of 2021.
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Cuban told CNN Business in an email that he invested in Cost Plus "[because] it is obscene how much drug companies overcharge for generic drugs and how they go to great lengths to hide their premiums."
Adding his own name to the company was an attempt to raise awareness, he added.
The goal, he said, is "to lower the prices of as many generic drugs as we can and be completely transparent about it so that people start to understand how the industry works [and] why we are transforming it."
Oshmyansky said he founded Cost Plus about six years ago after seeing the controversy over "Pharma Bro" Martin Shkreli, whose decision to increase the price of the life-saving AIDS drug Daraprim from $ 13.50 to $ 13.50. 750 in 2015, sparked a massive public backlash and at one point Shkreli was called "America's most hated man."
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"I was and still am a practicing physician and I was quite upset about it," Oshmyansky said.
"So I decided to go off on a tangent [to] try to fix it."
The controversy surrounding Shkreli exposed another big problem for the American pharmaceutical industry: Brand-name drugs are essentially protected from competition for 20 years once patented.
"In the case of brand name drugs, where there is not a lot of competition, there is nothing to keep prices low," Mulcahy said.
"And so you can get into situations where patients and their insurers are tied up by the thousands, tens of thousands of dollars for some of these expensive specialty drugs."
According to a 2019 survey by the Kaiser Family Foundation, a nonprofit organization dedicated to health policies, three in 10 adults reported not taking their medications as prescribed due to cost.
Pharmaceutical industry groups have previously opposed restrictions on drug prices, saying it would hurt medical innovation and investments in research and development.
"There is an important reason to give companies the opportunity to price above what it costs to make the drug and recoup their investment in research and development," Mulcahy said.
"However, at some point this has to end. We have to enter a world where there is more competition and lower prices."
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Meanwhile, companies like BetterMed intervene.
The company offers 0% interest loans to help patients cover the costs of drugs and other broader medical expenses, allowing them to pay them back in up to 15 years.
The company, which makes money by charging a fee to the doctors it works with, says it often makes loans in the tens of thousands of dollars.
Meanwhile, companies like BetterMed are stepping in.
BetterMed offers 0% interest loans to help patients cover the costs of drugs and other broader medical expenses, allowing them to pay them back in up to 15 years.
The company, which makes money by charging a fee to the doctors it works with, says it often makes loans in the tens of thousands of dollars.
"We'd like to help people make health care accessible," says Joseph Sussman, BetterMed's chief operating officer.
"But our hope is that, over time, maybe we can be a catalyst for the system to end up changing, because as it is now, this system is just ... unsustainable. It's getting more expensive year after year."
Encountering another major problem in the prescription drug market led Doug Hirsch to create GoodRx about a decade ago.
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"I had the experience of taking a prescription to a pharmacy and the person in charge of it told me it would be $ 500, and I had not talked to my doctor about it. It seemed like an excessive price," Hirsch told CNN Business.
"So I returned the prescription and went to other pharmacies, and I found very different prices: US $ 250, US $ 400. And I thought there had to be a better way. If I can compare the prices of travel and electronic products, can I? why can't I compare health care prices?
Now, Hirsch says, GoodRx helps more than 20 million Americans save money on prescription drugs and healthcare each month, and has saved its users more than $ 30 billion since its inception.
"The healthcare challenge in this country is so complicated and so confusing that many people don't know what to do," he says.
"For more than a decade, most of my conversations with people have been about showing them that there is a better way than showing their insurance card at the pharmacy."
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