The Boston Globe - 23.08.2019

B6 Business The Boston Globe FRIDAY, AUGUST 23, 2019

In response to the rising cost
of medicines, a growing number
of people with diabetes are
spurning prescriptions
and asking their physi-
cians for lower-cost op-
tions, according to newly re-
leased governmentdata.
Amongadults who were pre-
scribed a diabetes medication in
the past 12 months, 13.2 percent
skipped dosages, took fewer dos-
ages, or delayed filling a prescrip-
tion in order to save money. And
24.4 percent asked their doctor
for a lower-cost alternative.
Women were more likely than
men to not take a medicine in or-
der to lower theircosts, although
they were just as likely to seek a
less-expensive prescription.
Drilling down further, 18 per-
cent of adults under age 65 were
more likely not to take a medi-
cine as prescribed so they could
save money, compared with 7.
percent of those 65 and older.
More than a quarter of those
younger than 65 were likelier to
seek a cheaper prescription, com-
pared with one-fifth of those 65
years and older, according to the
survey by the National Center for
Health Statistics.
Amongdiabetics between 18
and 64 yearsof age, the percent-
age who did not take a medicine
as prescribed or asked a doctor
for a lower-cost drug was highest
among those who wereunin-
sured. Not surprisingly, unin-
sured adults were more likely
than those with private healthin-
surance or Medicaid coverage
not to take a medicine as pre-
scribed.
“Recently, there has been a
shift towards lower-cost options
as the first line of therapy for dia-
betes management. However, the
burden associated with high pre-
scription drugcosts remains a
public health concern for adults
with diagnosed diabetes,” wrote
the researchers at the NCHS,
which is a unit of the Centers for
Disease Control and Prevention.
The findings comeamid an
uproar in the United States over
the prices that people pay for in-
sulin and other diabetes treat-
ments, an issue that has gained
still more attention in recent
months as a growing numberof
Americans drive to Canada to
purchase lower-cost medicines.
Numbers help tell the story:
More than 29 million Ameri-
cans, or 9.3 percent of the US
population, have some form of
diabetes, and about 7.4 million

use insulin. But the average list

price nearly tripled between

2002 and 2013,according to the

American Diabetes Association.

Fifteen yearsago, for instance,a

patient might have paid $175.

for a 20-milliliter vial of the long-

acting insulin HumulinR U-500.

Today, it costs $1,487.

By contrast, a study issued

last fall estimated the cost to pro-

duce a vial of human insulin be-

tween $2.28 and $3.42, while the

cost to produce a vial of most an-

alog insulins is between $3.

and $6.16.

Last year, medicationsto treat

diabetes ranked sixth out of the

top 20 therapeutic classes of dis-

pensedprescriptions, accounting

for 214 million prescriptions, ac-

cording to the IQVIA market re-

search firm. And in 2017,the an-

nual per capita expense for out-

patient medication for diabetics

was almost $5,000, according to

the AmericanDiabetes Associa-

tion.

Consequently, more federal

and state officials are scrutiniz-

ing insulin makers. Recently,

Sanofi, Eli Lilly, and Novo Nor-

disk received subpoenas fromthe

New York attorney general in

connection with an inquiry into

pricing practices.

In recent months, the Senate

Finance Committee and the

House Oversight Committee

launched investigationsinto the

high price of insulin. The Minne-

sota and Kentucky attorneys gen-

eral filed lawsuits accusing the

companies of deceptively raising

prices. And several consumers

filed a lawsuit two years ago, ac-

cusing the companies of collu-

sion.

In Nevada, a new law requires

companies that sell diabetes

drugs to disclose costs and justify

price hikes; Colorado adopted a

law capping the price of insulin

for insured patients at $100 per

month. Other states are explor-

ing similar legislation.

In response, a few states — in-

cluding Florida and Vermont —

have passed laws that would cre-

ate mechanisms for importing

medicines from Canada. But

thesewould require authoriza-

tion from the Trump administra-

tion, whichresponded with a

plan to allow states to work with

wholesalers and pharmacies to

import certain medicines from

Canada, but this would not in-

clude insulin.

