Policy

SC’s Tim Scott debates caps, penalties for drug companies as costs soar for seniors

Sen. Tim Scott, R-S.C., questions witnesses on the Senate Banking Committee.
Sen. Tim Scott, R-S.C., questions witnesses on the Senate Banking Committee. AP

As a geriatric physician in South Carolina for nearly 25 years, Victor Hirth has seen first-hand how hard it is for senior citizens to get the medications they need.

He’s had patients on the same regimen for years — and has written them prescriptions for a generic drug with a $30 co-pay — only to see prices on that drug skyrocket to $300 overnight for seemingly no reason.

“Needless to say,” Hirth said of his patients, “they’ll be shocked.”

To combat sudden spikes in drug costs, Hirth often advises seniors to comparison shop at different area drug stores to find the cheapest price, “because drug prices even among different pharmacies within two or three miles of each other can differ.

“But once you find that low-cost pharmacy,” he continued, “you can go there for your next refill and suddenly the price is completely different, and someone else has a lower cost.”

Between 2013-2017, prescription drug spending among recipients of Medicare Part D — the prescription drug plan component of the larger national health care system for seniors — grew at an average annual rate of 10.6%, according to the Centers for Medicare and Medicaid Studies.

The AARP reported that in 2017 alone, retail prices for 97 widely-used “specialty” drugs increased by an average of 7%. The average annual price for just one of these drugs was $78,781.

The explanation for this phenomenon depends on who’s providing it.

Advocates for senior citizens, like the AARP, say there are simply no mechanisms in place to stop drug companies from raising costs as high as the market will bear.

Allies of the pharmaceutical industry counter that manufacturers need to charge high prices to fund the research and development that produces cutting-edge, life-saving cures.

Whatever the reason, the situation is becoming untenable for seniors on fixed incomes, said Hirth: “If utilities were going up at the same rate as medication costs, many folks wouldn’t be able to stay in their homes.”

And while the rising costs of prescription drug prices is a problem for senior citizens all over the country, the crisis is being uniquely felt in South Carolina.

The state’s appeal to retirees means the over-60 population is on track to reach 1.6 million by the year 2030, according to the S.C. Department of Aging.

According to the Centers for Disease Control and Prevention, South Carolina ranked 10th out of all states for obesity, a condition that leads to potentially fatal health conditions like diabetes and hypertension for which medications can be extremely costly.

At the same time, the state Department of Aging reported in 2016 that 13% of S.C. residents over the age of 60 live in poverty, while nearly one in five South Carolinians is enrolled in Medicare.

“The average annual income of folks on Medicare is $26,000 a year, and in South Carolina it’s lower than that,” said Teresa Arnold, state director for AARP South Carolina.

“For a single specialty drug, the annual cost can be $79,000,” Arnold added. “That’s just unbelievable and it’s hard to imagine we would expect people to have to go without food in order to pay for life-saving drugs.”

Path to lower costs uncertain

Politicians acknowledge that skyrocketing drug prices have reached a crisis level, and congressional lawmakers are eager to come up with a solution.

On the front lines of this debate is South Carolina’s junior U.S. senator, Republican Tim Scott. He sits on the powerful U.S. Senate Finance Committee, which took first steps in July towards advancing a comprehensive overhaul of the country’s prescription drug pricing rules and regulations.

There is currently no law protecting Medicare participants from having to pay exorbitant amounts of money for their prescription drugs each year. In response, the bipartisan bill would call for an annual cap on enrollees’ out-of-pocket drug payments at $3,100.

This is a popular proposal, one that Scott supports. But that’s where agreement largely ends.

Democrats and Republicans in Washington are divided, even among members of their own parties, about how to keep costs down without disrupting the private sector marketplace or creating adverse consequences for consumers.

A major point of contention that does fall along party lines is whether to allow the federal government to negotiate drug prices on Medicare’s behalf, which is currently prohibited by law. Supporters of this change in policy say it’s the only way to bring accountability to the system.

“The VA (Department of Veterans Affairs) negotiates drug prices for veterans ... and their drug costs are 80% lower than those in Medicare,” said Arnold.

Opponents say it would constitute a massive government intrusion in the free market.

The Senate Finance Committee bill doesn’t address this policy change. Instead, it would require drugmakers to pay a penalty to the Medicare program if the costs of their medications on the market rise faster than the rate of inflation.

