[Ip-health] New York Times (Editorial Board): Runaway Drug Prices

Thiru Balasubramaniam thiru at keionline.org
Tue May 5 05:04:27 PDT 2015

The Opinion Pages <http://www.nytimes.com/pages/opinion/index.html> |
 EDITORIALRunaway Drug Prices

<http://www.nytimes.com/interactive/opinion/editorialboard.html>MAY 5, 2015


A drug to treat abnormal heart rhythms can cost about $200 on one day and
more than $1,300 the next. A diagnosis of multiple sclerosis can lead to a
drug bill of at least $50,000 a year. How companies set prices of specialty
drugs for these and other complex diseases, like cancer and AIDS, has been
a mystery to the patients who need them. Now the Obama administration and
some states are tackling that lack of transparency and the rising costs.

Mr. Obama has asked Congress to let Medicare officials negotiate prices
with drug manufacturers, a practice forbidden by current law that may be
hard to change with the antiregulatory mood among Republicans. And several
states are considering bills that would require drug companies to justify
their prices to public agencies. It is the least the states can do to bring
costs to levels that patients, hospitals and government programs can afford.

Spending on all prescription drugs, including commonly used medicines like
antibiotics, accounts for a tenth of the nation’s total health spending.
Prices have been rising slowly in recent years mainly because many
brand-name drugs lost protection and lower-cost generics were prescribed.
But there are fewer patent expirations ahead. Specialized medicines already
on the market carry huge price tags, as The Times reported
and strain the budgets of Medicare, Medicaid and consumers. The list price
for a one-year’s supply of Kalydeco to treat cystic fibrosis is $311,000. A
standard course of treatment with Blincyto, a leukemia drug, is about

Drugs used to treat multiple sclerosis are of particular concern. A recent
researchers in Oregon found that first-generation drugs that came on the
market in the 1990s ranged in price from $8,000 to $11,000 a year. Prices
for those drugs rose even though new drugs entered the market,
theoretically providing competition. One drug that first cost $8,700 now
costs $62,400 a year.

There are no multiple sclerosis drugs available in the United States with a
list price below $50,000 a year, the researchers say
which is two to three times more than the list prices in Canada, Australia
or Britain.

The drug and biotech companies contend that high prices are justified to
cover the large costs of bringing a drug to market and to compensate for
the large number of drugs that fail in late stages of costly clinical
trials. But it appears that many companies raise prices arbitrarily and
charge what public and private insurers will pay.

The industry helped defeat such a bill in Oregon and is fighting to head
off a bill in California that would impose new reporting requirements on
makers of any prescription drug whose wholesale costs are $10,000 or more
annually or per course of treatment. They would have to disclose the
research, development, marketing and manufacturing costs, as well as the
profits, attributable to the drug. The companies complain that some of
these costs are hard to quantify and that compiling the data would be
burdensome. But surely the public would benefit from increased transparency
that might deter the worst abuses.
Bills have been introduced
 in several states requiring drug makers to report profits and expenses for
costly drugs or sometimes for all drugs, according to The Journal’s
pharmaceutical blog. Such disclosures might shame companies into
restraining their price increases and provide state officials with
information to determine what action to take.A recent report
The Wall Street Journal described how Valeant Pharmaceuticals
International, based in Canada, bought the rights to two lifesaving heart
drugs on Feb. 10 and raised their prices the same day. The list price for a
one-milliliter vial of Isuprel, used to treat abnormal heart rhythms, rose
to $1,347 from $215. The price for a two-milliliter vial of Nitropress, for
dangerously high blood pressure and acute heart failure, increased from to
$806 from $258. The Journal cites similar increases for Ofirmev pain
injections and Vimovo pain tablets after new companies acquired the rights.

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