Pharmaceutical Pricing Trends: Ethical Challenges and Impacts

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Arizona State University *

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Jun 10, 2024

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Notes-Pharmecutical pricing Background: -high prescription prices create affordability problems for patients, hc payers, employers, and taxpayers -inflation reduction act (IRA) requires manufacturers to pay rebates to medicare if they raise their prices for certain medicare part b and D drugs faster than the rate of inflation -Most drug manufacturers make changes to their prescription drug prices in either January or July of each year, mostly January. -January 2022 to January 2023, price changes ranged from a decrease of 99 percent to increases of over 3,000 percent. Over this period, 4,264 drug products had price increases. Of these increases, 1,982 (46 percent) were greater than the increase in the consumer price index for all urban consumers (CPI-U) for this period (which was 6.4 percent). During the same period, 1,599 drug products had price decreases. -For those drugs with a price increase, the average increase over the January 2022 to January 2023 period was 15.2 percent. This is higher than the average price change between 2021 and 2022 of 11.5 percent. -Because which drugs change price can vary considerably from year to year, the dollar values of the increases can be very different. The January 2022 to January 2023 increase of 15.2 percent translates to $590, while the previous year’s increase of 11.5 percent translates to $172. -Percentage price increases for multi-source drugs tend to be higher than for single source drugs, while the absolute dollar increases are much larger for the latter. From January 2022 to January 2023, the average price change for single source drugs was 7.4 percent ($958) while the average increase for multi- source drugs was 26.0 percent ($69). The highest dollar value increase in 2022 was for a drug approved to treat spinal muscular atrophy, whose price increased from $2.12 million per kit to $2.18 million, reflecting a $63,750 (3 percent) increase. The highest percentage increase was for a drug approved to treat high blood pressure whose price increased more than 35-fold, from a list price of $4.32 to a new price of $158.72. The list prices for drugs included in this brief are determined based on Wholesale Acquisition Cost (WAC). While these results provide insights into the potential impacts of the IRA’s inflation rebates, they are not direct estimates of which drugs will be subject to the IRA provisions, due to differences in price measures, time periods, and definition of drug products between our data source and the IRA provision. ( https://aspe.hhs.gov/reports/changes-list-prices-prescription-drugs ) -The tension between patient access to medicines and the high drug costs needed to create incentives for innovation has occupied considerable policy and scholarly attention for a quarter century,

-beginning in the 1990s with the introduction of intellectual property protection in the World Trade Organization and reaching a crescendo in the 2000s with the controversy over high prices for HIV/AIDS drugs (1). -More generally, the juxtaposition of ethical considerations with the economic realities of modern health care has provoked intense discussion. -We survey recent literature in twelve areas of health-care policy in which these tensions between economic and ethical imperatives arise. Recent economic research has increased the sharpness and focus of the ethically based calls to increase access by modifying patent protection and reducing prices. In some cases, the research supports ethical arguments for broader access . In many cases, however, research suggests that efforts to make the marketplace more ethical by broadening access result in unintended consequences for innovation and otherwise work against the medical needs of patients. -Limited access to expensive drugs developed for rich-country markets is compounded by the availability problem, i.e., the limited research and development (R&D) funding for diseases affecting less developed countries (LDCs) exclusively. -In 2000, the United Nations adopted a Millennium Development Goal to, “in cooperation with pharmaceutical companies, provide access to affordable essential medicines in developing countries” -Although they acknowledge that drug patents can be justified by both utilitarian and property rights principles, some ethicists argue that the “most basic rights...of life, liberty, and/or the right not to be harmed” should “override property rights...such as during crises such as the threat of death by HIV/AIDS” -Others argue that pharmaceutical companies are for-profit entities, and it is unfair to hold them responsible to pursue socially beneficial but unprofitable endeavors (such as producing unprofitable drugs) when no other firm or individual is held to such a standard. -Nonprofit pharmaceutical companies have emerged as an alternative to traditional markets or institutions, one that is more effective at addressing basic human needs (the ethics and economics of pharmaceutical pricing by sara parker-lue, michael Santoro, greg koski- https://www.annualreviews.org/doi/pdf/10.1146/annurev-pharmtox-010814-124649) -In some cases, countries that impose price ceilings (either directly, as in Canada, or indirectly, as in Germany) to increase patient access may deter market entry for drugs. High prices may price out a large section of the population, but some economists argue that price controls may effectively price out an entire country. -although overall life expectancy is higher on average in Europe, European cancer survival rates are lower than the US survival rate. For example, the 5-year survival rate for men over age 75 diagnosed with prostate cancer is 92.1% in the United States but only 64.4% in Scotland. -Between 2004 and 2008, the US Food and Drug Administration (FDA) approved 59 anticancer drugs, of which 46 were also approved in Europe. Every US payer that was studied covered all FDA-approved drugs, whereas in Scotland, only 43% of licensed drugs were covered. - ethical literature would benefit from greater appreciation of economic realities, and, conversely, economists can better focus their studies by displaying greater sensitivity to ethical concerns. Both fields

