Public Shaming is Not an Effective Drug Pricing Policy

From NBC News: Congress Doesn’t Scare Drug Execs Into Lowering Prices

Excerpt:

Congress’s routine of publicly shaming drug company executives over high prices works no better than a placebo: It may make some people feel better, but it doesn’t treat the problem…

But a review by The Associated Press of the list prices of nearly 30 brand-name medications and generic versions targeted by congressional investigators shows most haven’t budged since coming under federal scrutiny, according to figures from Truven Health Analytics.

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“New Math on Drug Cost-Effectiveness”

Competing commentaries on rising drug prices:

  • Bach PB. “New Math on Drug Cost-Effectiveness” NEJM 2015; 373: 1797-99
  • Chin WW. “A Delicate Balance –Pharmaceutical Innovation and Access” NEJM 2015; 373: 199-1801)

Dr. Bach’s commentary focuses on the exorbitant costs of many medications.  His key points:

  • “The rate of introduction of new and expensive drugs has accelerated; the pace of conversion to generics is slowing; the prices of many generics are rising; and expensive drugs are now being introduced for conditions that affect millions of people rather than thousands.”
  • “Drug prices are increasing more rapidly than their benefits.”

Dr. Chin counters that there have been more than 500 new medications that have been approved in the United States since 2000.

  • “The United States relies on competitive markets to set prices and encourage innovation —a system that, as I see it, is working well.”
  • “The…hepatitis C medications, with cure rates above 90% are a good case study: within a year, competing medications entered the market, driving down prices by about half.”
  • “Any centralized government-purchasing model would probably result in drastically limited choices for physicians and patients.”

Another “must-read” on this topic comes from Ezekiel Emmanuel & the NY Times: I Am Paying for Your Expensive Medicine  Here’s an excerpt:

In July, the Food and Drug Administration approved the first of two new PCSK9 inhibitors that lower the bad type of cholesterol, LDL. Studiessuggest that they can reduce it by up to 60 percent, … and reduce it up to 36 percent more than statins… However, there are no definitive data on how much these drugs actually reduce heart attacks, strokes and deaths from heart disease…the retail price for a prescription would be more than $14,000 per patient per year. The price is particularly steep given that these drugs may need to be taken for the rest of the patients’ lives. How much patients pay directly would depend on their insurance plan….even if the price came down to about $11,000 per patient per year, and only 1.1 million of the roughly 23 million middle-age Americans with high cholesterol actually took these drugs, the bill would be so high that for a typical insurance plan, “annual insurance premiums would increase by $124 for every person” in the insurance plan…

As the PCSK9 story is making clear, the drug cost debate is now beginning to focus on two questions that are currently unresolved: First, how do we determine value so the perspectives of all Americans are considered? Second, how do we implement and enforce that determination of value?…

Many people hope that the drug industry will self-regulate, using value-based pricing of its new drugs. But if past experience is any indication of future behavior, self-regulation may be a pipe dream. 

My take: I don’t agree with Dr. Chin that our system has the right balance at this time, though he is right that too much interference could slow innovation.  In my view, recent high-profile excesses by pharmaceutical companies have strengthened the argument for more government intervention.

Morning in Sandy Springs

Morning in Sandy Springs

 

5000% Increase for Well-Established Drug

There is yet another outrageous example of a pharmaceutical company jacking up the price of a medication, without any added innovation, due to monopolizing its production.

From USA Today: Company hikes price 5000%.  Here’s an excerpt:

Turing Pharmaceuticals of New York raised the price of Daraprim from $13.50 per pill to $750 per pill last month, shortly after purchasing the rights to the drug from Impax Laboratories. Turing has exclusive rights to market Daraprim (pyrimethamine), on the market since 1953.

Daraprim fights toxoplasmosis, the second most common food-borne disease, which can easily infect people whose immune systems have been weakened by AIDS, chemotherapy or even pregnancy, according to the Centers for Disease Control.,,,

About 60 million people in the United States may carry the Toxoplasma parasite, according to the CDC. It comes from eating under-cooked meat, cooking with contaminated knives and boards, drinking unclean water and contact with infected cat feces.

Mothers can also pass it to their children during pregnancy and organ transplant patients can get it through an infected donor.

My take: This type of excessive drug cost increase is why critics demand additional regulation be placed over the entire pharmaceutical industry; it can occur only in a system which indirectly shares the cost across the entire system by having insurance companies foot most of the bill.  In my view, this increase in cost is equivalent to the water company jacking up your water bill 5000% –how would you feel about that?

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“The Solution to Drug Prices”

Worth a read: “The Solution to Drug Prices” by Eziel Emanuel

An excerpt:

WE’RE paying too much for prescription drugs….Despite representing about 1 percent of prescriptions in 2014, these types of high-cost drugs accounted for some 32 percent of all spending on pharmaceuticals….

Almost all developed countries… making drugs available at fixed prices …Drug companies would immediately raise two objections: the high risks associated with drug development and, related, the high cost of research and development. But both of these arguments are fatuous…

Also, as outrageous as they are, prices are not the real issue. Value is. What really frustrates people are expensive drugs that do not provide a cure. For instance, Opdivo adds an average of 3.2 months of life to lung cancer patients and costs $150,000 per year for treatment…

Everyone, including drug company executives, believes that high prices cannot continue. Indeed, that is one reason that companies are trying to maximize profits while they can. We must come up with a comprehensive solution now.