 is Dr. Caleb Alexander. Caleb is an associate professor in the Department of Epidemiology and Medicine and the co-director of the Center for Drug Safety and Effectiveness at Johns Hopkins. Dr. Alexander is also an ad hoc member of the FDA Drug Safety and Risk Management Advisory Committee. Caleb has served on many editorial boards including drug safety, medical care, medical decision making, and the Journal of General Internal Medicine. Caleb's research interests include clinical decision making about prescription drugs and the impact of policy recommendations on pharmaceutical utilization. Today Caleb is going to speak to us on the topic of clinical decision making about prescription drugs in the modern era. Join me in welcoming Caleb Alexander. Thanks. It's great to be here and as always I'm grateful for the chance to come back to the University where I spent a decade. I also want to thank the McLean's and my fellow colleagues and alumni of the Center and from the University of Chicago and also congratulate Ann Dudley Goldblatt on such a long and substantive contribution to the Center and to the broader field of bioethics. Some of you may recall my title last year which was Why 59D67 Are We Clear? This year my title was only slightly less opaque and that was so that it could serve similarly as a placeholder. I had no idea what I was going to speak about eight months ago. What I will focus on today is one important element of clinical decision making namely therapeutics and specifically prescription drugs and there are many interesting elements of prescription drugs that we could talk about but I'll focus yet further on the cost of these treatments and what's different about the modern era that presents, I'll argue, some old and some new challenges and opportunities for clinicians and for patients and for clinical bioethicists alike. Speaking of money these are my disclosures and my current funding sources although the content of my talk today wasn't supported directly by any of these organizations. About a decade ago in fact when I was at the University of Chicago we conducted a paired study of patients and providers and we wanted to see essentially examine their experiences, their preferences, their beliefs about communication about out-of-pocket costs and in particular prescription costs. This was one of the questions we asked and once again this was a paired sample so that we were asking the same patient provider duos about their experiences with each other and you can see here that about three-fifths of patients and four-fifths of providers felt that the patients wanted to discuss out-of-pocket costs. We asked, does the physician know how much the patient is spending on their out-of-pocket costs and you see that they generally agreed at least the overall proportions, the answer being in most cases not. And we also examined when was the, we asked patients and providers when was the most recent time, if ever, that you've discussed your out-of-pocket costs with this doctor and 85% of patients said they'd never discussed their out-of-pocket costs with their provider and we asked the doctors the same questions and the doctors said in most cases a bit lower but 65% of the time the physicians reported that they hadn't discussed their out-of-pocket costs. So from these studies, this study and then a number of companion studies examining barriers to patient provider communication and the like, we concluded that patient provider communication about out-of-pocket costs is an important and yet a neglected aspect of current clinical practice. And these insights generate a lot of related ethical questions and some that are quite vexing and I'll pose one to you that here again we examined as part of this body of work and it's the following dilemma that is should doctors recommend what is absolutely medically best for each patient as if costs were no object or should they tailor the recommendations based on each person's financial circumstances and there are a number of different takes on this issue. Here a doctor is seated with the wife of a patient saying you can rest assured Mrs. Wilson that your husband will receive the best care known to medical coverage and to some degree this conflict is both old and new. You know on the one hand for centuries physicians have had to make treatment recommendations and decisions cognizant of the fact that these may have economic implications for patients. On the other hand under indemnity or fee-for-service insurance models which predominated during at least the latter part of the 20th century patients financial and medical interests were generally well aligned but during the past few decades there have been a number of changes and transformations in healthcare delivery where we've really entered an era of cost sharing and these include health savings accounts, high deductible health plans more recently we have ultra-narrow provider networks for those of you that are health policy buffs you know what those mean and the core issue is that a lot of modern bioethics was developed in the insurance era where the normative claim was present that physicians should disregard costs at the point of decision making and with tort litigation posing a standard of care. However professional ethics developed during the past century at least in this case doesn't fit the world of modern medicine. So based on this tension this dilemma should doctors essentially provide a uniform standard of care or should they tailor the recommendations for each patient based on their ability to pay really at the core of this are competing ethics that is an aspirational ethic to treat all patients the same and an agency