The price of pharmaceutical drugs in the U.S. has become an issue in the presidential primary with calls for reform being made by major candidates. Some Arkansas patients are reporting that the co-pays for medications they depend upon have skyrocketed, making them unaffordable. It is difficult for a patient to understand why a prescription that used to cost them a $20 co-pay per month has gone up to $400 per month.

The problem comes as no surprise to Hot Springs dermatologist Dow Stough, MD, president of Burke Therapeutics LLC, which develops specialty dermatology medicines for acne, rosacea, psoriasis, pediatric dermatitis, eczema and other skin conditions.

“America has the highest prices for prescriptions in the world, and that’s ridiculous,” Stough said, who has done a number of clinical trials for pharmaceutical companies for dermatological prescriptions. “We created this mess, and the question before us now is, ‘Are we going to do what it takes to fix it?’”

Stough said it would take a combination of reforms to rein in the cost of prescription medicines. “The generic companies have consolidated in areas creating a monopoly which causes prices to skyrocket,” said Stough, who is a Certified Physician Investigator with accreditation from the Association of Clinical Research Professionals. “The small pharma companies can't come in because of very high FDA filing fees. Then they are at the mercy of the FDA to process, review, inspect and eventually approve a competitive generic. The filing fees to the FDA for new drug approval is more than $1.2 million.”

The list of problems that increase the cost of drugs is lengthy.

“You pay the FDA for approval and maintenance fees,” Stough said. “You pay the wholesalers a fee from 10-18 percent after rebates, and you pay the PBMs (pharmaceutical benefit managers) to list your drug. Manufacturers of higher tier drugs work out ‘deals’ with PBMs. Many of the PBMs have received large fines for violations. Pharmacies also need to make a profit. And, finally, the pharmaceutical industry pays enormous liability insurance.”

These other costs mean, Stough said, that if he produced a drug for $50 dollars a month, it would be difficult to sell it for $200 and make any profit.

Stough’s prescription for reforming costs for pharmaceutical drugs is multifold:

• A better distribution system. No kickbacks or rebates should be allowed to insurance companies or PBMs,
• Medicare\Medicaid and large insurance companies should be allowed to negotiate prices of drugs with manufacturers,
• FDA filings fees should be drastically decreased coupled with much faster review times for new drugs,
• Tort\liability reform,
• Better patent protection. Currently, patents are often challenged and manufacturers lose patent protection before the time period needed to recoup development costs,
• Patients should be allowed to purchase drugs outside their insurance network and even outside of the U.S.

“We should open up the distribution channels to make Canadian drugs readily available in the U.S.,” Stough said. “There are plenty of good foreign drugs, many of the same ones we have here, but under different names, that are incredibly cheaper than what is on the market in the United States. Patients should absolutely have access to those more-affordable prescriptions.”

Stough is skeptical that the major reforms will happen anytime soon.

“In the meantime, the high prices are great talking points for politicians,” he said. “But real change would take another level of interest by the U.S. government.”

As prescription drug prices continue to rise, consumers who can afford it are paying more of their income for prescriptions. Those who can’t afford it are going without medicine that they need.

Is there a conspiracy between drug developers, lawmakers and medical personnel? Big Pharm is one of the largest lobby group in the U.S. with estimates that total spending on lobbying activities from 1998-2012 at $2.6 billion.

But Stough doesn’t see a major conspiracy afoot.

“This is a complicated system, created over years by a series of actions that were intended to drive down drug costs, but had an alternate effect,” Stough said. “While 99 percent of doctors may throw up their hands and think there’s a smoking gun, that’s simply not true. There are not five guys in a back room somewhere manipulating the price of drugs.”

Stough got involved in development of dermatological drugs after seeing areas where needs were not being met. Why was a certain drug effective for psoriasis, for example, no longer available? Or why had a drug soared in cost?

“But 99 percent of the time, there was no way to get an answer,” Stough said. “There is no one to call or way to find out. Now I understand why it is so difficult to find the answer because there can be many elements. One company buys out another to get market dominance. Maybe the company bought has 20 drugs, and the buyer is really only after one. So they stop manufacturing the other drugs. Some manufacturers get shut down by the FDA. Then Generic Drug User Fee Act (GDUFA) costs are very high. So there is not much competition.”

Burke Therapeutics could manufacture drugs that have been dropped from production, but are very much needed by patients. But Stough said fees and lengthy review processes usually make it cost prohibitive.

“Sometimes the time frame is two or three years for the FDA to act on an application,” Stough said. “If you did get the application approved, then you have to enter the distribution system. If you don’t understand the problems with the distribution system, you can’t understand the high cost of drugs. That is why the politicians, news media and physicians all can’t understand why this drug that was $5 a month is now $200 a month. They think it is just pure greed from pharmaceutical industry. It is not. That is not the whole story. There are numerous reasons patients and healthcare payers pay high prices for drugs.”

Finally, it is difficult and cost prohibitive to get liability insurance for small companies; all the policies are for big companies. Stough said there are drugs he theoretically could manufacture for $1 a pill, but liability insurance starts at $100,000.

While the solutions are complicated, there is growing urgency to do something.

“The growing price of drug costs is not sustainable,” Stough said. “We can’t continue to do this.”