WHY DRUGS COST SO MUCH

Richard, Linda and Carolyn, Kalamazoo, 1952

Throwback Thursday

 

From the Ingwalls comes this NY Times Op Ed, which is guaranteed to make your blood boil.

It concerns a topic we have batted around many times before: How have we arrived at a situation wherein a drug – a pill, say – that some people need to survive costs $2.29 to manufacture, but is sold for $2,290?  (I made those numbers up, but they are not improbably extreme.)  In no particular order, here are some of the answers: 

It costs billions to develop a new, effective drug, and Big Pharma must recoup those billions, plus a decent profit, to placate its stockholders.

The Feds gum up the works with preposterous rules and regulations, presented as means to protect us from the next Thalidomide but really represent a product of the normal evolution of a bureaucracy.

Capitalism encourages the proliferation of a class of blood-sucking leeches who prey on the innocent.

Foreign countries let us (the U.S.) spend cubic kilometers of large-denomination bills to develop healthcare procedures, then duplicate what we do for peanuts.

No medical practitioner dares NOT use a new drug for fear that he/she will get sued.

And so forth.  Some of these are fairly stupid, some are partially true, but even collectively they are not the entire answer.  According to the author of this piece (a prominent M.D.  employed by Memorial Sloan Kettering, itself a true major-league outfit), the problem breaks down something like this:  Drugs obtain approval from the FDA that (a) cost a lot, and (b) aren’t much more effective than existing treatments.  Nevertheless, insurance companies are REQUIRED to offer these drugs, and some physicians prescribe them, either out of primordial CYA instincts, or out of ignorance.  The suggestion here is to, in effect, let competition do its job.  In Europe, it is said, insurance agencies can say “no” to new drugs, and so – if a new drug is developed – it must be priced so as to make it attractive.  Let’s say I am CEO of NastyPharma and I have a new cancer drug in my bag.  Call my drug N, and let’s also  say there is a competing drug already known to work, called C.  I would like to price N at $10,000/month, but C sells for about half that.  The FDA has ruled that N is a little better than C, but not much.  In the U.S., insurance policies must offer both N and C, and for reasons afore said some physicians will prescribe it, or at least not argue too hard if the patient requests it.  However, in Europe the outfits that control such things can say “no” to N, at that price.  Hence, I must price it much lower.  If it must be priced so low that I can legitimately despair of ever recovering development costs, well : Tough stuff.  I should have figured that out early-on and worked on something else.  Benign Capitalism in action, more or less. 

There is more to this article than I have summarized here, but I am beginning to think destructive thoughts about this computer again, as it swallows entire paragraphs and pastes them elsewhere – mainly in cyberspace.  So I will give you the link, below, which you should read.  In my view this is not close to the entire answer to our drug-price problem, although it is a good start.  It may reduce the cost of a drug from $10K/month to $5K, but who can afford even that?  We absolutely must somehow learn to allocate our research dollars in such a way that not many people ever NEED either N or C.  Maximize prevention and early detection so we don’t need to worry so much about cure.

http://www.nytimes.com/2015/01/15/opinion/why-drugs-cost-so-much.html?smprod=nytcore-ipad&smid=nytcore-ipad-share&_r=0