On Sunday, 60 Minutes ran a segment about the high cost of drug therapies. They exposed the rip-off prices Big Pharma charges for certain Cancer drugs. Moreover, the clear message was that if you have a life-threatening disease, it is likely that some drug company has come up with a treatment that may extend your life, at a price. How much would you pay for another year of life? In 2012, of the 12 cancer drugs approved by the FDA, 11 cost over $100,000 per year.
Who wouldnât pay that (if they could) in order to stay alive? 60 Minutes quoted Dr. Leonard Saltz, chief of gastrointestinal oncology at Memorial Sloan Kettering:
And remember that many of these drugs, most of them, don’t replace everything else. They get added to it. And if you figure one drug costs $120,000 and the next drug’s not going to cost less, you’re at a quarter-million dollars in drug costs just to get started.
The big lie told to the American people is that these high prices are necessary for innovation. 60 Minutes asked John Castellani, the CEO of the industryâs lobbying group, PhRMA, to explain why drug prices have to be so high:
The drug companies have to put a price on a medicine that reflects the cost of developing them, which is very expensive and takes a long period of time, and the value that it can provide.
This is, of course, BS. You never buy anything because it costs more to develop. You wouldnât pay more for a car because GM wasted extra money in R&D without results. You buy the car because the car is safer in a collision.
The same with drugs: we should pay what theyâre worth, not what it cost to develop them, particularly if you knew about your options, or were able to negotiate, like you can at the car dealership. The neoliberal meme at work is that profits motivate someone to invent. Perhaps Big Pharma just forgets about Dr. Jonas Salk, who gave his polio vaccine to the public free of charge, demonstrating the big lie spoken by the Big Pharma lobbyist.
Of course sociopathic entities, (that would be our beloved Corporations, who are people now) do not grasp altruism and empathy.
The Food and Drug Administration (FDA) approves drugs if they are shown to be âsafe and effectiveâ, but does not consider what the relative costs might be once the new medicine is marketed. From Bloomberg:
By law, Medicare must cover every cancer drug the FDA approves. (A 2003 law, moreover, mandates payment at the price the manufacturers charge, plus a 6% cushion) In most states private insurers are held to this same standard. Physician guideline-setting organizations likewise focus on whether or not a treatment is effective, and rarely factor in cost in their determinations.
The reality is that the drug companies are taking advantage of the current US law (that they lobbied for) to price their Cancer drugs.
Are these prices a rip-off? Prices for some of these drugs have increased the longer they are available, even though there is no increased research, no additional expenses in order to produce the drug. For example, Bloomberg notes that Gleevec, from Novartis, possibly the greatest cancer drug ever invented, cost $24,000 a year when it was introduced in 2001; now it costs $90,000 per year, nearly quadrupling in price. The typical new Cancer drug coming on the market a decade ago cost about $4,500 per month (in 2012 dollars); since 2010, the median price has been around $10,000. Two of the newest Cancer drugs cost more than $35,000 each per month of treatment.
A final quote from Bloomberg: (Emphasis by the Wrongologist)
While generic drugs… now make up 86% of all medicines used in the US, that hasnât reduced total spending on prescription drugs. In 2012, Americans spent $263 billion, or 11% more than the $236 billion in 2007, according to government data.
Fifty million people went without needed prescriptions in 2012 because they couldnât afford them. Itâs high time something is done about this.
A possible solution is to change the law so that Medicare negotiates volume discounts with the pharmaceutical companies, adding a fixed markup over costs, including R&D, plus the cost to produce and market the drug, and then adding a âfair profitâ say, 20%.
By multiplying the number of probable drug users, the dose frequency, term of the prescription and the length of an exclusivity period, we could determine the cost/dose required to achieve that return. Parenthetically, the government should directly fund antibiotic research and also control the price of those drugs to give the company a fair fixed profit (at a lower return than if the R&D had been paid by the companies).
The drug industry needs to think about how it can limit Cancer and other drug costs, and how to price affordably â before someone decides to do the thinking for them.