But this provision is also controversial: It was a major part of the reason why nine GOP members of the committee voted against advancing the overall bill. Scott was one of these members, explaining to The State he was concerned about the effect a so-called “inflationary cap” would have on innovation.

“Your profit (from drug sales) is how you reinvest in research and development,” he said. “If you have less profit, you will actually have fewer innovations.”

Scott also said capping drug prices wouldn’t even guarantee lower costs. If manufacturers know there will be a point at which they can no longer increase the price of their medications, he explained, companies will just begin pricing their products even higher than they might have otherwise.

“I’ve run businesses,” said Scott. “The notion of someone artificially setting a cap on what can happen in the future means, as a good business person, I adjust my prices before I get to that future.”

Erin Trish, an associate professor of pharmaceutical and health economics at the University of Southern California, said Scott isn’t wrong to worry that this provision would drive up the initial price of new drugs coming into the marketplace, because the flexibility for a manufacturer to adjust the price based on a drug’s value would be taken away.

“There are a number of inherent problems with this,” Trish said, “but I think the biggest is arguably that we want to be moving towards a market that encourages the prices of drugs to be better tied to the value that they generate for patients, and I think this type of regulatory approach is going to hinder our ability to move towards a value-based framework.”

Helping patients get by

Scott is a lawmaker who built his legislative portfolio around helping the disadvantaged, and South Carolina health care advocates were counting on him to support this bill.

“This is one of the first bills that was actually going to tackle some, not all, just a little bit of drug costs, and we had contacted Sen. Scott to tell him how much we supported the bilI,” said Arnold. “In times past ... he has been very supportive of anything that would help our seniors, especially those on fixed incomes. He took care of his own grandfather, he knows what being a caregiver is like.”

But Scott is also a free-market, fiscal conservative who believes there are often ways to get things done without passing new laws, rules or regulations.

In addition to “encourag(ing) innovation,” Scott thinks Congress should exercise its oversight authority to apply pressures to drug manufacturers engaged in corporate “greed.”

“There was a 64% increase from 2014 to 2018 on Insulin prices. We had hearings, we brought attention to it, and what we saw was a plateau and prices went down because we forced the conversation in the public forum,” Scott explained. “The Epipen. Mylan started pricing that thing so high it was unaffordable. We brought attention, and hearings, and forced the conversation, and prices have fallen and now even Mylan has a generic form of an Epipen that is 30 or 40% cheaper than it was.”

But congressional oversight alone won’t satisfy Democrats who generally support more federal involvement in America’s healthcare system.

The Democrats who control the U.S. House are getting ready to unveil drug pricing legislation that would allow the government to negotiate prices on Medicare’s behalf, putting it at odds with the Republican-controlled U.S. Senate for which such a provision is a nonstarter. Senate GOP leaders may not even have the support to move forward with its current framework.

In the meantime, South Carolina health professionals are struggling to do what they can to help their patients in a volatile environment.

Often, there isn’t much they can do.

Heather Easterling, the administrator of pharmacy services at the Medical University of South Carolina, said a patient’s access to the right resources could make the difference in whether he or she gets prescribed a medication he or she can actually afford.

“We are very lucky, at this large, academic medical center, to have a lot of pharmacists to do prospective medication history reviews for our patients,” said Easterling, who explained that in an ideal scenario pharmacists can help brainstorm alternatives with prescribing physicians when their patients can’t afford a certain drug.

“Small community hospitals may only have a handful of pharmacists working in the entire hospital and they don’t have the resources to do those kinds of things,” she continued.

South Carolinians living in more remote and rural areas of the state have particular challenges accessing the best prices.

“The lack of affordability of prescription drugs is a real issue in our rural communities and rural providers often struggle to ensure their patients can afford their prescriptions,” said Graham Adams, the CEO of the S.C. Office of Rural Health.

Easterling and Adams, along with Hirth, all agreed the Senate Finance Committee bill was a good place to start in the process of making medications more accessible to senior citizens.

Scott said he would keep working.

“I’d love to see us reduce prices ... The question is, how do you actually solve the problem.”

Emma Dumain works out of the McClatchy Washington bureau, where her reporting on South Carolina politics appears in The State, The Herald, The Sun News, The Island Packet and The Beaufort Gazette. She was previously the Washington correspondent for the Charleston, South Carolina Post and Courier. Dumain also covered Congress for Roll Call and Congressional Quarterly.
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