Life – No Price Too High!

A recent visit to my pharmacy prompted me to think about why it was I was paying so much for the “magic bullet” that was going to rid me of the flu. How is the price of a drug determined? What is the reason for one drug being more expensive than the other, yet both, ultimately, performing the same role?

The overall R&D costs for a new medicine can easily exceed a billion dollars. But drug pricing is set by the value that the new drug brings to the healthcare system – value that is increasingly determined by payers such as insurance companies, governments and even physicians.

A clear demonstration of this occurred in March 2013 with the approval of Biogen Idec’s new drug for multiple sclerosis, Tecfidera. Biogen Idec priced this drug at $54,900 per patient per year believing that the price, “represents a solid value to the MS community” in terms of efficacy and ease of administration. The active ingredient of Tecfidera is dimethyl fumarate, a chemical that organic chemists use commonly in lab experiments and costing $56.20 per 1000 grams! Clearly the price has been set based on the value of this product in treating MS based on the benefits that this drug will bring to patients and the savings to health care systems in treating this disease.

Drugs for rare diseases have very high price tags. Soliris, from the biotech company Alexion, is a drug for treating a rare form of anemia and a rarer kidney ailment known as atypical hemolytic syndrome. Only a few thousand patients in the world can benefit from Soliris and, to get a significant return on its investment, Alexion priced this drug at $440,000 per patient per year. Yet, private insurers, national health agencies and governments like the UK are willing to pay this price. The reason is simple: the costs of caring for these patients can run into millions of dollars per year. Making Soliris available to patients, healthcare systems actually SAVE money despite the price.

When Dr. Marcus M. Reidenberg (Professor of Pharmacology, Medicine, and Public Health, Assistant Dean, Weill Cornell Medical College) was editor of the the American journal, Clinical Pharmacology and Therapeutics, about a decade ago, he tried repeatedly to get drug manufacturers to write an article on how they priced medicines. No one took him up on the offer. “The price,” he concluded, “is whatever the market will bear.” For many doctors and health economists that conclusion was affirmed in December 2013 with the approval of Sovaldi, the first drug to cure hepatitis C.

Awaited by patients and doctors as a medical revolution, most were agog when its maker, Gilead Sciences, affixed its price: $86,000, or $1,000 a pill, for a six-week course. Yet many patients are unable to use the medicine as they cannot afford it. “Costs alone cast a pall over the stunning success in achieving the long-hoped-for goal of a safe and effective therapy for hepatitis C,” a recent article in The New England Journal of Medicine said.

It has become harder to claim that it takes, say, $1 billion to bring a new drug to market, since many medicines originate with government-funded research, and drug companies frequently include activities like marketing in the calculation, says Steve Francesco, a New Jersey-based pharmaceutical consultant who has worked for both drug companies and governments. “To understand drug pricing you have to shed your sense of value as a consumer and as a noble human being,” Mr. Francesco says. “You have to put on the lens of the health care industry, where what you’re doing is looking for opportunities to maximize return.”

The new argument from drug companies is: Health is priceless. Asked about the high price of Sovaldi, John Castellani, president of the Pharmaceutical Research and Manufacturers of America, said: “Their lives, in short, will be transformed. The value to these patients, and to their loved ones and society — you can’t put a price tag on it.”

When Gleevec, a miraculous drug to effectively treat a certain type of leukemia, was released in 2001, people at first choked at its $30,000 annual price tag. Within a few years there was lots of competition from equally effective but similarly expensive drugs, but the price didn’t go down — in fact it has more than tripled. “Gleevec was an amazing accomplishment, but the sons of Gleevec aren’t,” said Dr. Peter Bach, who studies drug pricing at Memorial Sloan Kettering Cancer Center.

1 Reply

  • elder berry juice or tea should cure your flu also research hydrotherapy this will also cure it, a couple of red chilli peppers a day are also fantastic for us. research natural cures as all the pharma poisons sorry drugs they give us are all based on natural plants which they cannot patent so they go off and make a synthetic version which cannot be assimilated by the body. yet the placebo affect does work as well as your bodies natural immunity