Behold the lowly pothole.
It pops your tire. It ruins the undercarriage of the car. It makes us swerve and sideswipe our fellow motorist.
A shovel, some asphalt and a little elbow grease can fix a pothole. And, it’s fairly inexpensive to do it – labor and material costs are pretty low. That means you can fix many potholes for not a lot of money.
Now, let’s say you were the pothole fixer and you thought, “I should charge the powers-that-be more because I’m preventing all kinds of other nasty and costly things from happening…instead of a couple hundred dollars, why not charge millions?
Welcome to the new irrational world of pharmaceutical pricing.
Instead of pricing a drug for the value it brings, pharmaceutical manufacturers also want to be rewarded for everything else that doesn’t happen to a patient in the future, even if those other events are highly unlikely to begin with.
The $1,000 Per Day Hepatitis C Pill
Today, we have a new breakthrough drug for hepatitis C – a terrible, slowly-developing condition that can lead to liver disease, cirrhosis and death. Some 3 million Americans have hepatitis C today and about 170 million worldwide have it. Scientific advances have led to wildly successful new drugs. They’re wildly priced, too.
At $84,000 for a three-month course of treatment, Sovaldi is the most expensive drug we’ve ever seen for such a large population of patients. Gilead, the manufacturer of Sovaldi, is asking all of us to pay not only for what the drug does today, but the liver transplants, hospitalizations and related illnesses that could also happen. Basically, they’re asking to be paid for the flat tire that all of you may avoid because they filled the one pothole.
For years, we have questioned why the United States pays so much more than other countries for many medications. That question can no longer go unanswered. It’s $84,000 for Sovaldi in the U.S. vs. $57,000 in the U.K. and just $900 in Egypt. This is the exact same drug delivering the same medical advancement, and yet the entire 12-week regimen in Egypt costs less than a single pill in the U.S.
We need a serious dialogue about why pharmaceutical innovators can factor in every downstream cost when setting what they consider to be a “fair” return on their research investment – in this case, avoidance of a $500,000 liver transplant that in reality would only be needed by about four in every 100 hepatitis C patients.
A recent study by the California Technology Assessment Forum, a nationally recognized and objective panel of experts, considered the investment required to treat all of the state’s residents who are infected with Hepatitis C. The Forum really tried to give Gilead the benefit of the doubt by evaluating savings over a 20-year period. Even after that amount of time, the eventual savings would only cover approximately two-thirds of the initial drug cost.
Let’s say we treated all hepatitis C patients with this breakthrough drug. That would cost about $300 billion, the same amount the U.S. spends on all drugs combined over the course of a year.
As a physician, my first priority is doing what’s best for patients. That principle is no less important in my role as Chief Medical Officer of Express Scripts, serving nearly one in three Americans. I take seriously my pledge to do no harm.
But in more than 30 years in studying and practicing medicine, I’ve seen nothing as potentially harmful as the exorbitant pricing displayed by Gilead in the case of Sovaldi. Annual U.S. spend on these pills is on track to jump 1,800% by 2016.
The population of hepatitis C patients is largely underinsured, uninsured and/or currently incarcerated. Barring an outbreak of successful Kickstarter campaigns, any kind of out of pocket payment could be disastrous for these patients.
Less than 20% of Americans who are infected with hepatitis C will go on to develop life-threatening disease. Even among those, the condition can remain asymptomatic for years, absent other medical conditions such as HIV, or alcohol abuse. Most patients can wait and that may be a good thing: If so advised by physicians, they could forego treatment until competing products are available (likely later this year) and, presumably, will moderate the price.
The Need for Fair Drug Pricing Across All Conditions
Hepatitis C treatments represent just the tip of the iceberg. As we consider truly game-changing medications, we may be limited in taking approaches such as formulary management and step therapies that can moderate spending when cheaper, equivalent therapies are available. The emerging pipeline of drugs in development indicates this excessive pricing will come to diabetes, high cholesterol, Alzheimer’s disease and others in the future.
We can’t wait. It’s time for a serious dialogue on fairness in prescription-drug pricing. Today.
Our clients – the private insurance plan sponsors, government agencies and labor unions who comprise the market – are concerned that the pharmacy benefit, the most widely-used health benefit that plans offer, is in danger of becoming insolvent.
You Are Invited: A Conversation on Cost and Value
To this end, we invite you to join us on May 21 in Washington D.C. at “The Future of Medicine: A Conversation on Cost and Value.” Hosted at the Newseum and moderated by editors from The Atlantic, this forum will gather payers, drug manufacturers, patient advocates, policymakers and other key stakeholders in one room to explore how our country can achieve more affordable drug pricing for these innovative medicines.
You can register to attend the free event here.
If you share our concern over keeping life-saving prescription drugs affordable for all – please join us. Raise your voice for fairness and accessibility. It’s time.
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