By Ruth Carol, contributing writer

Dear Dr. Dermatologist,

I am deeply concerned about a recent prescription you gave me for my skin condition. I went to the pharmacy and found out that I had to pay a lot more than I was expecting! Why would you prescribe a drug that costs so much?

Regards,
Discouraged Patient

Dear Patient,

I am sorry that the medication I prescribed costs much more than you expected. Retail prices for medications and insurance coverage can vary drastically, so prescribers often don’t know how much any one patient will be charged.

Unfortunately, it is not uncommon for physicians to be left in the dark on drug prices. Let me explain… 

In recent years, wholesale and retail drug prices have skyrocketed in the U.S. According to the American Academy of Dermatology’s (AAD) 2016 Burden of Skin Disease Report, prescription drug spending within dermatology doubled from $7.4 billion in 2004 to $14.9 billion in 2013 (doi: 10.1016/j.jaad.2016.12.043). According to Maryam Asgari, MD, deputy chair of the AAD’s Drug Pricing and Transparency Task Force, some of these drugs have been on the market for decades and were inexpensive up until the last few years. For example, the average retail price for a 30g tube of clobetasol ointment — a common topical corticosteroid used to treat inflammatory skin conditions — was $36.30 in 2005 and $276.90 by 2016 (doi: 10.1016/j.jaad.2018.03.004). That’s a price that’s out of reach for many patients.

Generic drugs are no longer necessarily cheaper than their brand name equivalent. According to a 2016 U.S. Government Accountability Office report that tracked pricing trends for generic drugs under Medicare Part D, several generic dermatology drugs increased in price at least 100% or more between 2010 and 2015. Daniel Bennett, MD, member of the AADA’s Drug Pricing and Transparency Task Force, indicated that many generics are made by only one or two manufacturers. This gives them strong pricing power in the marketplace and allows them to drive up costs.

To his point, a cost analysis of 116 topical dermatologic generic drugs showed an inverse correlation between drug price and number of manufacturers (doi:10.1001/jamadermatol.2018.3798). Drugs with one to two manufacturers sustained a 33.2% higher median percentage price increase than did drugs with more than six manufacturers. Policies that increase market competition among topical dermatologic drug manufacturers may lead to long-term price reductions.

Drug shortages 101

Drug shortages also contribute to price spikes. According to Dr. Bennett, when only a handful of manufacturers make both the brand name drug and its generic equivalent, it sets up a scenario for drug shortages, which can drive up the cost in very unpredictable ways. Joerg Albrecht, MD, chair of the AADA’s Drug Pricing and Transparency Task Force, said that we used to have many inexpensive, generic “go-to” drugs, but shortages have forced the prices of those drugs to rise higher and higher. Unfortunately, Dr. Albrecht said that price hikes due to shortages that occurred three to four years ago haven’t come down yet. The GAO report I mentioned confirms this, noting that the cost of the generic dermatology drugs that experienced extraordinary price increases persisted for at least one year and most did not show any downward movement.

Prior authorization help

Easily create appeal letters to help overturn denials for prior authorizations. Check out the AADA’s Practice Management Center at staging.aad.org/practicecenter/managing-a-practice/prior-authorization-assistance.

Unfortunately, it is becoming harder and harder for physicians to keep up with the price of medications. I frequently use my electronic health record to get a sense of the cost of the drugs that I prescribe and whether it is listed on my patients’ insurance coverage. However, it doesn’t tell me what your out-of-pocket cost will be and only offers a general idea of the cost of the drug.

Finally, what you pay for a drug depends heavily on your health insurance, and whether your coverage requires a copay or has a deductible for medications. Insurers are increasingly implementing coinsurance, requiring patients to pay a percentage of the cost out of pocket rather than a flat rate. Some policies do not cover prescription medications at all. Many insurers have restricted formularies and a medication that is not on this list can be very expensive. Insurance companies negotiate medication costs with drug manufacturers, and some receive incentives and rebates, both of which affect the price of the drugs to you. They renegotiate every year, which can result in changes to the cost and even the medications that are available to you in their formularies. Physicians are not privy to this process and we may not know about changes until you or the pharmacy call us.

There are a few things we can do together that may help.

For starters, shopping around might save you money. Drug prices can vary significantly from one pharmacy to another. One option, says Dr. Albrecht, is to search around for your prescribed medication on sites like covermymeds.com. However, purchasing different medications at different pharmacies can be a double-edged sword because while it may lead to lower costs, patients should be cautious about potential adverse drug interactions. Pharmacists are trained to identify drug interactions, recognize when a drug is contraindicated, and counsel patients about side effects. However, if you get multiple prescriptions from different pharmacies, the pharmacist may not know about your other medications and potential interactions. This is something you should be aware of, and you should check for potential adverse drug interactions if you go this route.

You may have also heard about the option of a “specialty pharmacy.” Elaine Siegfried, MD, member of the AADA’s Drug Pricing and Transparency Task Force, has worked with specialty pharmacies that help with prior authorizations and identify patient assistance programs that provide lower cost or even free drugs for patients.

If those options don’t work, we may be able to get some medications through a patient assistance program if offered by the drug manufacturer. According to Dr. Bennett, these programs allow some patients to get the medication for a lower cost, but often only for a limited amount of time. Dr. Siegfried has found that applying for these programs can be time-consuming and difficult, and they are only available for medications prescribed for the exact condition and age group approved by the FDA.

Patient resources

The Academy offers physicians and patients several resources to help navigate formulary restrictions. Check out these tools and resources at staging.aad.org/practicecenter/managing-a-practice/prior-authorization-assistance/prior-authorization-patient-resources. 

On a positive note, your pharmacist can now tell you if it is cheaper for you to pay cash for your medications instead of paying the co-pay. Previously, pharmacists were not allowed to do this because of what was known as a “gag clause” that gave insurance companies control over what the pharmacist could say to you. In 2013, 23% of 9.5 million prescriptions filled through insurance ended up costing patients more money than if they paid out of pocket (JAMA. 2018;319(10):1045-1047). The overpayments totaled $135 million!

Fortunately, in October the Know the Lowest Price Act and the Patients Right to Know Drug Prices Act were signed into law — covering private insurance and Medicare Part D respectively. The laws eliminate the gag clause that prohibited pharmacists from telling patients if the cost of their medication would be less expensive if they paid out of pocket instead of using their insurance. You should know, however, that the pharmacist is not required to tell you this, so you must ask them directly.

In the future, if you learn that a medication is too costly, do not fill the prescription. Please call me so we can discuss other options. If necessary, my staff can call the insurance company to find their preferred alternative or ask about the possibility of submitting documentation to help authorize coverage for our first choice.

It’s important that we work together to find the most affordable and effective medication to treat your skin condition. I appreciate your coming to me with your concerns.

In health,
Dr. Dermatologist