Barry Werth examines how prescription drugs are evaluated for effectiveness and cost. From the intro to the in-depth piece:
Prices are set and raised according to what the market will bear, and the parties who actually pay the drug companies will meet whatever price is charged for an effective drug to which there is no alternative. And so in determining the price for a drug, companies ask themselves questions that have next to nothing to do with the drugs’ costs. “It is not a science,” the veteran drug maker and former Genzyme CEO Henri Termeer told me. “It is a feel.”
There are inherent problems with a system where the government is one of the biggest payers, and where doctors, hospitals, insurers, pharmacy benefit managers, drug companies, and investors all expect to profit handsomely from treating sick people, no matter how little real value they add to patients’ lives or to society.
Drug companies insist that they need to make billions of dollars on their medicines because their failure rate is so high and because they need to convince investors it is wise to sink money into research. That’s true, but it’s also true that the United States, with less than 5 percent of the world’s population, buys more than 50 percent of its prescription drugs. And it buys them at prices designed to subsidize the rest of the industrial world, where the same drugs cost much less, although most poor governments can’t afford them at even those lower prices.
Still, we have to ask: When is the high price of a drug acceptable? Perhaps it is one thing when Vertex [Pharmaceuticals] charges $841 for two pills a day—every day of a patient’s life—for medicine that will save that life, and quite another when [French drug maker] Sanofi offers a cancer drug that is twice as expensive as its alternative but offers no obvious advantages.
Previous Dish on the subject here. Update from a reader:
Your post that touched on Vertex Pharmaceuticals was startlingly well-timed for me. I am a devoted Dish reader. I also have cystic fibrosis, and at this very moment I am doing my treatments for the condition at a hotel, where I’m staying prior to my appointment for a clinical trial of Vertex’s next CF drug in the pipeline.
Your entry brings up several important further issues and questions, some of which are covered in the remainder of the Werth piece. Vertex’s research has been heavily supported by the Cystic Fibrosis Foundation, a charity that supports CF research, so it’s startling to see a charity-funded drug coming in at $300K per year. Vertex has also pledged to provide its drugs free of charge to any patient who cannot afford them or whose insurance will not cover them, which causes one to wonder whether more and more insurance companies would take a look at the situation and decide there’s no reason for them to cover the drugs.
Finally, Vertex has based its pricing based in part on the costs of other CF treatments that patients would theoretically – and hopefully – no longer need. However, living with CF, you learn quickly that if you don’t adhere to your treatment regimens, you can lose your health pretty rapidly, and I bet a lot of patients will be reluctant to simply cease all their other treatments right away, preferring to take their time confirming that Vertex’s drugs work as well as advertised before placing all of their eggs in the Vertex basket.
Thanks for your coverage of this important issue. While CF is a relatively rare disease, it has long been important as a harbinger of emerging trends in medicine, and this is certainly another instance in which that is the case. As our capabilities increase, more personalized drugs will become available or at least possible to produce for a wide range of conditions and diseases – but at what price?
The Dish 