Drug Prices– Patent Reform is Essential to Health Care reform

Fascinating article on the use of cost efficacy data to determine coverage in the U.K. The scheme in the U.K utilizes an impartial board the National Institute for Health and Clinical evidence (NICE) to look at evidence based results and the costs of medications. They then recommend for coverage based on the efficacy and the availability of resources to pay in the system. A rational approach? Rationing?

Both! With single drugs alone costing more than the median and average incomes in our countries we need to evaluate what their use actually accomplishes. In the U.S. we implicitly ration and have done so for many years by pricing insurance beyond the capability of many citizens (50 million approximately) and adding deductibles and co-pays that put many new drugs beyond the reach of patients.

The Time article points out the industry attitude:

“but industry advocates were not so kind. Robert Goldberg, vice president of the Center for Medicine in the Public Interest, an advocacy group financed by drug makers, likened Dr. Rawlins and his institute to terrorists and said their decisions were morally indefensible.”

Despite this a great number of countries are implementing similar schemes.

“For years, Britain was almost alone in using evidence of cost-effectiveness to decide what to pay for. But skyrocketing prices for drugs and medical devices have led a growing number of countries to ask the hardest of questions: How much is life worth? For many, NICE has the answer.”

“Top health officials in Austria, Brazil, Colombia and Thailand said in interviews that NICE now strongly influences their policies.”

“”All the middle-income countries – in Eastern Europe, Central and South America, the Middle East and all over Asia – are aware of NICE and are thinking about setting up something similar,” said Dr. Andreas Seiter, a senior health specialist at the World Bank.”

In fact the problem of drug pricing is based on drug company greed and inefficiency. The Pharmaceutical industry spends far more on marketing than research; rewards company executives and patent holders extravagantly; and ignores tax funded public supported research’s contribution to new drugs. Medicynic has pointed out the minimal drug company investment necessary for the drug imatinib (Gleevac), priced at over $50,000/year. The Time article points out other abuses.

“Celgene’s first big seller was thalidomide, a decades-old medicine now used as a cancer treatment, which is so cheap to manufacture that a company in Brazil sells it for pennies a pill.”

“Celgene initially spent very little on research and priced each pill in 1998 at $6. As the drug’s popularity against cancer grew, the company raised the price 30-fold to about $180 per pill, or $66,000 per year. The price increases reflected the medicine’s value, company executives said.”

“In 2005, the company introduced Revlimid, a derivative of thalidomide that is supposed to be less toxic, but may be no more effective. Celgene priced it at about $260 per pill, or $94,000 per year.”

It’s truly your money or your life. Is that what the company executive meant by value? Gold at 800/ounce is cheap compared to these agents.

Drug manufacturing is the new alchemy with the irony being that many of the newer agents are only marginally better than previous treatments. They are undoubtedly an improvement but is the cost/unit improvement worth bankrupting the health care system.

We need patent reform and aggressive negotiations with drug manufacturers to curb excessive pricing. (See this for proposals) There is legislation that requires reasonable pricing for government research funded advances that has never been applied. And lastly we should have an organization like NICE that objectively evaluates new advances, costly or not, and provides guidelines for payment and their use.

The question is whether the new administration has really isolated itself from Big Pharma’s influence. We’ll see soon enough.

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