🕗Unraveling the Mystery of Sky-High Drug Prices Ep. 233

Ready to unravel the mystery behind sky-high drug prices? Join Dr. Michael Koren, a top-tier cardiologist and medical researcher, as he dissects the factors driving the pharmaceutical industry's steep costs. From the firm grip of patent protection to the complex role of pharmacy benefit managers (PBMs) in price negotiations, Dr. Koren illuminates the multifaceted challenges of making medications more affordable. 

Recording Date: September 23, 2024

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Music: Storyblocks - Corporate Inspired

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Transcript

Announcer: 0:00

Welcome to MedEvidence, where we help you navigate the truth behind medical research with unbiased, evidence-proven facts Hosted by cardiologist and top medical researcher, Dr. Michael Koren.

Kevin Geddings: 0:12

Dr. Michael Koren joins us here on Monday mornings. We appreciate him very much. Of course, he runs the show at EN, where you can participate in leading-edge medical research, and of course, he's also a medical doctor, a cardiologistologist and a research scientist as well. We appreciate him very much. Go to EncoreDocscom, Dr Korn. What do you have on your mind this morning?

Dr. Michael Koren: 0:31

Let's talk about a non-controversial issue my tongue is firmly in my cheek and let's talk about high drug prices.

Kevin Geddings: 0:40

Nobody likes that.

Dr. Michael Koren: 0:42

No, no, and going into the political season, this is certainly going to be a discussion that you'll hear a lot about and, unfortunately, like most things in politics, there's a lot of name-calling and a lot of people yelling at each other, but maybe not enough people who actually understand the facts.

Kevin Geddings: 1:04

Right.

Dr. Michael Koren: 1:04

Maybe we can break it down a little bit. And certainly, drug prices are too high. I think pretty much everybody on all sides of the aisle agree with that. Ironically, even the drug companies agree with that. So we have these discussions all the time in my business and doctors are constantly talking to the drug companies saying, geez, can't you get these prices down? And they said we'd like to. But there's so many factors that go into this that people don't necessarily understand, so let me break it down.

Dr. Michael Koren: 1:34

So number one the main reason we have high drug prices, of course, is that the drug companies create a product that's protected by a patent, which means that there's no competition for anywhere between 10 and 20 years, depending on how long it takes for that company to get that product on the market. So when a company has an idea for a medical device or a drug or anything in the medical space, they file for a patent and then the government protects them from competition for 20 years, which means you can't compete on price. And, as you know, in a free market the thing that brings down high prices is high prices. If prices are high, then that brings in competitors and that brings down the price. Unfortunately, that does not happen in the pharmaceutical business or the medical device business because of the concept of patent protection. But the flip side of that is that this is very, very important for innovation. So, interestingly, one of the first things that the founding fathers did to set up business opportunities in the United States this goes back to the late 1700s is create a system of patents to protect intellectual property, and this is an important part of helping a lot of young industries become successful. And the other thing, of course, is that, unfortunately, governments and other parties universities have not been particularly good at developing new drugs, so that has become something that the private industries do very, very well and public industries or public endeavors don't. So, with that in mind, that's one of the factors that raises prices.

Dr. Michael Koren: 3:11

But the other big piece of it is something called PBMs, or pharmacy benefit managers, and there are three massive PBMs in the country, and these massive PBMs negotiate prices with massive health insurers you know your United Health, United ,Aetna, Humana, all these huge insurance companies and so this gets into big people playing a high stakes battle. And, of course, the biggest purchaser of drugs and devices is the government, and we have some laws in place that make this even more complicated, because pharmaceutical companies and others cannot charge private industries less than what they charge Medicare, Because if they do, then Medicare will immediately say I want that price. So it becomes this very, very complicated dance where pharmaceutical companies are selling mostly to these massive PBMs, selling to the federal government, which is obviously a massive customer, and they have to do this dance where if they lower price for one person, they have to lower price for everybody, and because of that we have this really crazy system where prices are really, really high and then you have to negotiate for discounts. So, with that said, the law has changed and there's something called the Inflation Reduction Act, which will kick in sometime in 2026, which, for the first time, in the United States. This is common practice around the world, but in the United States, for the first time, governments can directly negotiate prices with pharmaceutical companies.

