[Ip-health] NY Times editorial: No Justification for High Drug Prices

Ruth Lopert ruth.lopert at gmail.com
Tue Dec 22 08:25:06 PST 2015


Pricing based on risk adjusted R&D expenses wouldnt preclude paying a lot
for things of questionable value

On Tue, Dec 22, 2015 at 10:45 AM, Kapczynski, Amy <amy.kapczynski at yale.edu>
wrote:

>
> sure, that’s a good discussion to have.  prices should be adequate for
> companies to cover the risk-adjusted cost of R&D, w/ a reasonable profit.
> )(if - and in some cases this is a big if - the drug’s social benefits are
> sufficient to justify the R&D expenditures.)
>
> we’ve talked for a long time about compensation for social value, as an
> alternative to monopoly pricing.  in many cases that has great advantages
> over the existing model.  but you can see some of the difficulties of that
> approach w/ a drug like sovaldi - you can end up w/ massive rent seeking
> and waste where the science makes a big leap (based on publicly funded
> rsch, unsurprisingly).  we could treat massively more people, and save
> enormous sums, w the risk-adjusted R&D approach in this context, as opposed
> to a “pay for DALYs” approach.  (for those interested, I have a paper
> coming out soon that makes this case in much more detail, and uses 28 USC
> 1498 as a mechanism to get us closer to the risk-adjusted R&D compensation
> model.).
>
> there are a few cases where that approach will still lead to very high
> prices, but prices of many drugs would be far lower.
>
> there are others coming to this view as well — see sachs on this, for
> example:
>
> http://www.huffingtonpost.com/jeffrey-sachs/rational-drug-pricing_b_8188790.html
>
> ak
>
>
>
> > On Dec 20, 2015, at 12:24 PM, Peter Pitts <ppitts at cmpi.org> wrote:
> >
> > Perhaps a good debate would be what "high" means -- and relative to
> what?  What is the "right" price and how does that impact development?
> >
> >
> > On Dec 20, 2015, at 11:37 AM, Herper, Matthew wrote:
> >
> >> But see this recent Bloomberg article:
> >>
> https://urldefense.proofpoint.com/v2/url?u=http-3A__www.bloomberg.com_graphics_2015-2Ddrug-2Dprices_&d=AwICAg&c=-dg2m7zWuuDZ0MUcV7Sdqw&r=-ddH8Zceq1hAY-PYLwkNHeKcPT9OK3Kb_YdJ7DDd_Uo&m=YaiUSWbhK0ahtfnyerOT0XK3VgtcJMqivApsdvz3jXE&s=F8UnBc9hxepmvLV5qPcqF2OwLEpG6UdhI9FdKLdwqPk&e=
> >>
> >> The "real" prices are not as high as you'd think based on list price,
> but they are still high.
> >>
> >> ----------------------------------------------------
> >> Matthew Herper
> >> Senior Editor, Pharma & Healthcare
> >> Forbes
> >> office: 212-367-4879
> >> ________________________________________
> >> From: Ip-health [ip-health-bounces at lists.keionline.org] On Behalf Of
> Peter Pitts [ppitts at cmpi.org]
> >> Sent: Sunday, December 20, 2015 10:55 AM
> >> To: ip-health
> >> Subject: Re: [Ip-health] NY Times editorial: No Justification for High
> Drug     Prices
> >>
> >> The editorial "No Justification for High Drug Prices" (NYT, 12/20/15)
> quotes the "list" price for innovative medicines from Eli Lilly (Portazza
> for lung cancer)) and Pfizer (Ibrance for advanced breast cancer). The
> prices mentioned are true, but the context is inaccurate. Most every
> innovative new medicine offers significant discounts to private insurance
> payers (generally between 35-50%) in addition to double digit rebates for
> Medicare and Medicaid. There are very few patient paying "list price" and
> for those without insurance both of these companies (and mostly all
> innovative pharmaceutical developers) offer programs that provide their
> products at low or no cost. Context matter and accuracy counts.
> >>
> >> Peter J. Pitts, a former FDA Associate Commissioner, is President of
> the Center for Medicine in the Public Interest
> >> On Dec 20, 2015, at 9:36 AM, Peter Maybarduk wrote:
> >>
> >>>
> https://urldefense.proofpoint.com/v2/url?u=http-3A__www.nytimes.com_2015_12_20_opinion_sunday_no-2Djustification-2Dfor-2Dhigh-2Ddrug-2Dprices.html-3Faction-3Dclick-26pgtype-3DHomepage-26clickSource-3Dstory-2Dheading-26module-3Dopinion-2Dc-2Dcol-2Dleft-2Dregion-26region-3Dopinion-2Dc-2Dcol-2Dleft-2Dregion-26WT.nav-3Dopinion-2Dc-2Dcol-2Dleft-2Dregion-26-5Fr-3D0&d=AwICAg&c=-dg2m7zWuuDZ0MUcV7Sdqw&r=-ddH8Zceq1hAY-PYLwkNHeKcPT9OK3Kb_YdJ7DDd_Uo&m=YaiUSWbhK0ahtfnyerOT0XK3VgtcJMqivApsdvz3jXE&s=_XsjGL0mNWtsFKKyYdkro5C2xbzvKBSMFQE_dISJEHI&e=
