Why Do COPD Inhalers Cost So Much?by Eli Hendel, M.D. Medical Reviewer
An estimated one in 10 Medicare recipients gets treated for some type of respiratory problem. The first choice of treatment is often in the form of an inhaler, which directs medication right into the lungs, avoiding the side effects that some people may get from oral drugs. But it can get expensive.
Medicare covers 80 percent of the cost of those medications under the Part D program. But once a patient and the insurer together spend $3,700 (in 2017), the patient is responsible for the bill (the next $1,250) until the patient has $4,950 in medication costs. Medicare then covers 100 percent of the price of the drug. The amount that a Medicare patient is responsible for is called the "doughnut hole,” and a patient taking multiple medications could easily reach that point by July or August.
Why inhalers are expensive
So when the many pharmaceutical representatives pass through my office, promoting the newest and often more expensive medications, they assure me that the drugs are covered by Medicare.
What they fail to realize is that expensive drugs nudge seniors into the doughnut hole faster, forcing them to face a big payout. That’s a huge financial burden year after year. Even if patients are in a managed care plan with no doughnut hole, there is a monetary limit on pharmacy benefits.
A particular challenge that patients with chronic obstructive pulmonary disease face is inhaler costs. Years ago all inhalers used the same delivery device, which was designed by the 3M company. More recently, the leading companies that produce respiratory medications — Astra Zeneca, Boehringer Ingelheim, and GlaxoSmithKline — have all developed and patented their own devices.
Those various inhalers deliver different medications and work differently. It’s nearly impossible for the average primary care physician to stay abreast of all the new inhalers. The costs reflect innovative delivery methods and new drugs, and they’re not cheap. Unlike pills that can be halved, a patient has to buy and commit to the inhaler for each month’s therapy.
As a result, there are few opportunities for any meaningful savings. Patients can’t take half doses like pills, nor are there many generic options for COPD. The GOLD Guidelines mandate long-acting bronchodilators; the only generics available are short-acting bronchodilators used as rescue treatments for asthma.
A boon to the drug industry
This situation has paid off for drug companies. In 2015, more than $8 billion was spent on the four leading COPD inhaler medications.
At the end of the day drug companies and pharmacies are for-profit entitities. So drug copayments can still be quite high, and many insurance companies have a limit on pharmacy benefits.
Pharmacy Benefit Managers (PBMs) are companies that negotiate drug costs for insurers, acting as the middle man between the drug companies and the pharmacies. Unfortunately, the rebates and savings that the PBMs get for volume purchases are rarely passed to the consumer.
Seniors who are prescribed multiple drugs, including expensive inhalers, can end up accumulating several hundred dollars monthly in co-payments, an incredible burden if they are living on Social Security and minimal retirement savings.
What patients can do
To get them through a month, patients can ask their doctor for a two-week sample of a medication they already use regularly. Or they can ask for coupons to save money.
Consumer organizations like the nonprofit LeapFrog Group offer advice on the fair costs of medications. There are also groups of doctors empowered by the government to control health insurance costs for Medicare patients. Those Accountable Care Organizations are given data from insurance claims to see where savings can be found, such as eliminating the middle man.
Meanwhile, companies are popping up that negotiate bulk drug prices and hand off tremendous savings directly to the consumer. One free online site is called Blink Health, which allows consumers to find the cheapest price for medication. It guarantees the price and allows patients to pay online and pick up the prescription at a local pharmacy.
BlinkHealth offers AdvairHFA in two-dose options. Even Amazon, the online behemoth, has expressed interest in getting into generic drug distribution.
It’s unlikely that patients will have significantly cheaper generic COPD inhaler options in the near future. More effort is needed to expand brand competition because lower drug costs are especially important for seniors on fixed incomes.
Editor’s Note: Stephen Hendel, the son of the author, is an executive at Blink Health. The author has also been on the board of Apollo Pacific Alliance, Inc., an accountable care organization.