The Cost of a Cure: What’s the Right Price?

Recently, two significant pharmaceutical breakthroughs have resulted in a renewed debate about the costs of drug therapy. In the last year, a new drug class for the treatment of Hepatitis C has been released by two different manufacturers and has been found to cure a once incurable chronic liver disease for nearly 90% of patients who are treated with a full course of therapy. The drug appears to be safe and highly effective—however, the cost of a curative course of therapy is nearly 80K dollars. As you might imaging, there are already barriers to access for many patients including those treated in the Veterans’ Affairs (VA) system as well as those on government based insurance programs such as Medicaid.

In the last several months, another remarkable, potentially “game changing” drug has been approved and released into the market. These drugs, made by Regeneron and Sanofi, are intended for patients who do not achieve adequate cholesterol reduction with standard statin therapy (the current standard of care).   According to some analyses, these drugs, when used in the appropriate patient population, may result in the prevention of thousands of cardiovascular related deaths. However, just as seen with the new hepatitis C drugs, the price tag for therapy is exorbitant—nearly 15K dollars annually. With the Hepatitis C drug, therapy is only required for approximately 12 weeks and then is no longer needed—with the cholesterol drug, the therapy will most likely be lifelong.

This month a study examining the cost effectiveness of these new cholesterol drug has been published and concluded that the drugs are far over-priced (nearly 3 fold) for the benefit that they produce. Based on a pure economic analysis, researchers concluded that the drugs should actually cost between 3K and 4K dollars annually rather than the current 15K price tag.

Did Healthcare Reform Forget Big Pharma?

The purpose of the Affordable Care Act (ACA) (as touted by supporting politicians and its authors) is to make health care accessible and affordable to all Americans. Certainly this is a noble goal and one that we should continue to strive to achieve. However, the legislation has failed to meet this mark. While addressing physician reimbursement and clinical behaviors (and limiting choice and physician autonomy), the ACA has done nothing to regulate the high price of pharmaceuticals. Big pharma is allowed to charge exorbitant prices (whatever the market will bear) without regulation. It is clear that pharmaceuticals must reclaim their research and development investments and make a profit—however, many of these drugs are far overpriced and pricetags are simply designed to exploit the system and maximize corporate (and CEO profits). IN addition, many of the most expensive drugs in the US are sold overseas and in Canada at a fraction of the cost. This seems to me to be clear evidence of the pharmaceutical industry taking full advantage of the inherent wealth in the US today.

However, Would it not follow that if we placed limits on the prices of new drugs and paid “fair and equitable” charges, that healthcare costs would significantly decline?

It seems our politicians have sought to attack the problem from a few angles and have failed to address other significant sources of excessive healthcare spending. While reimbursement for physicians and physician groups are set clearly in the crosshairs of the ACA, it appears industry and litigators are not even on the radar. There is hope—legislation is being introduced that will allow legal purchase of drugs from Canada for Americans. In addition, pharmaceutical companies would be required to disclose what they charge for the same drugs in other countries. I believe this is a step in the right direction. Lets continue to innovate and provide new therapies for ALL Americans. But lets do it in a way that is cost effective. The latest studies make it clear that these drugs are overpriced. We must find a way to negotiate a fair and reasonable price that promotes and rewards innovation BUT also provides access to the newest and most effective therapies for all who need it.

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One response to “The Cost of a Cure: What’s the Right Price?

  1. Dr. Campbell, your point is well taken–the cost of drugs in the US is astounding to say the least, and we definitely need to address it. The transparency you mention would be a great first step. I personally think the ACA represents a significant and positive step for healthcare in our country, despite this hole in its scope. Do we know why pharmaceutical prices were so wholly excluded from ACA provisions? The cynic in me wonders if Big Pharma lobbyists had a hand in the omission. The optimist in me wants to think that the writers of the bill wanted to first address access, and knew that the journey toward equitable care would include drug pricing reform a little farther down the road.
    What do we know about this? Were drug pricing provisions included and then later discarded? What discussions occurred in the making of this long and complex piece of sausage?

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