> <
> https://urldefense.proofpoint.com/v2/url?u=http-3A__www.nytimes.com_2015_12_20_opinion_sunday_no-2Djustification-2Dfor-2Dhigh-2Ddrug-2Dprices.html-3Faction-3Dclick-26pgtype-3DHomepage-26clickSource-3Dstory-2Dheading-26module-3Dopinion-2Dc-2Dcol-2Dleft-2Dregion-26region-3Dopinion-2Dc-2Dcol-2Dleft-2Dregion-26WT.nav-3Dopinion-2Dc-2Dcol-2Dleft-2Dregion-26-5Fr-3D0&d=AwICAg&c=-dg2m7zWuuDZ0MUcV7Sdqw&r=-ddH8Zceq1hAY-PYLwkNHeKcPT9OK3Kb_YdJ7DDd_Uo&m=YaiUSWbhK0ahtfnyerOT0XK3VgtcJMqivApsdvz3jXE&s=_XsjGL0mNWtsFKKyYdkro5C2xbzvKBSMFQE_dISJEHI&e=
> >
> >>>
> >>> By the Editorial Board / Dec. 19
> >>>
> >>> There is ample evidence that drug prices have been pushed to
> astronomical heights for no reason other than the desire of drug makers to
> maximize profits. Prices in many cases far exceed what's needed to cover
> the costs of research and clinical trials, and some companies have found
> ways to rake in profits even without shouldering the cost of drug
> development.
> >>>
> >>> The two worst offenders are bottom feeders that simply buy companies
> they believe have underpriced their drugs and then quickly raise prices to
> astronomical levels.
> >>>
> >>> In August, Turing Pharmaceuticals acquired the American marketing
> rights to a 62-year-old drug to treat a devastating parasitic infection
> andraised the cost of one pill to $750 from $13.50. That brought the cost
> of a course of treatment for some patients to hundreds of thousands of
> dollars. (Turing's founder, Martin Shkreli, was indicted on Thursday on
> charges of securities fraud involving a hedge fund and another
> biotechnology firm he started.)
> >>> Valeant Pharmaceuticals greatly increased the prices of several drugs
> it acquired, including two used by hospitals to treat heart conditions. It
> also protected its high-priced dermatology drugs by urging doctors to send
> prescriptions to a mail-order pharmacy that would make sure no cheaper
> alternative was substituted.
> >>>
> >>> The Pharmaceutical Research and Manufacturers of America, a trade
> group, described Turing and Valeant as essentially investment vehicles
> "masquerading as pharmaceutical companies."
> >>>
> >>> Yet even some mainstream companies have set high prices that seem hard
> to justify. Eli Lilly said its new lung cancer drug, Portrazza, would cost
> about $11,430 a month in the United States, six times the $1,870 price that
> leading oncologists said in a recent journal article would be a fair
> reflection of the benefit the drug offers compared with older therapies.
> >>>
> >>> Similarly, Pfizer set the list price for Ibrance, a drug to treat a
> form of advanced breast cancer, at $9,850 a month, a price that remains
> high even after the 20 percent discount demanded by insurers. The price was
> not based on manufacturing costs or research costs, according to an
> analysis by The Wall Street Journal. Rather, Pfizer set the price as high
> as it could without causing doctors and insurers to favor an alternative
> drug.
> >>>
> >>> The pharmaceutical industry often defends its prices by noting that
> drugs account for only 10 percent of nationwide health spending. But in
> employer-based health insurance plans, drug benefits account for 19 percent
> of spending, not much less than spending on inpatient hospital care,
> according to a recent analysis by the Kaiser Family Foundation. And surveys
> have shown that many Americans have difficulty paying for the drugs they
> need. Major drug companies often increase prices 10 percent or more a year,
> far faster than inflation, straining the health care system.
> >>>
> >>> Experts have proposed several ways to reduce drug prices, like
> fostering greater competition among drug companies or allowing the
> government to negotiate lower prices. Encouraging the development of
> innovative drugs and setting prices in ways that make lifesaving medicines
> affordable to all are not mutually exclusive ideas.
> >>>
> >>>
> >>>
> >>> _______________________________________________
> >>> Ip-health mailing list
> >>> Ip-health at lists.keionline.org
> >>>
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> >
> >>
> >>
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> >
> >>
> >
> >
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