ethic to be a trustworthy advisor for one's patients and the real challenge here is that the nature of the agency role or at least the recommendations that should come from the provider with the agent in serving patients well as a patient's agent vary as the nature of cost sharing changes and as the nature of insurance changes and so we've argued that the goals of the aspirational ethics shouldn't be ignored but nor should they be recklessly obeyed of course their problems with a pure agency based ethic as well there are many problems patients have widespread variation in the cost sharing that they're exposed to as well as their willingness to pay some patients willingness to pay for a given procedure test is very different from another patient to say nothing of the principles of beneficence and non-malphesians that appropriately provide some outer bounds and constrain physicians choice sets during clinical encounters and so we've argued that aspirational ethics must yield to accommodate physicians agency role in an era of greater cost sharing and that consistent yet flexible recommendations from providers are needed during the course of clinical encounters but that physicians shouldn't abandon their professional standards either and so in summary what I've shown you thus far is I've described a fundamental challenge to patients and providers with respect to out of pocket communications and I've also described ethical tension between this aspirational ethic to treat all patients the same regardless of their ability to pay and an agency role that calls for physicians to be trusted advisors for their patients sensitive to their financial needs as well as their physiologic and medical needs well nowhere has this conflict been more apparent in recent memory when it comes to therapeutics than with specialty drugs and for those of you that are not familiar with the term specialty drugs I would bet dollars to donuts you will be within the next five years these are products that are there's no universally agreed upon definition for these products but they are often biologics that is they're made from biologic processes using living cells they are often complex to manufacture many have unique routes of distribution they may require cold storage they many have nonoral routes of administration and they're often very costly in fact one definition of specialty drugs neither necessary nor sufficient but I think illustrative nonetheless is that they cost more than $5,000 for a monthly supply and so for a few examples of these brand names is what I'll give you consider the following Epigen, Remicade, Enbril, Avastin, Lantus, Nulasta, Humera, Rituxan, Copaxone, Herceptin, Lucentus, Pegasus and the list goes on their cost in financing keeps many patients and clinicians awake at night and dare I say increasingly bioethicists as they should so this slide depicts 2011 spending on pharmaceuticals in the US and so it's about $320 billion overall which parenthetically is more than the GDP of Denmark and it's actually exceeded only by the GDPs of 33 countries that as we spend more on prescription drugs in the United States only 33 countries have a GDP more than the amount that we spend on prescription drugs in the United States and I'd like to highlight three things the first is that we spend a lot on prescription drugs I've just told you that the second is that specialty drugs already account for 25% of prescription expenditures so if you look at the third bar down it shows traditional pharmaceuticals 75% and specialty products 25% and the third is that by 2020 in just six years it's estimated and forecast that half of our pharmaceutical budget will be on specialty products so these are really really important for policy makers, for manufacturers for regulatory bodies such as the FDA and yes for doctors and patients as well well manufacturers are aware of this and aware of the burden that many patients face for their specialty products and I'd like to suggest that the solution that many manufacturers are using may be where market forces are driving them to go but may ultimately be eroding efforts to constrain the cost of these products ultimately a shell game which will ultimately pass on these costs to consumers without tackling the fundamental problem which is the high cost of these products and what I'm talking about are drug coupons this is from a paper that we published in health affairs last month examining the use of specialty drug coupons and the results were surprising to say the least focusing just on the last row of data here all of these products we examined 10 million individuals and looked at all of the specialty products that they received and overall there were about 250,000 prescriptions for specialty drugs and what's important to note is that of these 250,000 specialty drug prescriptions 40% or 2 out of 5 were associated with a drug coupon the overall patient cost sharing for these products was 35.3 million so this comes out to about $135 per specialty prescription and of which 60% so 60% of the patient cost share was actually offset by coupons more than half of the amount that patients would have seen and been exposed to out of pocket was offset by coupons this isn't all bad news either of course and so lest you think this is bad news alone consider this so here on the y-axis we have non-abandonment rates I'm sorry abandonment rates by which I mean prescriptions that patients I think this is first fill so these are first prescriptions for these products that patients never pick up from the pharmacy and you see here the y-axis is from 0 to 70% and we have multiple sclerosis specialty drugs and then we have essentially