“New Math on Drug Cost-Effectiveness”

Competing commentaries on rising drug prices:

  • Bach PB. “New Math on Drug Cost-Effectiveness” NEJM 2015; 373: 1797-99
  • Chin WW. “A Delicate Balance –Pharmaceutical Innovation and Access” NEJM 2015; 373: 199-1801)

Dr. Bach’s commentary focuses on the exorbitant costs of many medications.  His key points:

  • “The rate of introduction of new and expensive drugs has accelerated; the pace of conversion to generics is slowing; the prices of many generics are rising; and expensive drugs are now being introduced for conditions that affect millions of people rather than thousands.”
  • “Drug prices are increasing more rapidly than their benefits.”

Dr. Chin counters that there have been more than 500 new medications that have been approved in the United States since 2000.

  • “The United States relies on competitive markets to set prices and encourage innovation —a system that, as I see it, is working well.”
  • “The…hepatitis C medications, with cure rates above 90% are a good case study: within a year, competing medications entered the market, driving down prices by about half.”
  • “Any centralized government-purchasing model would probably result in drastically limited choices for physicians and patients.”

Another “must-read” on this topic comes from Ezekiel Emmanuel & the NY Times: I Am Paying for Your Expensive Medicine  Here’s an excerpt:

In July, the Food and Drug Administration approved the first of two new PCSK9 inhibitors that lower the bad type of cholesterol, LDL. Studiessuggest that they can reduce it by up to 60 percent, … and reduce it up to 36 percent more than statins… However, there are no definitive data on how much these drugs actually reduce heart attacks, strokes and deaths from heart disease…the retail price for a prescription would be more than $14,000 per patient per year. The price is particularly steep given that these drugs may need to be taken for the rest of the patients’ lives. How much patients pay directly would depend on their insurance plan….even if the price came down to about $11,000 per patient per year, and only 1.1 million of the roughly 23 million middle-age Americans with high cholesterol actually took these drugs, the bill would be so high that for a typical insurance plan, “annual insurance premiums would increase by $124 for every person” in the insurance plan…

As the PCSK9 story is making clear, the drug cost debate is now beginning to focus on two questions that are currently unresolved: First, how do we determine value so the perspectives of all Americans are considered? Second, how do we implement and enforce that determination of value?…

Many people hope that the drug industry will self-regulate, using value-based pricing of its new drugs. But if past experience is any indication of future behavior, self-regulation may be a pipe dream. 

My take: I don’t agree with Dr. Chin that our system has the right balance at this time, though he is right that too much interference could slow innovation.  In my view, recent high-profile excesses by pharmaceutical companies have strengthened the argument for more government intervention.

Morning in Sandy Springs

Morning in Sandy Springs

 

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3 thoughts on ““New Math on Drug Cost-Effectiveness”

  1. Pingback: Drug Waste Costing Billions. Who benefits? Pharmaceutical Companies | gutsandgrowth

  2. Pingback: How to Undermine Value Care: Lessons from Pharmaceuticals | gutsandgrowth

  3. Pingback: Orphan Drugs –Very Profitable | gutsandgrowth

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