need to be more deeply immersed in the real clinical settings in which physicians practice medicine with real patients. Greater cross-disciplinary interaction among economists, ethicists, and physicians can help to reduce the disjunction between innovation and access and improve access and patient care. As this dialogue takes place, it will have an enormous impact on private industry and may result in new multistakeholder paradigms for drug discovery, development, and pricing -patents creation and expiration both effect pricing. Patent law allows drug companies to charge high prices over the life of a patent, creating incentives for new discoveries that become more broadly available at lower generic prices once the 20-year term of the patent expires (84, 85). However, recent studies have called into question whether patents actually increase innovation (86); some have even found that they have a negative effect on innovation (87, 88). Notwithstanding the doubts this patent puzzle raises, in the particular case of drug development, some policy mechanism is necessary to recoup the rising costs of R&D and, in particular, clinical trials that constitute 80% of the initial fixed cost of drug development (89). LEADER SECTION TOPICS For full points: Leader is selected and clearly states how problem is managed - Leader mark Cuban, problem managed by his creation of company cost plus drugs which wants to interrupt big pharma and offers more transparency to consumer regarding prescription drug prices. Shows an in-depth analysis of the leader’s skills using a variety of class concepts (3+) and ethical behavior - Skills include confidence, decisiveness, sales, curiosity flexibility, innovation, efficiency and later a grater focus on interpersonal relaionships - Demonstrates high emotional intelligence 13 things emotionally intelligent people do article - Is true colors of gold or green Describes negative trait(s) and gives recommendations how to improve based on concepts presented in class - Trouble with authority relationships fear of vulnerability perceived as intimidating or competitive

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Talking points order Introduce mark Cuban/how problem is addressed Go into ethics and integrity of mark Cuban Examples of his cohesiveness collaboration conflict management and desire to make a change Expand on his results in regards to class including his emotional intelligence score and his true colors assessment results. ___________________________________SPEECH_________________________________________ Our leader is Mark Cuban. He is the face of Cost Plus Drugs, which he invested in with the ideal that every American could have access to safe, affordable medicine and a bold attempt at disrupting Big Pharma. Mark Cuban is often described as confident, competitive, and ambitious. SLIDE As a television personality and entrepreneur his integrity has sometimes come into question but throughout multiple interviews he’s made strong ethical statements not only on pharmaceutical pricing, but good business. He’s expressed his values in things like effort, curiosity, flexibility, innovation, efficiency, and more recently the importance of interpersonal relationships. In an interview with Business Insider he says we need to recognize “having a social conscience is good business.” People want companies with moral roots for both consumers and employees alike. He also states, “one of the most underrated skills in business right now is being nice.” SLIDE On his willingness to collaborate Mark Cuban openly displays the many companies Cost Plus Drugs works with to achieve their shared goals. Utilizing the experience and platform of Expion Health for example allows both companies the ability for amplified sourcing and further transparency. Cuban also stated in an interview that team culture takes precedence over talent and calls out politicians for always taking credit for the work of their employees rather than giving the credit where it is due. This acknowledgement of the integral role of his employees translates into his conflict management style. He described himself in his 20s being abrasive, direct, even volatile and goes on to say he had a metamorphosis later in life. He demonstrates this in an interview where he states, “if you can handle people’s diversity, people of a different age, personality, educational background for example, you can handle the conflict that comes with that and you will be the highest paid, most valuable employee in the company. SLIDE From our research we determined from Mark Cuban’s intellectual, analytical, and objective nature that his True Colors Assessment originally landed in Gold in his 20s before shifting to Green in his later adulthood with his increased social awareness. We also looked at his emotional Intelligence and determined it is likely high due to his demonstration of self-awareness, self-control, empathy, motivation, and social awareness. He has also stated “what makes you most valuable is your ability to

