Price of life

Amer­i­can leg­is­la­tors are try­ing to put a tab on pharma firms charg­ing ex­or­bi­tantly for spe­cialty drugs


Gbe­came the poster boy for high ILEAD SCIENCES drug prices when it launched So­valdi to treat hep­ati­tis C, a course of treat­ment that cost us $84,000, or us $1,000 a pill. That shocked the world. There was out­rage even in the de­vel­oped world which has al­ways de­fended the high prices charged by in­no­va­tor com­pa­nies as the cost of en­cour­ag­ing R&D and bring­ing new drugs to the mar­ket. But even the US Congress saw red over the So­valdi price, which in In­dia has been slashed to us $900 for the course. Be­sides, Gilead’s patents on the drug are un­der chal­lenge.

Medi­care, Amer­ica’s na­tional in­sur­ance pro­gramme for se­niors which has 54 mil­lion mem­bers, found that its pay­out on hep­ati­tis C drugs had gone through the ceil­ing last year at an as­tro­nom­i­cal us $4.7 bil­lion, com­pared to just us $286 mil­lion the year be­fore. But other health in­sur­ance pro­grammes, Med­i­caid, for in­stance, which cov­ers 70 mil­lion pa­tients, paid a quar­ter of this amount for the same drugs. That’s be­cause Medi­care, un­like the oth­ers, is barred from ne­go­ti­at­ing drug prices with the pharma com­pa­nies.If one thought So­valdi was over­priced, there are other spe­cialty drugs which cost as much as us $311,000 for a year’s treat­ment of cys­tic fi­bro­sis.

Healthcare in­sur­ance com­pa­nies are not the only ones who are burn­ing up over the cost of drugs. Aca­demics, physi­cians and pol­icy an­a­lysts have been ques­tion­ing the high prices charged for medicines, spe­cially those used to treat can­cer—these cost around us $100,000 a year up from us $10,000 just 15 years ago—while rub­bish­ing the claims of the pharma in­dus­try. Re­search by doc­tors at­tached to the Na­tional In­sti­tutes of Health (nih) and the Mayo Foun­da­tion have dis­proved the usual jus­ti­fi­ca­tions used by com­pa­nies for their price goug­ing such as high cost of R&D, drug de­vel­op­ment, com­par­a­tive ben­e­fits to pa­tients and the abil­ity of mar­kets to set­tle prices to rea­son­able lev­els.All claims have shown to be false.

The in­ter­est­ing cor­ner in the fight against big pharma, though, is the states. Here, the re­volt is out in the open with leg­is­la­tors in five states, Cal­i­for­nia, Ore­gon, Penn­syl­va­nia, North Carolina and Mas­sachusetts, bring­ing out bills that seek trans­parency in drug pric­ing. One of the he­roes of this long de­layed upris­ing is Cal­i­for­nia Assem­bly mem­ber David Chiu,a Demo­crat from San Fran­cisco, who moved a bill ask­ing drug mak­ers to ex­plain their pric­ing, the first leg­isla­tive at­tempt to de­mand ac­count­abil­ity from the in­dus­try.

Chiu’s trail­blaz­ing Pre­scrip­tion Drug Pric­ing Trans­parency Act would have forced drug com­pa­nies to re­port prof­its and pro­duc­tion ex­penses for any drug whose treat­ment ex­ceeds us $10,000. More sig­nif­i­cantly, they would have to ex­plain ex­pen­di­ture re­lated to sev­eral steps of the drug­mak­ing process, in­clud­ing a breakup of re­search and reg­u­la­tory costs, apart from mar­ket­ing and advertising costs.In sum, ev­ery as­pect would need au­dit­ing.

That move, as ex­pected, was de­feated with big pharma swing­ing into ac­tion with a prac­tised de­fence to stymie the bill. But an un­de­terred Chiu says he would bring a re­vised ver­sion next Jan­uary. A sim­i­lar bill was stalled in Ore­gon, but the fires are spread­ing with in­flu­en­tial pa­pers like the New York Times urg­ing law­mak­ers to act on the “run­away drug prices”.

In­dus­try’s whine is that some of the costs are hard to quan­tify and that com­pil­ing the data would be bur­den­some. In­ter­est­ingly, in In­dia too we have heard this ex­cuse. Bayer, while chal­leng­ing a com­pul­sory li­cence is­sued to Natco for its can­cer drug So­rafenib, had claimed the roy­alty rate was too low for the costs it had in­curred. Yet, it failed to give the Supreme Court its break-up of R&D ex­penses claim­ing that 98 per cent of the cost was on ac­count of failed drugs, which made pre­cise ac­counts im­pos­si­ble. In­dia’s Supreme Court did not buy this ar­gu­ment. Nei­ther should the peo­ple of Amer­ica.


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