TNF inhibitors biologic anti-inflammatory drugs so these are drugs in red for Crohn's all sort of colitis, psoriasis and rheumatoid arthritis I think are the FDA labels and then on the x-axis you have the monthly out-of-pocket costs so this is from 0 to 50 dollars the abandonment rates are about 5 or 7% and you see that once you get up to 250 to $500 monthly out-of-pocket costs the abandonment rates start getting pretty high and here when you're talking about out-of-pocket costs of $750 to $1000 1 in 5 patients isn't picking up their prescription from the pharmacy now I haven't included numbers in this bar graph but mind you there are patients with co-payments of $500 or more we increasingly see fourth tiers so they're standard and classically in the past two decades there are three tiers for formulary benefits managed by pharmacy benefits managers like ExpressGrips or CVS Caremark there's a generic preferred brand and non-preferred brand and increasingly what we see is a fourth tier for specialty products which may have rather than co-payments co-insurance where patients pay a fixed proportion of the overall charge so you do the math for a product that costs $6,000 a month with a co-insurance rate of 25% we're talking about an out-of-pocket cost of $1,500 so think about that the next time you go to your CVS or Walgreens to pick up your next prescription so these are really tricky issues and I think the question is what do we do about cost sharing in an era of specialty products where many of these therapies are associated with co-payments and in some cases as I've just told you co-insurance they may simply break the bank for many Americans and I think there are a number of implications from the facts that I've presented first despite an unprecedented growth in generic market share so generics now account for 80% of all prescription drugs that are dispensed in the US but despite this despite the fact that there's been huge increases in the market share of generic products the first is that the burgeoning market of specialty products is going to continue to pose economic hardship for many Americans and this isn't just about cancer drugs many of the drugs that I mentioned and indeed the data that I've shown are not cancer products so this isn't just oncology although I think the I do have to hand it to colleagues here at the University of Chicago and elsewhere that have coined the term financial toxicity referring to cancer products that in fact won't just cause mucusitis or bad diarrhea and hair loss but also break the bank the second issue is that drug coupons remain an empirically understudied and I would argue dubious means to reduce prescription drug costs in the long term and I think it's reasonable and fair to argue that they're penny wise pound foolish since they may promote adherence and reduce patients short term economic burden but they also raise premiums in the long term and they undercut pharmacy benefit managers abilities to use any economic mechanisms to try to incent patients towards more rational or optimal pharmacotherapy third this is a really dynamic policy arena so many state legislatures have passed laws banning or limiting cost sharing for specialty products and you can imagine who the lobbyists are and there have also been proposals to re-design the Obamacare's health insurance exchanges so as to provide protection to patients facing extremely high costs from these specialty tiers and there's a related parallel story here about oral oncology oral chemotherapy parity laws so many of you some of you may have heard this but in 34 states in the District of Columbia in fact these laws have been passed by legislatures and what they do is they require healthcare insurers or oral chemotherapeutics under quote-unquote no less favorable terms than IV chemotherapeutics have historically been covered this is really big news because the oral products generally have been covered on the pharmacy side pharmacy benefits and the IV chemotherapeutics are covered on the medical benefit side and the implication of this is that often with the oral agents that are specialty drugs covered on the pharmacy side patients are seeing these very high cost sharing but as with drug coupons I think it's fair to argue that such laws are both an inadequate response and ultimately a shell game they essentially will pass on the cost to insurers who in turn will pass it on to you and me and they really don't tackle these laws really don't tackle the fundamental problem which is the high cost of these products in short the laws ignore the cost quality question and last but not least I'd say that the broad deficiency that we characterize more than a decade ago as well as the fundamental tension between clinicians agency and aspirational roles is as relevant as ever in light of these changes in the pharmaceutical marketplace so I think that it's going to be a very important and dynamic area for the foreseeable future and one where I hope and believe that clinical bioethicists and others engaged in the vexing issues can make a substantive contribution thank you very much thank you sure Dr. Alexander's paper is open to questions September hi September Williams 9th month consults this is I think related to the topic of course the things you're talking about remind me of the work around antiretroviral drugs and how to get access on a broader level around the world I recently because I don't work in an academic center and I take consults from a wide variety of places often from clinicians and from patients directly come across a couple of cases where people have been priced out of the ability to cover their immunosuppressive medications