cooperate and connect with others” a lot of jobs are going to disappear, but the thing that we always have that is more important is your emotional intelligence.” “you need to have a good understanding of yourself, self control, empathy and a natural understanding of peoples decisions, needs and desires.” SLIDE Mark Cuban is not without fault as he still has room for improvement in areas like social relationships and being more present in the moment. People with similar results also tend to have problems with authority and criticism so people might perceive him as intimidating or competitive. Tools he could use to improve in these areas are self-reflection, making himself more available and present, as well as adopting a growth mindset and choosing to see criticism as other’s beliefs in his abilities rather than an attack. ____________________________________________________________________________________ Room for Improvements: social relationships, and being present in the moment -what makes you most valuable isyour ability to cooperate and connect with others:”a lot of jobs are going to disappear, but ythef thing that we always have that is more important is your emotional intelligence.” “a god understanding of yourself, self control, empathy and a natural understanding of peoples decisions needs and desires.” - better capitalism related to social conscious and its affect on business both for consumers and in the workplace as employees ASSESSMENT FOCUS—do we need to touch on ethics?? “show indepth analysis of leaders skills using class concepts and ethical behavior” Values Cohesiveness/collaboration Conflict management EQ and true colors Described as competitive and ambitious

Values: effort, curiosity, flexibility, change/innovation, efficiency, and interpersonal relationships True Color: Gold to Green Intellectual, analytical, objective, future-oriented, and curious Room for Improvements: social relationships, and being present in the moment Argument for courage or priorities based on interviews/regarding political statement etc Ethics/integrity -article written by forbes: 10 million donated to organizations promoting women in leadership roles and combat domestic violence after sexual harassment allegations in the mavericks. -cuban not speicially incriminated for sexual harassment or misconduct but his company had 1.6 million documents and 215 interviews with current and former employees confirming it was happening within the company. -lash out or lack thereof on Chinese crisis despite confirmation of minorities being held in camps where they are abused, forced labor and forced sterilization.—considers it tricky politics to do ethical business with china but doesn’t seem inclined to make a difference himself. “they are a customer of ours and guess what? I’m okay with doing business with china” -however claims to have approached the state department about increasing number of slots available in usa for asylum seekers -claims to not want to get caught saying he condems chinas actions but conversely says when he wants to discuss the actions they could take hes told hes dodging the question. - better capitalism related to social conscious and its affect on business both for consumers and in the workplace as employees Cohesiveness/collaboration -collaborates with pharmacies and partnerships for cost plus drugs -“team culture is more important than raw talent.” -“politicians could learn from business. In business raising money is not an accomplishment, its an obligation to execute a business plan. In politics passing legislation is not an accomplishment. It’s an obligation to execute on a plan to help our country.” “I’m wainting for a politician who doesn’t take credit for simply pasing legislation but actually cares about the results and gives credit to the peopoe who do the actual work. -makes commentary on a successful business person gives credit to the employees and poloticians act like they did what all their employees did.

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Conflict management -a simple skill anyone can develop can go a long way, “one of the most underrated skills in business right now is being nice. Nice sells.” -“I went through my own metamorphisis, if you will, early on in my career, I was like bam bam bam bam I might curese. I might get mad. And then I just got straight to the point I wouldn’t have wanted to do business with me when I was in my 20s. -what makes you most valuable isyour ability to cooperate and connect with others:”a lot of jobs are going to disappear, but ythef thing that we always have that is more important is your emotional intelligence.” “a god understanding of yourself, self control, empathy and a natural understanding of peoples decisions needs and desires.” -“if you can handle peoples diversity people of a different age, diggerent personalities, or educational backgrounds for example and you can handle tbeconflict that comes with that, you will be the highest paid, most valuable employee in the company” True colors assessment more focus on green, but was a gold/yellow that he developed with focus on vision which inspires followers as well as has a clear idea of end goal. Values effort curiosity flexibility innovation/change efficiency and interpersonal relationships Desire to make a change/commitment Intend to disrupt big pharma Demonstrates ability to shift into mindset of patients etc Negatives about mark Cuban -business over making political statement -can come across as a jerk/hard headed https://www.forbes.com/sites/doylerader/2018/09/19/mark-cuban-will-donate-10-million-after- investigation-confirms-workplace-misconduct-within-dallas-mavericks/?sh=3f058ba61212 https://variety.com/2020/politics/news/mark-cuban-nba-china-megyn-kelly-1234803523/

