Drug Pricing and Health Care Reform

Interesting take on drug prices in Health affairs blog– http://healthaffairs.org/blog/2009/11/24/drug-prices-and-health-reform/ –Donald Light commenting on his article Global Drug Discovery: Europe Is Ahead” noted:

  • “Europe outperformed the United States and also significantly increased its productivity of NMEs (new molecules) per billion invested. Regarding critical new drugs that are first in class, Europe and the United States were about even, but this means that U.S productivity decreased substantially and Europe productivity increased, as shown in Exhibit 4 of the article.”

He also observes:

  • “European countries have also signaled more strongly that companies will be rewarded for significantly better drugs but not for marginally better ones, while U.S. purchasers tend to pay high prices for marginally better drugs as well as good ones. Although the Pharmaceutical Research and Manufacturers of America (PhRMA), the industry trade association, champions high prices, they create an industry fat on easy profits and well-documented opulence.”


  • “The second, bigger point of my article for Congress, employers, and insurers is that regardless how productive pharmaceutical companies are, studies show that 85-89 percent of new drugs provide little or no advantage over existing drugs when measured by clinical improvements.”

Medicynic believes patent reform is one way to deal with the drug cost problem as outlined here and here. We should:

  • “link the length of patents to reasonable pricing. As part of the FDA approval process the proposed price of the new medication would be compared with similar medications already on the market and with the same medication in other countries. The same process that the Canadian patent drug review board uses. If priced a significant amount over the comparator, the patent length would be decreased by some period of time to be determined by the review process–there are many ways such a link could be structured. For unique innovative drugs the cost of development could also be factored into the pricing length of patent equation. Price increases during the duration of the patent would be tied to the rate of inflation. If they exceed that rate the patent length would be proportionally shortened.”

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