Drug Price Reform — When, Not If

Brand name drugs are expensive.  They’re more expensive in the US than elsewhere, but they’re still expensive, regardless.

Prices are based on a number of factors, including what manufacturers think they can get insurance companies and governments to accept.  List prices are paid by consumers without health insurance.  Insurers and government programs pay negotiated rates often substantially below list.

Prices are supported by patent and exclusivity laws that protect original manufacturers.(2)  The US is the leader in this, to the point that drug companies will discard work on promising medicines if they believe they cannot obtain patents for them.(1)  For US consumers, it means they pay higher prices than people in other countries for the same drugs from the same manufacturers.  Congress has also made it illegal for US consumers to buy drugs elsewhere and bring them into the US.

“The current model for cancer drug pricing is not sustainable and harms patients and families as well as our health care system.” (5)

“Americans with cancer pay 50 percent to 100 percent more for the same patented drug than patients in other countries. As oncologists we have a moral obligation to advocate for affordable cancer drugs for our patients.”(6)

Take GSK’s Advair inhaler as an example.  The cash price of the 500/50 version of the inhaler for a consumer without insurance in the US is between $560 and $600 for a one-month supply.(3)  The price for the same product in Canada is $84.00.(4)  Some US consumers with insurance will pay a higher copay than the cash price in Canada.  With Horizon Omnia, I was quoted a price of over $300 for this drug by the pharmacy department at Wegman’s.

Prices are becoming detached from research costs.  The price for insulin for the treatment of diabetes has tripled in the last decade, despite the fact that the product has been largely unchanged for decades.(7)  (Synthetic insulin was introduced in the US in 1982, following development in India.)

Some people are angry about pricing, and one country is finally taking action.  Colombia has ordered Novartis to lower the price of its leukemia drug, Gleevec.  If the company does not comply, Colombia has threatened to break the patent and issue licenses for production of a generic version of the product.  According to Fox News, members of the US Congress are involved in lobbying the Colombian government to protect the drug company.  US Senator Orin Hatch of Utah is one of the people named in the news report as having close ties to the pharmaceutical industry.(8)

Whether Colombia breaks the current pricing model, or it happens elsewhere, it’s just a question of time.  Current prices are artificial and based on government intervention in the markets, and not on free market economics.

However, that’s the paradox that some conservative politicians like to ignore:  one is against government controls unless the controls lead to higher profits for your friends.

 

 


Sources:

(1) Frakt, Austin. “How Patent Law Can Block Even Lifesaving Drugs,” The New York Times.  28 Sept. 2015.  http://www.nytimes.com/2015/09/29/upshot/how-patent-law-can-block-even-lifesaving-drugs.html?_r=0

(2)  “Frequently Asked Questions on Patents and Exclusivity.”  US Health and Human Services, Food and Drug Administration.  http://www.fda.gov/Drugs/DevelopmentApprovalProcess/ucm079031.htm#How%20many%20years%20is%20a%20patent%20granted%20for?

(3) GoodRX.com.  http://www.goodrx.com/advair-diskus?form=inhaler&dosage=500mcg-50mcg&quantity=1&days_supply=&label_override=Advair%20Diskus

(4) Canada Pharmacy Online.  http://www.canadapharmacyonline.com/DrugInfo.aspx?name=Advair+0042

(5) Fred Hutchinson Cancer Research Center. “Expert opinion on how to address the skyrocketing prices of cancer drugs,” Science Daily.  12 February 2016.

(6) Mayo Clinic.  “Oncologists reveal reasons for high cost of cancer drugs in U.S.”  Science Daily.  16 March 2015.

(7) University of Michigan Health System,  “Sugar shock: Insulin costs tripled in 10 years, study finds,”  Science Daily.  5 April 2016.  https://www.sciencedaily.com/releases/2016/04/160405122030.htm

(8) “Colombia battles world’s biggest drugmaker over cancer drug,” Fox News Health.  18 May 2016.  http://www.foxnews.com/health/2016/05/18/colombia-battles-worlds-biggest-drugmaker-over-cancer-drug.html

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