A recent BMJ study challenges the high price of new drugs
In the old Popeye cartoons (many will have no idea what I’m talking about), our hero’s recurring line was “It’s all I can stands – I can’t stands no more.” That’s the way I’ve felt about big pharma for a very long time, but recently we have really had our nose rubbed in it.
A month ago I went to a pro tennis tournament and among the exhibitors was one for EpiPen. I thought this was an unusual exhibit for a tennis tournament. On taking my seat I saw a big banner for Mylan over the court. It was the major sponsor of the tournament. I had no idea what Mylan was or what they did. Then the dots were connected — Mylan makes the EpiPen.
Coincidentally, almost immediately after I went to the tournament, it hit the fan for Mylan and the EpiPen. Although multiple articles have spotlighted the price gouging by Mylan, the Los Angeles Times nicely summarized broader industry patterns in their recent editorial “Getting Stuck by the EpiPen”. The bottom line – Mylan bought the company that made the EpiPen in 2007 and since then the price has gone from $94 to $608 despite there being no discernable improvements or changes in the product. The article then goes on to give multiple examples of other drugs that have had price increases of between 3,000% and 5,000%.
In response to the outrage over the EpiPen price increase (even Hillary Clinton and Congress are calling for an explanation) Mylan, instead of just an across the board price cut, decided to expand a program that supplements costs to lower income patients and to release a generic version for about $300. That’s right – you can pay either $600 or $300 for the same product made by the same company.
Of course, EpiPen is just the most recent example of how the pharmaceutical industry can just about do whatever it wants when it comes to pricing. Take albuterol inhalers. When the government outlawed the propellant in the original inhaler due to concerns that it was destroying the ozone layer, the new propellant allowed the inhaler to become a “new” drug. The price then shot up from about $12 to $60 and there were no longer any generic options. Oh and don’t even get me started about the ludicrous pricing of the hepatitis C drug – $1,000 a pill per day for 12 weeks – $84,000 in total. The rationale – it is cheaper than getting a liver transplant. Unbelievable.
So how did we get into this mess? Here are a few thoughts. In 2006 Part D Medicare was established under the Bush administration. This insurance program allowed Medicare patients to opt into a program that would provide prescription drugs. But there was one catch – Medicare, the largest drug purchaser in the U.S. was not allowed to bargain with the drug companies on price even though both the VA and the military can. Ka ching – drug company profits immediately soared.
And then there is the massive amount of lobbying money. For example, citizens in California recently rallied to get a proposition on the November ballot called the Drug Price Relief Act. This act would require that any drugs paid for either directly or indirectly by the state could not be priced above what the VA pays. As anticipated, big pharma is not happy about this and has contributed $68.5 million (versus the supporter’s 4.4 million) to defeat it. With those numbers, who do you think is going to win (again)?
Although it is easy to find innumerable articles on the absurdity of drug pricing, here’s the latest one from the EMA collection. It is a good read and the original article is readily available.
PROPAGANDA OR THE COST OF INNOVATION? CHALLENGING THE HIGH PRICE OF NEW DRUGS
[Ghinea, N., et al, BMJ 352:i1284, March 11, 2016]
Drug prices are rising so rapidly that even dire predictions of future spending are proving to be underestimates; this level of growth is clearly unsustainable. These Australian authors review the problem and try to determine whether the true cost of drug development justifies the high prices. Many extremely expensive drugs for rare diseases can exceed $225,000 per year yet offer very low value in terms of quality-adjusted life-years. A widely quoted 2014 study estimated that drug development costs $2.6 billion, but critics note that the study did not acknowledge taxpayer funding (estimated at 85% of all basic research for cancer drugs) or the fact that drug companies often do not touch their own cash reserves for funding research, while deceptively including marketing costs in their R&D estimates. Large pharmaceuticals reap profits of 30%, and the industry as a whole makes profits up to 37 times higher than those of other industries. Unfair pricing is also due to government programs and industry deregulation, companies’ gaming the system (eg, to extend patents and prolong high pricing), and arbitrary price hikes after drug acquisitions (eg, Turing Pharmaceuticals’ effort to increase the price of pyrimethamine by 5000%). Determining a “fair” price for a drug is complex and would depend on the true costs of development, market size, uniqueness of the agent, affordability, and other issues. In the interim, stakeholders must be informed about the actual costs of research and manufacturing for each specific drug. Industry must be more forthcoming (with less concern about profits and confidentiality) and the public realistic (acknowledging the need for fair industry profits); payers can facilitate accountability by favoring companies that disclose costs.
