Because They Can
The United States Senate conducted the first day of hearings Wednesday, December 9, on the high price of pharmaceuticals. The Special Committee on Aging is investigating the soaring prices of old drugs, including the overnight price hike of Turing’s Daraprim from $18 to $750. Every day there is another press release about the egregious increase in pricing of a generic drug or a newly-released-to-market medication. U.S. drug prices are the highest of any in the industrialized world.
Drug prices and the strategies used to determine them are shrouded in secrecy. A recent Wall Street Journal article compared U.S. prices to Norway and several other countries. Pharma and biotech companies in the S&P 1500 average a net profit margin of 16% compared with an average of about 7% for all the other companies. Their rationale is usually they need that profit margin to support Research & Development (R&D) costs. That argument obviously doesn’t apply for generic drugs. Pricing has nothing to do with recouping costs—it is a decision based on market research, competitor products, and shareholder value.
What’s the answer? Doctors, insurance companies, hospitals, and Pharmacy Benefit Managers (PBMs) are all struggling to figure it out. Many healthcare policy experts are advocating for Congress to pass legislation which would allow the government to negotiate pricing especially for Medicare. Since there are more pharmaceutical company lobbyists in Washington, DC, than there are members of Congress, this could be an epic struggle.
These breakthrough treatments are invaluable to patients, but the costs for the patient and insurers can be exorbitant. What programs have you put in place to help your members adhere to treatments, minimize side effects, and empower them to understand their disease, and the drugs to help treat it?
Doctors are publishing and participating in dialogues about what the true value of a cancer drug is based on effectiveness and increased patient longevity. What is the true cost of a medication? If patients actually knew, could they make informed decisions about their options?
The Turing CEO may have just opened the can of worms that Pharma did not want to ever be seen. Greed and arrogance may be the catalyst Congress needs to implement meaningful changes. One thing we all know now―pharmaceutical and biotech manufacturers charge what they do…because they can.
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