Drug prices in the U.S., while always a source of controversy, have come under intense attack of late. A recent article in the Wall Street Journal highlighted the differences in the costs of drugs in the U.S. versus other countries, particularly Norway, again raising concerns that the U.S. is paying more than its fair share when it comes to this sector of healthcare. At the same time, Senators Wyden and Grassley issued a report attacking Gilead, the company that developed the first hepatitis C cure, for its pricing of Sovaldi, saying that “Gilead pursued a calculated scheme for pricing and marketing its Hepatitis C drug based on one primary goal, maximizing revenue, regardless of the human consequences.”
Prices for the hepatitis C drugs have caused particular outrage. Gilead’s initial price of $1,000/pill meant that the 12-week regimen of Sovaldi necessary to cure this disease would cost $84,000. Despite the fact that wiping out hepatitis C would result in enormous costs savings by eliminating the downstream consequences of liver cirrhosis, cancer and liver transplants, and SAVE LIVES, the thought of $1,000/pill was appalling to Americans, especially as the prices being paid in the U.K and Germany for a course of Sovaldi therapy were far cheaper at $55,000 and $67,000, respectively. Insurance companies were particularly outraged by Gilead’s pricing strategy, as expressed by Ms. Karen Ignagni, president of America’s Health Insurance Plans: “The company is asking for a blank check which, if granted, will blow up employer benefit costs…and wreak havoc on the Federal debt.”
Amid all of the wailing and gnashing of teeth on drug prices, it was stunning to hear recent comments by Dr. Steve Miller, Chief Medical Officer of
Are U.S. drug prices really going through the roof?
What most stories about drug pricing omit is that the large payers like Express Scripts and
So where is the disconnect here? Why are politicians howling about the price of drugs? The problem is that the government is prevented by Congress, the same Congress that houses Senators Wyden and Grassley, to negotiate the pricing of drugs covered by Medicare. It is this segment of the drug pricing debate that gets highlighted in the drug pricing discussions, and the area highlighted when the biopharmaceutical industry is attacked on this topic.
From the standpoint of the American people, the fix is easy – change the law and allow Medicare to negotiate. This position is being advocated by Presidential candidate Hillary Clinton. However, this will have consequences. As Dr. Howard Dean, former Governor of Vermont and Democratic National Chairman, warned in a letter to the New York Times:
The American drug industry is the most successful and innovative in the world in addition to being the most expensive because we are the only country that pays the true research and development costs not only for Americans but for the rest of the world…. But schemes to launch a federal attack on one of the last, growing, innovative industries in America are in the long run counterproductive for both job creation and, more important, for the health of human beings around the world. By all means, let us try to reduce the costs of drugs. But over the years, advances in drug efficacy and scope have saved us far more in hospital costs than we have spent on drugs.
Biopharmaceutical companies invest roughly 15% of top line revenues back into R&D. Limiting top-line growth has the consequence of limiting new investments in research. At a time when new insights into the causes of diseases are being made on a daily basis, cutting back research efforts would certainly not be in our best interests.
The issue of drug prices in the U.S. cannot be simply summarized in the headlines that are now demonizing the biopharmaceutical industry. As Dr. Miller said, there are millions of Americans for whom certain drug costs are similar, if not lower, than those for Europeans, a fact that few Americans appreciate. Before any national debate occurs on price controls for drugs, it behooves us to understand fully all facets of this issue.