As noted previously, Lilly re-

cently began selling a so-called

authorized genericversion of its

Humalog insulin, which means

the medicine is identical to the

brand-name treatment, at half

price. The company also began

disclosing its pricing. Last

March, the drug maker claims

the price it was paid for a key dia-

betes treatment fell by 8.1 per-

cent over the past five years, after

subtracting rebates and other

discounts.

A monthlater, Sanofi began

offering a program to lower the

cost of the diabetes treatment to

$99 a month for uninsured pa-

tients and others who pay cash in

the United States. The move was

made just hours before one of its

executives was set to testify at a

congressional hearing to review

insulin pricing.

EdSilverman canbe reachedat

[email protected].

Follow him on Twitter

@Pharmalot. Follow Stat on

Twitter: @statnews.

Cost of diabetes drugs forcing a shift

ByAlex Tanzi

BLOOMBERG NEWS

Bigger cracks are forming across

America’s manufacturingfounda-

tion as lackluster globaldemand

and persistent trade tensions led to

the first contraction in US manu-

facturing since September 2009.

The IHS Markit manufacturing

PurchasingManagers’Index

slipped to 49.9from a final July

readingof 50.4, accordingto a pre-

liminary August report Thursday

that trailed all estimates in

Bloomberg’s survey of economists.

Fifty is the dividing line between

expansion and contraction. The

reading for the United States fol-

lows others from Europe and Japan

that showedshrinking factory ac-

tivity.

The US data underscorethe

complicated challenge facingFed-

eral Reserve chairman Jerome Pow-

ell and his colleagues — a battered

manufacturing sector, beset by

global fragility and trade tensions,

and an invigorated Americancon-

sumer powered by still-robust em-

ployment and incomes.

The IHS Markit’s gauge of man-

ufacturinghas declinedfive points

since this year’s peakin January, ac-

cordingto the report which also

showed the largest contraction in a

decade for domestic ordersand

bookings from abroad.

The figuressurfaceaheadof

Powell’s opening remarks Friday at

the central bank’s annual Jackson

Hole symposium.Commentsfrom

otherFed officials show the difficult

task Powell has in delivering finan-

cial markets a consistent message

about changing monetary policy.

KansasCity Fed Bankpresident

Esther George, in an interview with

BloombergTelevision aired Thurs-

day, said the economy doesn’t need

lower interest rates.

“When I lookat whereunem-

ployment is and I look at where in-

flation is rightnow, I think we’re in

a good place as long as the consum-

er can continue to pull the economy

forward,” George said.

US stocks fell after Fed officials,

including George, cast doubt on

further interest-rate cuts and as

traders assessed mixedeconomic

data. Treasuries fluctuated.

A week ago, the Commerce De-

partment reported that retail sales

rose by the most in four months.

The fifth-straight advance indicates

Americans,buoyed by plentiful jobs

and wage gains,remaincomfort-

able spending. A separate release

Thursday showedapplicationsfor

jobless benefits at a four-week low.

Earningsfromcompaniessuch

as Walmart Inc. and Target Corp.

have alsosignaledconsumers’

strength.

At the sametime,a factory

gauge fromGeorge’s district

showed the worst contraction in ac-

tivity sinceMarch 2016. Further-

more,Fed officialsmust keep in

mindthe risk that the retrench-

mentin manufacturing will spill

over into the broadereconomy. The

IHS Markit gauge of businessat US

service providersfell to 50.9 from

53 in July and matchedthe lowest

since February 2016.

Thursday’s US factory reports

follow other preliminary IHS

Markit data showing manufactur-

ing shrank again in Germany and

Japan, whilestabilizing in France.

The Germanmanufacturing sector

shrank for an eighthconsecutive

month,underscored by a more

than25-point decline in a gauge of

outputprospects over the last two

years.

“The survey’s output data ha-

ven’t changed enoughto dispel the

threat of another slightcontraction

in GDP in the third quarter, espe-

cially giventhe deterioration in the

forward-looking indicators,” Phil

Smith, an economist at IHS Markit,

said in a statement.

Japan’s manufacturingsector

contracted for the fourth month,

while in France,the index reversed

to show tepid growth.

US business expectations for the

year ahead reached the lowest level

in data backto July 2012, the IHS

Markit data showed.

