The article reports on a current battle to decrease the price of a particular prostate cancer drug. The argument of those advocating for a lower price focuses on the fact that the same drug is sold at a fraction of the price in other high-income countries.
Fascinating article! I know very little about the U.S. government’s “march-in” rights under U.S. law. It would appear that the criteria for doing so are specific and difficult to satisfy.
Astellas’ response seems unsatisfying. But the larger question is, what is driving the prices of drugs so high? The fact that they are cheaper in other countries does not prove anything, since that is typically done by the government subsidizing the prices. Unfortunately, while that has a short-term benefit to those in need of drugs, the long-term effect is typically to drive prices higher.
My personal expertise with drug pricing is limited. But one of my brothers was a financial analyst for Eli Lilly in Indianapolis, told me some years ago that about a third of the price of drug development (at the time, about $325M out of $1B) was set aside for litigation expenses. That is substantial.
It seems that the biggest factor in creating the difference between the drug prices inside and outside the US is the lack of governmental authority to purchase medicine in bulk. In a way, we might need to decide between a monopoly (from the drug companies) or a monopsony (from the government).
http://www.cnn.com/2015/09/28/health/us-pays-more-for-drugs/
For me, the most powerful argument made in the article was “When Americans pay for research that results in a pharmaceutical, that drug should be available at a reasonable price.” That makes sense to me. There has to be some perks to investing in the R&D to creates these drugs, other than the benefit received from them. Doesn’t seem right to use tax payer money to fund the R&D to create a drug the tax payer’s life becomes dependent on and then charge those tax payer’s exorbitant amounts to have access to those drugs.
Funny you should mention that – that sentence jumped out at me as well. It has been referred to as “collectivizing the risks (or in some cases, losses)”, and “privatizing the profits.”