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The Cost of Drugs For Rare Diseases Is Threatening the US Health Care System (hbr.org)
An anonymous reader shares an article: There are 7,000 rare diseases affecting 25 million to 30 million Americans. The average drug approved under the Orphan Drug Act of 1983 (ODA), which governs rare disease approval, costs $118,820 per year. Assuming a similar cost, if a single drug were approved under the ODA for 10% of rare diseases, the total would exceed $350 billion annually -- more than 10 percent of the total amount that America spends on health care and much more than the health care costs attributable to either diabetes or Alzheimer's disease and other forms of dementia. If this seems far-fetched, consider the two drugs for treating Duchenne muscular dystrophy that the FDA approved in the last six months: eteplirsen, which is sold by Sarepta Therapeutics and costs $300,000 annually per patient, and deflazacort, which is sold by Marathon Pharmaceuticals and costs $89,000 annually per patient. However, approval of such costly drugs exposes an uncomfortable truth: scientific discovery has outpaced health care economics. [...] In the United Kingdom, the National Institute for Health and Care Excellence (NICE) determines the cost effectiveness, or value, of newly approved drugs based on their impact on quality-adjusted life years. These determinations inform the National Health System's (NHS) treatment-coverage decisions. In contrast, the FDA is prohibited from considering cost or value in its decision making, and there is no U.S. governmental equivalent of NICE.
Bristol-Meyers Squib has a 75% margin on their drugs. And almost 30% return on equity.
They like to blame R&D but one Summer I worked at one of their research labs. It was a very very nice place. Parts could have been from a country club. The head of the place helicoptered in from NY every morning - which is all considered R&D "costs". The cafeteria food was 5-star but cost as much as a McDonald's meal.
The only sucky part was the animal section.
I miss that place.
The problem is not that we aren't spending enough money. The problem is the combination of the pharmaceutical and insurance industries getting all of the money they can out of anything they have with no limits. Even generic drugs that aren't under patent production are many, many times more expensive in the US than in other countries (one example my wife gave me last night is $0.18 per pill abroad, versus $30 per pill here - for a generic medication). If the pharmaceutical companies are not actively engaged in collusion and price-fixing for generic medications then I would be shocked. Additionally, they spend so much money buying legislators that it is effectively impossible to get any legislation passed which would force a resolution to this issue by capping the price of medications or making it easier for additional companies to manufacture generic medications and compete with the established players. The free market is obviously not working correctly when every company making a certain generic medication sells it for the same amount, or when generic drugs which are readily available in other countries are not available here because they would compete with products from established companies. There is an opportunity there for a competitor to sell it for less and undercut the competition and make money, but for some reason that doesn't happen. If the free market is not allowed to work, and instead there is price gouging going on, then it sounds like legislation is required to correct that issue and bring drug prices down as a matter of law. If anyone thinks that such a thing would limit development or force companies out of business then I would invite those people to look at the P/L statements for the major pharmaceutical companies. A good start may be to outlaw advertising to consumers for pharmaceuticals, followed by a way to cap prices on medication based on metrics similar to those used by NICE.
"Our two-party system is like a bowl of shit looking at itself in a mirror." - Lewis Black
The various drug companies spend 3 1/2 x as much on advertising and marketing as research, with MOST basic research paid for by governments and sold for pennies or given away for free
Welfare starts at the top
Here's a problem with your assessment, we don't have a free market with drugs.
I know, that's my point. I said that if the free market was working, then we would see more competition and lower prices. The fact that we don't means that it is not working. The fact that no one is coming in to undercut prices on generic drugs that are not encumbered by patents is indicative of the fact that the free market is not working here. It might be evidence of collusion and price-fixing, or a situation making it impossible for competitors to enter the market.
Prescription rules, if you want even a common drug for a chronic condition you will need a permission slip from a physician. Why? Can't people figure this out on their own?
I understand that problem well. My wife is from Brazil, when we are there she can walk into any pharmacy and get whatever she wants, she can even consult with the people working there. There are certain limitations on what they're allowed to do, but they can sell her any of the drugs they have there. Many of those drugs are not even available in the US even though they do not have patents and are generic drugs. She can't get steroids that she needs for inflammation and other issues, and she can't even get the drug that works to get rid of her headaches without going to Brazil and getting it straight from the pharmacy without ever needing to see a doctor. She feels lied to after coming here and realizing that she cannot get the quality of care that she is used to from living in other countries, and the reason seems to be money, like so many of our other problems. So many people have their hands in the pie and what gets lost is actually providing good quality care to people who need it, even if it only means making drugs readily available like they are in other countries. She knows exactly what she needs, what works and what doesn't, and she simply can't get what she needs here. She feels lied to after hearing how great the US was supposed to be, and then getting here and realizing that it's all about money, and if someone can make money restricting access to health care then that's what they're going to do.
More laws will not fix this problem. The problem is too many laws.
Which laws do you think need to be removed in order to fix these issues?
If you think that there is price fixing then I ask you to prove it.
Really? You want evidence of a price-fixing scheme in a trillion-dollar industry? Well let me just hit Google, I'm sure there are signed documents online that will clear that right up.
"Our two-party system is like a bowl of shit looking at itself in a mirror." - Lewis Black