The main reason drug makers demand such prices is because they can.
USA Today – In the good-news/bad-news world of blockbuster drugs, the latest is the launch of Sovaldi, a drug to treat hepatitis C.
Sovaldi comes with a cure rate as high as 90% for a disease that afflicts 3 million people in the United States, and with fewer complications than previous treatments.
But it also comes with a scary side effect: a price of $1,000 a pill.
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Because the pills must be taken once a day for 12 weeks, the cost of treatment comes to $84,000, plus thousands more for other drugs included in the protocol. Even with a generous insurance policy, a patient would likely pony up more than $20,000.
And how does drug maker Gilead Sciences arrive at that price?
The answer can be hard to come by. Last week, two U.S. senators, Democrat Ron Wyden of Oregon and Republican Chuck Grassley of Iowa, asked Gilead to explain its pricing for Sovaldi. If the lawmakers can pry some concrete answers, it would give the public a much needed look inside the opaque world of drug pricing.
Skyrocketing prices are everybody’s business: They push up health care spending and produce what oncologist Hagop Kantarjian calls “a Darwinian form of health care” where people who can afford drugs live and those who can’t die.
Sovaldi is a bit of an outlier. The most expensive drugs tend to be cancer treatments. Few offer the cure that Sovaldi holds out for so many people. Many extend life for just a few months. What connects all these drugs is their astronomical prices and the murky reasons behind them.
Since the early 1990s, the median price of new cancer drugs has risen eightfold, from about $1,200 a month to more than $9,700 a month. The main reason the industry demands such prices is because it can. The market for treating deadly diseases is unmoored from the pricing constraints that affect other products, from cars to computers.
Often, there is no competition. Patients and their loved ones, desperate for a few precious months of life, want the drug regardless of the price. Usually, they’re not the ones footing most of the bill. Medicare and private insurers are. Insurers or doctors who balk at the sky-high prices risk being branded for rationing life and death.
The most oft-cited rationale for high prices is that they reflect the costs of research, development and government approval, pegged by the industry at an average $1.3 billion per drug. But in a recent article in the AARP Bulletin, Kantarjian and Donald W. Light argue that the real figure is closer to $125 million.
In a few cases, doctors are fighting back against outrageous markups. In 2012, when the colon cancer drug Zaltrap came on the market at $11,000 a month, Memorial Sloan-Kettering hospital in New York decided not to use it. Within weeks, Zaltrap’s maker began cutting the price. Today, it’s about $4,300 a month.
Public protest can work occasionally. It should not be necessary when lives are at stake. Gilead, which had $2.3 billion in sales for Sovaldi in its first full quarter alone, and the rest of the industry can well afford to show a little restraint.
If they don’t, they should expect more clamor for restraint to be imposed upon them.
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