Sluggish global demand is caus-

ing service firms to cut prices at the

sametimeinput costs weaken. A

measure of prices charged contract-

ed by the most since records began

in October 2009.

Report

shows

toll on

factories

Shrinkage blamed

onweakdemand

and tradetensions

ByMatt Day
BLOOMBERG NEWS
Amazon.comInc., criticized
for wieldingtoo muchpower
over third-party merchants on its
marketplace, said it will spend
some$15 billion this year to help
themboost sales.
The sum includes investments
in the company’s warehouse net-
workdedicated to storingand
shippingsellers’ items and per-
sonnel whooperate the digital
marketplaceand deal withindi-
vidual merchants. It also includes
developing new services, such as
a dashboardthat helpssellers de-
cide what new products to carry,
and a revampedtraining pro-
gram.
NicholasDenissen,a vice
president, declinedto say how
the company’s anticipated $
billion in spendinghad changed
from 2018 or what portionof
Amazon’s companywide expens-
es it represents. “I would say it’s a
lot of money,” he said.
Besidesbuying and selling
goods itself, Amazon has for
more than a decade rented space
on its websiteto third-party sell-
ers — many of themmom-and-
pop merchants — who last year
accounted for 58 percent of the
company’s unit sales.
Many of thesesellershave
built profitable businesses on
Amazon. But somehave com-
plained in recent years about the
risingcosts of usingthe compa-
ny’s logistics network and buying
ads to stand out on the increas-
ingly cluttered website.Some
have tried to reduce their reliance

on the site by sellingon Wal-

mart.com and EBay, but are re-

signedto the fact that Amazon

generates most of their sales.

DenissensaidAmazonhas

beenresponsive to sellerfeed-

back.“I can’t think of one meet-

ing or one day I’ve beenin where

somebodyisn’t obsessing or

fighting on behalf of selling part-

ners,” he said.

The Seattle-basedcompany’s

relationship with independent

sellers has also drawn scrutiny

amid a broader examination of

whether US tech giants are violat-

ing antitrust law. The European

Union is investigating whether

Amazon is shortchanging smaller

merchants.In the United States,

the Federal Trade Commission

has spoken to at least one Ama-

zon seller, and the regulator’s

chairmansaid he would be inter-

ested in hearing frommore.

Amazonin the last few years

has made merchantsfixtures of

its marketing and lobbyingcam-

paigns, an effort to portray itself

as a friend of the little guy rather

than a behemoth putting Main

Street shops out of business.

Denissen,whofor the last few

yearsoversaw new programs

gearedtoward small- and craft-

sellers as vice president of “mar-

ketplace business,” took on a new

title in July as VP of “smallbusi-

ness.”

“Thinkof me a little bit as the

voiceof small businesses,” inside

Amazon, he said.

This year the company rolled

out reduced storage fees for sell-

ers who take Amazon’s sugges-

tionson inventory levels and a

program that automates pricing

while guaranteeing merchants a

minimum price. One service, a

seller performance dashboard, is

designedto warnsellers who ar-

en’t meeting Amazon standards

before cutting them off. The com-

pany has released morethan 150

new tools,including programs

madewidelyavailable after ini-

tial launches in the United States.

“Their success is our success,”

Denissen said of Amazon’s sell-

ers. “We’d be morethan stupid to

not listen to them, or ignoreany

concerns that they have.”

Amazon launches

$15b small business

charm offensive

LYNNESLADKY/ASSOCIATED PRESS/FILE 2018

A UPS

employee

unloaded

Amazon

packagesfor

delivery in

Miami.Much of

Amazon’s

businesshas

comefrom

independent

sellerswhouse

theplatform.

The company is

nowtryingto

respondto

someof their

complaints.

JUSTIN COOK FORSTATNEWS/FILE

Empty insulin

bottlesat the

Johnston

County

Workforce

Development

Center. A

growing

numberof

peoplewith

diabetesare

nottaking

medicineas

prescribedto

save money, or

areaskingtheir

physiciansfor

lower-cost

options,

accordingto

newlyreleased

government

data.

EdSilverman

PHARMALOT

STAT

Manysellershave

builtprofitable

businesseson

Amazon.Butsome

havecomplainedin

recentyearsabout

therisingcosts of

usingthe

company’slogistics

network.