https://www.businessinsider.com/mark-cuban-social-conscience-good-business-2018-12 https://www.beckershospitalreview.com/pharmacy/mark-cuban-pharmacys-collaborations- partnerships.html https://www.cnbc.com/2022/09/16/mark-cuban-team-culture-is-more-important-than-raw-talent.html https://www.thestreet.com/politics/mark-cuban-shares-a-clever-take-on-effective-leadership https://costplusdrugs.com/ https://www.cnbc.com/2018/10/12/mark-cuban-one-of-the-most-underrated-business-skills-is-being- nice.html Davis, R. (2020, October 13). Mark Cuban condemns China on human rights but avoids specifics at delicate time for the NBA . Variety. https://variety.com/2020/politics/news/mark-cuban-nba-china-megyn-kelly-1234803523/ Elkins, K. (2018, October 12). Mark Cuban: “one of the most underrated skills in business right now is being nice.” CNBC. https://www.cnbc.com/2018/10/12/mark-cuban-one-of-the- most-underrated-business-skills-is-being-nice.html Feloni, R. (2018). Billionaire investor Mark Cuban says it’s time we recognize “having a social conscience is good business.” Business Insider. https://www.businessinsider.com/mark- cuban-social-conscience-good-business-2018-12 Homepage of Mark Cuban Cost Plus Drugs. (n.d.). https://costplusdrugs.com/ O’Connell, B. (2023, August 28). Mark Cuban shares a clever take on effective leadership. https://www.thestreet.com/politics/mark-cuban-shares-a-clever-take-on-effective- leadership Rader, D. (2018, September 20). Mark Cuban will donate $10M after investigation confirms workplace misconduct within Mavericks . Forbes. https://www.forbes.com/sites/doylerader/2018/09/19/mark-cuban-will-donate-10-million- after-investigation-confirms-workplace-misconduct-within-dallas-mavericks/? sh=3f058ba61212 Sauer, M. (2022, September 16). Mark Cuban fires business partners and NBA players for the same reason: “A team can have 1 knucklehead, you can’t have 2.” CNBC.

https://www.cnbc.com/2022/09/16/mark-cuban-team-culture-is-more-important-than-raw- talent.html Twenter, P. (n.d.). Mark Cuban Pharmacy’s collaborations, Partnerships . Becker’s Hospital Review. https://www.beckershospitalreview.com/pharmacy/mark-cuban-pharmacys- collaborations-partnerships.html

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Our leader is Mark Cuban. He is the face of Cost Plus Drugs, which he invested in with the ideal that every American could have access to safe, affordable medicine and a bold attempt at disrupting Big Pharma. Mark Cuban is often described as confident, competitive, and ambitious. SLIDE As a television personality and entrepreneur his integrity has sometimes come into question but throughout multiple interviews he’s made strong ethical statements not only on pharmaceutical pricing, but good business. He’s expressed his values in things like effort, curiosity, flexibility, innovation, efficiency, and more recently the importance of interpersonal relationships. In an interview with Business Insider he says we need to recognize “having a social conscience is good business.” People want companies with moral roots for both consumers and employees alike. He also states, “one of the most underrated skills in business right now is being nice.” SLIDE On his willingness to collaborate Mark Cuban openly displays the many companies Cost Plus Drugs works with to achieve their shared goals. Utilizing the experience and platform of Expion Health for example allows both companies the ability for amplified sourcing and further transparency. Cuban also stated in an interview that team culture takes precedence over talent and calls out politicians for always taking credit for the work of their employees rather than giving the credit where it is due. This acknowledgement of the integral role of his employees translates into his conflict management style. He described himself in his 20s being abrasive, direct, even volatile and goes on to say he had a metamorphosis later in life. He demonstrates this in an interview where he states, “if you can handle people’s diversity, people of a different age, personality, educational background for example, you can handle the conflict that comes with that and you will be the highest paid, most valuable employee in the company. SLIDE From our research we determined from Mark Cuban’s intellectual, analytical, and objective nature that his True Colors Assessment originally landed in Gold in his 20s before shifting to Green in his later adulthood with his increased social awareness. We also looked at his emotional Intelligence and determined it is likely high due to his demonstration of self-awareness, self-control, empathy, motivation, and social awareness. He has also stated “what makes you most valuable is your ability to cooperate and connect with others” a lot of jobs are going to disappear, but the thing that we always have that is more important is your emotional intelligence.” “you need to have a good understanding of yourself, self-control, empathy and a natural understanding of peoples decisions, needs and desires.” SLIDE Mark Cuban is not without fault as he still has room for improvement in areas like social relationships and being more present in the moment. People with similar results also tend to have problems with authority and criticism so people might perceive him as intimidating or competitive. Tools he could use to improve in these areas are self-reflection, making himself more available and present, as well as adopting a growth mindset and choosing to see criticism as other’s beliefs in his abilities rather than an attack.

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