Opinion: Let’s not talk drug price, without value.
Author: Peter J. Pitts
In medicine, it’s considered good practice to figure out what’s causing a patient’s illness before prescribing the cure.
When it comes to pharmaceutical pricing, politicians and special interest groups should do the same. Recently, politicians along with the nonprofit Public Citizen have slammed pharmaceutical firms for “needlessly high” drug prices. Public Citizen, specifically citing the $1,000-per-pill hepatitis C drug Sovaldi, have called for the government to step in and control prices in the drug industry.
The treatment plan? Very recently, Bernie Sanders has called for “wartime powers” to break the patents on drugs. Hillary Clinton has proposed regulating drug prices.
Unfortunately, while good intentioned, all these are responses to a symptom without understanding the underlying cause for the high cost of some drugs. And this prescribed treatment, price controls, has real side effects. When it comes to the price/value debate it’s important to look at the whole picture.
Some drugs are more expensive, but also more effective.
Consider Sovaldi. A 12-week course of treatment costs $84,000, which is more expensive than past hepatitis C treatments — but it’s also more effective. Pegasys, one alternative treatment for Hepatitis C, requires one injection a week for 24 or 48 weeks. Sovaldi not only cures patients 2-4x faster than does Pegasys but also doesn’t cause the same severe side effects. That means patients are more likely to complete the regimen, rather than wasting money by dropping out of treatment prematurely, as many used to do.
Upfront drug costs prevent major expenditures later. High-tech pharmaceuticals prevent patients from developing more serious conditions that require expensive procedures, hospital stays, or doctors’ appointments. About one in five hepatitis C patients ultimately suffers cirrhosis of the liver. Sovaldi stops these patients from needing liver transplants, which can cost nearly $600,000.
Data recently published by the PwC Health Research Institute suggests that the use of Sovaldi will actually drive down overall spending within a decade.
Drug development is a lengthy, expensive undertaking. The average new treatment costs $2.6 billion and takes over a decade to develop. Even so, more than 88 percent of tested drugs fail to secure FDA approval. Today it takes about 10,000 new molecules to produce one FDA-approved medicine. This observation itself is disconcerting, but further, only three out of 10 new medicines earn back their R&D costs. If the government steps in and ratchets back the price of expensive medications, pharmaceutical innovation will grind to a halt. If the United States had implemented European Union-type price controls back in 1980, up to $256 billion worth of research would have been lost, according to one study.
Generics are a solution but also have hidden costs. “Mandatary generic substitution’ is a good way to save payers money in the short term (including our nation’s largest payer—Uncle Sam), but it often has a deleterious impact on patient care — an issue that is researched and quantified. This is even more important when it comes to medicines that have a narrow therapeutic index. A study fielded by the National Consumers League demonstrated that switching a patient to a generic medicine doesn’t always result in positive outcomes: only a third (34 percent) felt that the substituted medication was just as effective as the original medication.
When it comes to the price/value debate it’s important to look at the whole picture. The repercussions of choosing short-term savings over long-term results, of cost- based choices over patient-centric care are pernicious to both the public purse and the public health. Skimping on a more expensive medicine today but paying for an avoidable hospital stay later is a fool’s errand.