Dr. Michael Koren: 4:48

And how that plays out no one knows exactly. How aggressive the government gets with. Lowering prices is something we don't know exactly. So a lot of unknowns. So I don't know if that helps People understand the picture better. But let's just suffice to say it's a pretty complicated system and at the end of the day, the incentives all push prices up, not down.

Kevin Geddings: 5:11

Yeah, and the linchpin seems to be that patent protection right for that period of time, and it's important, I guess, for all of us consumers to know there has to be some patent protection, otherwise a for-profit business like a pharmaceutical company wouldn't have any motivation to try to get out there and create new drugs right.

Dr. Michael Koren: 5:26

Exactly. That's right and that's a driving factor, but that's only one of the factors. Quite honestly, obviously, patent protection has been in place for 200 years and this sort of crisis with high drug prices has accelerated in the last 20 years. Quite honestly, and again, that's also because of these political elements the fact that you're not dealing directly with consumers and in fact, it's very big companies negotiating these high stakes battles with each other. So, interestingly, a PBM may take the list price of a drug and discount it to a big insurer like UnitedHealthcare by 50%, and they do it this way so that the list price doesn't change, because the list price is what Medicare will pay. So it's really a bit of a sneaky way, quite frankly, to get around some of these laws, but it's created this incredible complexity. Now there are groups like Amazon and others that want to do more direct consumer sales and, quite frankly, there's a number of avenues where you can get drugs in a very reasonable fashion. GoodRX is doing some of this. Canadian Pharmacy has done some of this. Some of the compounding pharmacies have a bit of an uneven track record, but some of them have provided important medicines to people at a lower price by selling directly to consumers. So there is already ways of trying to get around it, but it's still a very unseemly, very, very complicated system.

Dr. Michael Koren: 6:58

But one of the nice things about what I do is that we can give people, give our consumers and give our patients the opportunity to get some benefits from the system.

Dr. Michael Koren: 7:08

So part and parcel of the system also is this demand for an incredible amount of information. So we know so much more about drugs that have been developed in the last 20 years than we've ever known about anything, quite frankly. And so, for example, if you take a medicine that was developed 50 or 60 years ago, we know way less about that than a new medicine, and for that reason there's benefits for our patients. So all the studies that we do are supported by grants from medical companies. That means everything is free to patients and in fact, we negotiate a budget for our patients for every study. So when you get involved in what we do, there will be a stipend for each of the patients because of our negotiating skills and our ability to create budgets that also consider the time and travel needs of our patients. So it's a nice little benefit of what we do. Plus, in many cases, you get medicine at no charge.

Kevin Geddings: 8:06

And whether it's drug pricing, medical research, clinical trials, prescription drugs, all that kind of stuff. There's some good data out there on a particular website, right, Dr. Koren?

Dr. Michael Koren: 8:16

Yeah, it's called MedEvidence and that's our platform where people can learn the truth behind the data.

Kevin Geddings: 8:22

Yeah, so check that out too. Go to medevidence. com.

Dr. Michael Koren: 8:27

Yeah.

Dr. Michael Koren: 8:27

So, as I mentioned, we know so much about current medical interventions and therapies much more than we've ever known about anything else and anything else in medicine in the past, and so because of that reason, we can share this information. So the website helps people understand what it is that we know about a particular area in medicine, what we don't know about a particular area in medicine and how we're going to learn to find out about the things that we don't know. So I think it's a very powerful way of learning. We've gotten fabulous feedback on this format and I hope people enjoy it and let us know, and we've been seeing really a dramatic increase in traffic to this website, so that's very gratifying that the message is getting out.

Kevin Geddings: 9:11

Yeah, it definitely is, and it's worth your checking out and also share with your friends and family and others who may not be listening to us, you know, on Monday mornings, have them check out the website medevidence. com. That's medevidence. com. And also, of course, the website encoredocs. com as well. Dr. Michael Koren, be safe out there driving around and we'll talk with you again next week, okay.

Dr. Michael Koren: 9:32

Sounds great, Kevin, you have a great week.

Announcer: 9:35

Thanks for joining the MedEvidence podcast. To learn more, head over to medevidence. com or subscribe to our podcast on your favorite podcast platform.