Researchers associated with a prestigious teaching hospital released a sensationalistic and highly suspect study aimed at supporting Congressional legislation. The study, launched with an op-ed in the New York Times, points fingers at an evil, nebulous industry, yet forgets to note the researchers’ own role in exacerbating problems of drug affordability.
Another day in partisan America.
You could cast suspicion on the study by noting that it was funded by key backers of Speaker Pelosi. And, not surprisingly, the experts argue that Congress must pass a drug price control bill sponsored by the Speaker.
But that’s arguing by association. The key criticism to make is that the study is almost laughably conceived. Comparing the launch prices of drugs in 2008 with launch prices of drugs in 2021 is like analyzing transportation costs by comparing the price of a motorcycle in 2008 with the price of a rocket ship in 2021. These are completely different in technology, purpose, and operation. A new gene therapy to treat sickle cell disease will be priced in a manner wholly distinct from a cheap blood pressure pill developed in 2008.
And, as that example suggests, the highly personalized cures developed today are often for small populations, often between 3,000 and 200,000, unlike the blockbuster drugs of 2008 intended for mass consumption.
The problem gets thornier for these so-called experts because of their affiliation with Boston’s Brigham and Women’s Hospital.
The Brigham is a stellar institution. It is also a 340B hospital, which means it participates in a federal program that allows it to buy prescription drugs at huge discounts, sometimes 75 percent below what a commercial health insurance company would pay. In some cases, drugs costing commercial health plans or Medicare thousands of dollars are available to 340B hospitals for $1. That’s not a typo.
By law, 340B hospitals are allowed to charge a patient’s health plan or Medicare hundreds of thousands of dollars even if, under 340B discounts, the drug only costs the hospital a few hundred dollars. That is, 340B hospitals are allowed to reap a windfall profit of tens of millions of dollars on the resale of prescription drugs. Readers of the drug pricing study may have been interested to know that the authors’ employer secures millions of dollars through the arbitrage of prescription drugs.
Why is this permitted? The 340B program was intended to provide hospitals with additional revenues so they could expand charity care programs for low-income and uninsured patients. So how is the Brigham doing in providing charity care programs? Sadly, the answer is miserably.
Rather than crafting politically motivated studies, these Brigham experts should look inward. As they say, the most sensible change starts at home. The Brigham should provide patients the full discount it receives as part of the 340B program, and it should dramatically increase its level of charity care spending.
And its researchers should stick to providing the public with fact-based, objective research.