By Jill Zorn
Pharmaceutical companies are being called out in fairly graphic terms for price gouging, influence peddling and deceptive, dangerous marketing practices. Here are some recent headlines:
This blog will focus on the outrageous and ever-increasing price of drugs, leaving patient safety concerns and the conflicts of interest that are rampant in the regulatory process overseen by the Federal Drug Administration (FDA) for another day.
New drugs are coming on the market with huge price tags. Life-saving Hepatitis C drugs cost as much as $100,000 a year. Many patients have to fight to get their insurers to cover them. And this cost has an impact on state and federal budgets, too. California estimates that paying for the new Hepatitis C drugs will cost the state up to $300 million a year.
At least these new medications have clear benefit and replace drugs that were not nearly as effective. But what about the new class of cholesterol-lowering drugs coming on the market?
They are arriving with steep price tags of $14,000 a year compared to traditional statins which cost about $100 a year. A recent analysis published by the Institute for Clinical and Economic Review (ICER) found, that while they may help some patients, these new drugs are vastly overpriced.
Another troubling trend is that the prices of existing medications are going through the roof. The cost of drugs to treat Multiple Sclerosis according to one study published in the journal Neurology, has increased by about 30 percent per year. And when new drugs come on the market, the price of the older drugs are continuing to rise:
The standard economic principle that more choices will drive down prices doesn’t always apply in the topsy-turvy world of drug economics, especially in the United States….Drug companies are acting much like a cartel such as OPEC, says Stephen Schondelmeyer, a pharmaceutical economist at the University of Minnesota. He says the companies must figure,
“If we all keep moving [our prices] up and nobody moves down, we can get away with raising the price, because if a person has multiple sclerosis, what other choice do they have?”
Today’s New York Times highlights a shocking example of a price jump for an existing drug. The drug in question treats toxoplasmosis, a parasitic infection that is a common complication for people living with AIDS and has been in use for 62 years.
In August, a start-up pharmaceutical company founded by a former hedge fund manager purchased the drug. The company, Turing Pharmaceutical, then raised the price from $14.50 per pill to $750 per pill. Two physician groups called the increase, “unjustifiable for the medically vulnerable patient population” and “unsustainable for the health care system.”
How to fight back
A recent Boston Globe article, profiles ICER’s efforts to take aim at rising drug prices.
The law that expanded Medicare to cover the cost of prescription drugs specifically forbids Medicare from negotiating better prices with pharmaceutical manufacturers. The National Committee Preserve Social Security and Medicare and other advocacy groups are fighting to overturn that ban. This New York Times editorial supports that effort.
At the state level, legislation seeking greater transparency on the costs of drug development and marketing is moving forward in several states. Massachusetts is also considering legislation to cap the prices of certain high cost medications.