41 references (email@example.com – no reprints) Copyright 2016 by Emergency Medical Abstracts – All Rights Reserved 8/16 – #26
It’s no surprise that the U.S. pays more for drugs than any developed country and unlike our neighbor Canada, we can’t buy them at discount price from third world countries. What are the real reasons behind our government’s hyped up pharmaceutical regulations? What are the real risks of importing potential counterfeit or otherwise inferior drugs – are the Canadians really dropping like flies?
Although there are literally hundreds of examples of drug price gouging easily accessed on the internet, we’ll close with a paper comparing antibiotic use in children in the U.S. and the U.K. As might easily be intuited, we virtually sheep-dip our children in antibiotics from an early age. Compared to the U.K. our children are prescribed antibiotics 50% more frequently and are prescribed drugs with significantly (unnecessary) broader spectrum and for longer periods of time. In this study of about 160,000 children annual costs for antibiotics in the U.S. were estimated to be about $2.5 million vs about $480,000 in the U.K.. Embarrassing on many levels.
COMPARISON OF PRESCRIPTION DRUG COSTS IN THE UNITED STATES AND THE UNITED KINGDOM, PART 4: ANTIBIOTICS IN YOUNG CHILDREN
[Jick, H., et al, Pharmacotherapy 34(4):324, April 2014]
BACKGROUND: Disparities in healthcare costs between the USA and other developed countries has been the subject of much attention. Prescription drugs are a substantial contributor to overall healthcare costs.
METHODS: The authors, from Boston and Brandeis Universities in Massachusetts, examined information from the British General Practice Research Database and a comparable US database containing information from private health insurance companies to compare the costs of antibiotics prescribed in 2009 for matched cohorts of about 160,000 children below the age of nine included in each database.
RESULTS: At least one antibiotic prescription was documented for 75% of the US cohort but 50% of the UK cohort, and the estimated average duration of treatment was 9-11 days vs. 6-7 days, respectively. Amoxicillin was the antibiotic most often prescribed in both countries. In order of frequency, amoxicillin was followed by azithromycin and amoxicillin-clavulanate in the US but by penicillin V and flucloxacillin in the UK. The cost per prescription ranged from $1.17 to $35.86 in the US, compared with $2.17 to $19.59 in the UK. The estimated average annual cost for prescription antibiotics in this age group was $2,525,000 in the US compared with $477,000 in the UK.
CONCLUSIONS: This study highlights substantial differences between the US (privately insured) and the UK (universal governmental insurance) in the percentage of children below the age of nine years who are prescribed an antibiotic, the duration of antibiotic treatment and the types of antibiotics prescribed. The cost of antibiotic use in this age group was more than five times greater in the US than in the UK.
24 references (firstname.lastname@example.org – no reprints) Copyright 2014 by Emergency Medical Abstracts – All Rights Reserved 9/14 – #24
There are few components in U.S. healthcare that are more discouraging than the dominance of big pharma. As an industry, as noted in the first abstract, profits far exceed those of other major industries, their lobbying efforts are extraordinary and Congress has neither the will nor the courage to take them on. So certain cancer drugs will continue to cost $225,000 a year and drug companies will use just about every trick in the book to charge whatever they can get away with. Capitalism has a lot of good things about it – but trying to make as much money as you can in healthcare is not one of them.