Price, Cost, Spend: Following Pfizer’s Rabbit

Fifteen years ago, I walked out in protest when a pair of Big Pharma recruiters visited my Community Health Sciences lecture at UCLA. Here we were, examining social determinants of health and assessing public health programs’ impact, and these folks were hawking their slick, updated employee gym and company swag? I didn’t stick around to hear their entire spiel. I knew they were trying to convince us that selling our souls to Big Pharma would be AWESOME. I was so disappointed in our professor. How dare he invite The Enemy into our academic, idealistic bubble? Let them hand out flyers or have a table at a career fair, fine, but DUDE, I am NOT down with Pharma companies recruiting on our academic clock, funded by our tuition dollars.

Oh, how far this self-righteous grad student fell. Ten years later, I led Patient Support initiatives at that same Big Pharma company.

What changed?


After twenty years of working in nonprofits (eight of them in hospitals), I believe that if anyone will positively change healthcare in the US, it is Industry. Case in point: Pfizer’s current lawsuit against the US government. Pfizer is challenging federal regulations that prohibit pharmaceutical manufacturers from offering financial assistance to patients who have government-sponsored health insurance. This is a big deal. If you work in Biotech Pricing, Market Access, or Patient Support, you’re keeping an eye on this case. Legal arguments opened a few weeks ago.

A MarketWatch article covering the Pfizer case caught my eye yesterday. Two lines, in particular, have been pinging around my skull:

  • Rather than waging a legal battle to help patients with tafamidis copays, ‘why doesn’t Pfizer just reduce the cost?’ asked Judge Mary Kay Vyskocil. 
  • If patients don’t have to consider cost and drug companies can charge whatever they want, Shapiro says, ‘eventually Medicare will collapse.

Kindly note that both of these quotes have been taken out of context by yours truly. Please read the reference article. Additionally, I recognize that three years of high school debate team do not a lawyer make. Nothing I share on this blog should be construed as legal advice.

I highlight these two sentences because I see three distinctly different ideas, that while certainly linked, are not the heart (cardiovascular drug pun intended, it’s ok; go ahead and groan) of Pfizer’s legal challenge: 

  • Manufacturers choose high drug prices (Why doesn’t Pfizer just reduce the cost?)
  • High costs keep patients from using certain medicines (If patients don’t have to consider cost. they OR THEIR HCPs may choose the therapy that best serves their clinical need, regardless of price)
  • The Medicare program’s survival hinges upon controlling drug spend and limiting the total dollars Medicare pays for medications (eventually, Medicare will collapse)

Price, cost, and drug spend are connected, but they are not interchangeable. And, to my best understanding, the Pfizer case is not explicitly about price– it’s about offering the same financial assistance to patients with government-funded health insurance as offered to commercially insured patients.

Today, if you have commercial insurance coverage (for example, through your employer) that doesn’t completely cover the cost of your medicine, you may be able to receive financial assistance (most often in the form of a copay card) from the drug manufacturer. But, if your insurance is part of a Federal Healthcare Program, meaning that the government is the payer, as it is for Medicare and Medicaid, then the drug manufacturer is prohibited from directly offering you any financial assistance for your medication costs

I’ve previously shared my belief that Patient Support leadership needs to work with in-house or outside counsel as early as Biologics Licensing Application (BLA) submission to the FDA. This isn’t lip service to the folks sitting in the Compliance seats way at the back– it’s just good business practice, saving both headaches and time. Anyone working in Patient Support should adhere to Office of Inspector General (OIG) guidelines for pharmaceutical manufacturer programs. The Federal Anti-Kickback Statute (AKS) prohibits manufacturers from inducing prescribers or patients with any financial incentives to prescribe or use their medications. There have been, and continue to be, Pharma Manufacturers who blur the line between enabling patient access and financially rewarding prescriptions. In my opinion, the compliance risk is most significant for those manufacturers whose therapies are administered in an office, infusion, or hospital setting. Prescribers or facilities can and do recoup fees associated with a medication’s administration.

The AKS, a criminal statute passed by Congress in 1972 as part of the Social Security Amendments, also inadvertently (?!) keep our nation’s most vulnerable, the elderly and the working poor, from accessing some therapies. These patients are not eligible for manufacturer financial assistance, so patient out-of-pocket costs, not clinical endpoints, can drive the health care provider’s and the patient’s treatment decisions. Given that over 61 million Americans are enrolled in Medicare, a drug’s list price need not be high to impact government healthcare spending. In 2019, Medicare spent more on Eliquis, an anticoagulant that treats and prevents blood clots, than any other Part D drug: $7B. The annual wholesale Acquisition Cost (WAC) for Eliquis? $6K.

I know next to nothing about Pfizer’s medication tafamidis, which sits at the center of the lawsuit. Gleaned from a quick scan online:

$225,000 is a lot of money. I don’t know if that is a fair price for tafamidis. My initial hunch is No. (That rustling sound you hear is my chance of ever working with Pfizer going up in flames. Joking. Kinda.) True, I don’t know how expensive it is to manufacture (i.e., its Cost of Goods). But with minimal digging, I found a tafamidis cost-effectiveness study that estimated:

  • Compared to other treatments, tafamidis gave patients, on average, an additional 1.29 quality-adjusted life-years (QALYs) 
  • The cost for one tafamidis QALY was $880,000 (some drug pricing watch groups, government agencies, and payers cite $100K per QALY as a reasonable threshold for new therapies)
  • If the ~120K patients clinically appropriate patients in the US were treated with tafamidis, healthcare spending would increase over $30B/year (a fraction of the $1.7 trillion F-35 fighter jet program, but still a LOT of money).

But, y’know what? 

It’s not tafamidis’ price that is being challenged in court; the question is whether manufacturers can offer the same financial assistance programs to all patients, regardless of insurance type. 

Contrary to urban legend, medication costs are not the leading driver in US healthcare spending; inpatient and outpatient services are. The way Medicare catastrophic coverage is structured today, even if a manufacturer slashed its drug prices, many publicly insured patients would still not be able to afford their out-of-pocket costs. I’m not letting Pharma off the hook. Still, I am saying that as we move forward, especially with innovative, lifesaving (but very expensive to manufacture) precision medicines and gene therapies, we need to make certain that patients on government insurance have equal access. 

And Access is what fired me up to enroll in school all those years ago.