for transplant so this is a special kind of a case so you know a 19 year old got transplanted it's 11 years later she's doing well she's compliant she works in a coffee shop and she no longer has the appropriate coverage because there's a loophole that doesn't recognize these expensive life sustaining therapies as being important so when I look at the things you're talking about I think this is a special case of that situation do you know anything about what is being done with that and how it might apply to the general case that you're talking about yeah thanks for the question I'm not aware of specific coverage policies in that context but it certainly sounds to me as if that would also fall into the category of Pennywise Pound Foolish and so far as if you think down the road of the implications of organ rejection they're going to be far more costly than a month or a year or in fact probably a lifetime of the immunosuppressive agents so I'm not but I thank you for that and I think that's an illustrative and cautionary clinical anecdote by the way the case came from an emergency room physician who found himself specifically sort of saying to this young woman well you have to get yourself back on the Medicaid for some other purpose so I guess you have to risk your graft and when you sit come right in yeah thank you I think we'll take one more we'll take two more hi Bob Taylor from the Ohio State University so I think the this is this I think the problem is that markets and well markets and insurance have insurance has become a market and it used to be back in the old days with Blue Cross and big insurers they're almost like a single payer system there were big groups that but now we have so for example with the example just given not doing it not paying for the drugs now the cost of that may go to some other company next year so there's no continuity there's no there's much less incentive for insurers to avoid future costs much more incentive to avoid current costs so it's sort of like everything's just become a market for the immediate moment as opposed to so again I think the you know the single payer system seems to be the only way that one can get past all of these problems and I just wonder what your thoughts are it seems to me the market can't fix this that's my impression yeah well I appreciate the comment and I don't disagree and I think that the you know we've seen for example in studies of offsets associated with Medicare Part D that there are some Medicare Part D providers that cover both medical and pharmacy benefits indeed we've identified savings on the medical side from covering from providing prescription drug coverage and that in sense in sense that type of provision so you know I think that it's not dissimilar from settings where you look at something like tobacco cessation and the public health benefits from that and the fact that it accrues long term and maybe to different parties that are covering the cessation therapy in the first place so you know without getting into you know sort of lengthy discussion of the way that insurance policies are designed and bundled I think you raise a fair enough point about that the responsibility for the bad outcomes that may come from from poor patient adherence or access to pharmacotherapies may not accrue to the people that are on the hook for the bill for the drugs in the first place we'll take these final two questions Peter and then Owen yeah I wonder I think this is becoming the need to discuss cost I think it's becoming inevitable we just finished looking at about 2,000 physician patient encounters third in breast cancer third in rheumatoid arthritis another in a third in depression and we find between 20 and 34 percent of the encounters there's some discussion of healthcare costs so I think even from based on your survey I think it's becoming more and more common and one of the things that comes up a lot is the coupons I wonder if you quickly say this is this the way to get people on a drug that they will then later pay for or what's going on with these yeah well it's I'm heartened to hear that based on your empiric findings and actually there's remarkable paucity of research examining drug coupons partly because the data just ain't there in the public domain so you know I think manufacturers are pretty smart with their marketing campaigns but I've not seen anything more than three pithy commentaries in JAMA and the New England Journal of Medicine about drug coupons looking empirically at when they're used and what their impact is on the other hand you've got to think that if manufacturers are footing the bill that they're paying for themselves over the long term thanks hi I'm an oncologist so we have these issues quite a bit and sometimes we're faced with having to choose between an oral medication that has a lot of patient versus an IV medication which does not have an out-of-patient cost but has logistical time-away-from-work and family cost has there been any look at how patients value either money out pocket versus time-away from family and work and time and infusion chair yeah it's a great question well and so the oral parity laws of course are required to be covered under no less favorable terms with that said it doesn't sound like that's yet past here been implemented in Illinois I'm not aware of that literature I'm sure that people are working on it and I think it's a very reasonable point I mean so there's a big difference between coming in for a 48-hour infusion versus taking a pill each morning and I think that cost effectiveness and the cost benefit trade-offs of those types of alternative treatment strategies thank you yeah thanks thanks