PoliticalSpeak & OffLabel: high-cost drugs in the US

Will the war on high-cost drug pricing stifle innovation? #PoliticalSpeak #MSBlog #OffLabel

“We have had much debate on the issue of high-cost drugs on this blog and have discussed the pros and cons endlessly. We have also taken a stand on the issue of the unaffordability of high-cost DMTs for pwMS living in resource-poor healthcare environments and have actively promoted off-label prescribing as a way of addressing this issue. If you have MS and couldn’t afford a high-cost drug aren’t you better off on a cheap off-label DMT that has some evidence supporting its efficacy in MS? This strategy is pragmatic and makes sense as we move from ‘simply putting pwMS on a DMT and hope for the best’ strategy to ‘treat-2-target of NEDA’. With a treat-2-target strategy pwMS who don’t respond to one DMT will be switched to another class of DMT with more efficacy.”

“The following perspective article in the NEJM highlights some of the issues in the US with high-cost drugs and some of the options the US Federal government has to reduce the price of drugs. This is not a trivial issue; in relation to MS DMTs some products cost 5x more in the US than they do in the UK. NICE has been very effective at driving a hard bargain with Pharma to get down the costs of DMTs for pwMS in the UK. This is also happening in most other countries with socialised healthcare systems. It was only a matter of time before the US Federal Government would put a stop to the US subsidizing drug development costs for the world. The new fight on high-cost drugs in the US, is the beginning of this process of sharing the burden of drug development costs. These US initiatives will have knock-on effects and I suspect as we see drug prices fall in the US we will seem them start to rise in Europe and the rest of world.”

“Some of the issues raised in this perspective piece are very interesting and hence I would suggest you read the whole article. A very interesting point highlighted in the perspective is that when central governments get involved in procuring access to new and innovative drugs they reduce pharma investment in innovation. Good examples of this is the virtual absence of a market for innovation in vaccines and antibiotics in the US. I recall a similar problem in the UK about 15 years ago when the Department of Health interfered with the market for IVIG (intravenous immunoglobulin); they allowed a subsidised product onto the market that was being made by a spin-off company from the Blood Transfusion Service. The subsidised UK product had an unfair advantage undercutting the private providers to such an extent they couldn’t make any money; they voted with  their feet and pulled out of the UK market. As the blood transfusion service couldn’t produce enough IVIG we had a shortage of IVIG in the UK that led to its rationing. A a result of this rationing many patients couldn’t be treated with IVIG and we had to use resort to using more invasive alternative treatments, such as plasma exchange. This is an example of the law of unintended consequences; you think you are doing good by lowering prices, but in the long run you may be doing the exact opposite by reducing incentives for innovation. This is a difficult balancing act  for politicians and is probably why there is so much debate and disagreement about how to deal with the issue of high-cost drugs. Another question we need to ask ourselves is how did we allow ourselves to get into the situation where drug development costs have become so high (and risky)?”

Conti & Rosenthal. Perspective: Pharmaceutical Policy Reform — Balancing Affordability with Incentives for Innovation. N Engl J Med 2016; 374:703-706.


……The high prices of prescription drugs have become an issue of paramount concern to Americans. This concern has now found its way into policy proposals from presidential candidates and is preoccupying state and federal lawmakers…..

…… Congressional investigations are examining the way in which drug companies set prices, and proposals for making drug pricing more transparent are pending in seven state legislatures…..

….. Lawmakers and others have identified multiple possible reforms to address the affordability of prescription drugs……

…… Direct negotiation of prescription-drug prices by the federal government, however, is a solution for which there may be little congressional appetite…..

……. Patient-advocacy groups and pharmaceutical companies are united in their concern that with substantially increased government involvement come the risks of reduced access of patients to new drugs and reduced company investment in innovation. They point to the virtual absence of a market for innovation in vaccines and antibiotics, therapeutic classes for which the federal government is the monopsony purchaser……

……. The prospect of losing ground on innovation and diminishing their own credibility with industry partners has chilled lawmakers’ previous resolve to enact direct regulation of pharmaceutical prices……

……. Public outrage over recent high-profile cases of extreme pricing in the U.S. pharmaceutical market suggest that our laissez-faire system may not be achieving the balance of affordability and incentives for innovation that Americans want…..

……. Realistically, the best options for meaningful reform of prescription-drug policy to improve this balance focus on increasing value-based competition……

…….. However, market-driven policies are not a panacea. They do not resolve the dilemma of extremely high launch prices for arguably high-value new products without close competitors…..

……. To preserve incentives for welfare-increasing innovation, the rewards for developing such products must be substantial, but if prices are the only mechanism through which returns on research flow, affordability will be compromised…..

…….. Evidently, there is no single, easy answer to high and escalating drug prices in the United States…….

CoI: multiple

12 thoughts on “PoliticalSpeak & OffLabel: high-cost drugs in the US”

  1. Still cannot understand your arguments for more expensive drugs that are not so expensive to manufacture."The subsidised UK product had an unfair advantage undercutting the private providers to such an extent they couldn't make any money;" If they were truly subsidised they would not have gone out of business, right?"This is an example of the law of unintended consequences; you think you are doing good by lowering prices, but in the long run you may be doing the exact opposite by reducing incentives for innovation." There is no innovation in treating patients with the evidence-based approved treatment for a condition. If you mean that you could not treat people with conditions that were not approved, then it is a one-off not innovation. Can you mention Tesla arguments for not protecting his inventions and what the world has gained from it?

    1. Re: ""The subsidised UK product had an unfair advantage undercutting the private providers to such an extent they couldn't make any money;" If they were truly subsidised they would not have gone out of business, right?"The subsidised company was 50% owned by the UK-PLC; they didn't go out of business as they had a guaranteed market. The problem is that they didn't have enough production capacity to make sufficient IVIG for the UK market. The other companies are multinationals and simply stopped selling their product in the UK; they didn't go out of business.The intended consequence was to lower the cost of IVIG for the NHS. The unintended consequence was to create a national shortage of IVIG. What this case proves is that there is a global pharma market and it responds to incentives and disincentives. The latter is one of the reasons Pharma gives for closing so many of its R&D labs in the UK; NICE has reduced their ability to make large profits in the UK so they have taken their jobs to greener pastures (mainly the US and China). Apparently, the NICE effect gave Gordon Brown sleepless nights.

    1. RE: "Drugs are not too expensive, people just need to earn more money."That is the neoliberal philosophy that believes the market is the holy grail. It doesn't help pwMS who live in resource poor environments who can't afford to pay for high-cost drugs and will never be in a position to earn enough money to pay for their treatment. Life is a lottery and because you draw the short straw and develop MS why should we give up on you because you can't afford healthcare? The world needs empathy.

  2. Big Pharma is slowly breaking the backs of U.S. citizens with their exorbitant pricing for even run of the mill drugs that have existed for over half a century. Healthcare is rapidly becoming as unattainable in the U.S. as it is much poorer countries.Nobody has a problem with a business turning a profit. What most of us have a problem with, is the way in which Big Pharma manipulates our government to wring every last penny from their patients or the patients' insurance companies (which, in the end just costs the patients in higher premiums anyway). It's draconian. They make the argument that they need the money for R&D, yet every time I see a credible report on this subject, I see Big Pharma has increasingly shifted R&D costs onto other entities.Big Pharma needs to be brought under control, pure and simple. They need to make a reasonable profit, yes. But they're incapable of determining what 'reasonable' is. To guys like Martin Shkreli, 'reasonable' is charging $750 per pill today, for a drug that cost just $13.50 per pill yesterday. They always trot out the 'we need that blood money to innovate' excuse. We're not buying their BS anymore. I hope the government does crack down on them, and hard (though I hold out little hope that anything meaningful can be done). If there were ever an industry that needed regulation, it's the pharmaceuticals industry.

  3. I have serious trouble swallowing the notion that this market is so efficient that a fall in prices somewhere is responsible for a rise elsewhere. The supposed inherent efficiency of private enterprise is one of the biggest myths of the modern world. The Bermuda Triangle of executive compensation is a more likely explanation I suspect.The price of drugs is to a large extent whatever the market will bear. At the moment our health is effectively being held to ransom. Calling the current setup competitive is a huge stretch.I agree about examining cheaper pathways to drug development, but I also think that perhaps innovation should be something that our governments invest in also. Private enterprise likes sure bets, like following an already established pathway with 'me too' drugs. Public research is often where the true innovation and blue sky discoveries come from.

  4. There are so many issues in all of this. As I described in another post there exists this strange rebate system here in the USA for one. So insurers for lack of a better term get a 'kickback' (rebate) thus what people think costing is really is not the case at all.However, yes, production to distribution is considerably more expensive here and in large part thats due to monitoring. For many years costs of care in the USA have had dollars float to other nations. This is a ying/yang aspect of global economics. Economies are intertwined enough that if lets say citizens in the US scream and care costs impact what floats globally in dollars it comes back to roost or manifest elsewhere in US citizens lives. How other nations use or leverage such things is of course politics.Very few people here could pay for a DMT even at its 8 year ago pricing, $8,000 a year roundabout. To an insurer 8 years ago, $8,000 is a ton.The problem here in the USA has been some entities taking advantage of this chronic med structure and raping with it. Insurers here first off are opting out of the "Obama" system as has been well covered in media. Insurers are unlikely to spring 17,000 dollars for a DMT (ex: CAN costing) unless they have incentive (aka: the rebate system affords this incentive). Should it come apart we'll see, "Do Glatopa" even though Gilenya might be best. Make no mistakes about it, the Insurers are the powerhouses, not Pharma here in the USA.I've said this before, is it ridiculous for a DMT to make its billions .vs. other forms of goods. An Apple iPhone has production costs reportedly costs about $200 and retails at $650. Walmart is the wealthiest company on the planet yet does not own 1/10th of 1% of whats sold in store, its all consign with huge markups. People go "shock" when they see HIGH numbers. $55,000 a year for pills? Why in two years thats my mortgage!!! No, the $110,000 home over 30 years is now a $280,000 home. My initial home, $88,000, $900 a month (property tax taken off), $300,000+.Numbers can be perceptions. Patients in the USA see the $55,000 and since they are SO money oriented as they believe money equates to value of living they loose their minds. They'll readily ignore the $5 DVD at Walmart which has costing at .50 cents for a 900% markup.WATCH what happens over the next 5 years as "wellness" gets PUSHED by the care systems. That is to say, "We prescribe physical therapy, dietary etc" and people loose their minds. Where people are forced to change lifestyles or pay the piper in insurance / care if they dont. Like bad drivers in cars. I love America, dont get me wrong. But people love point fingers here and seldom look in the mirror and point there.

  5. Another question we need to ask ourselves is how did we allow ourselves to get into the situation where drug development costs have become so high (and risky)?"I blame the lawyers…

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