One of the most contentious social issues in the US has been what to do (if anything) about health care, insurance, and rising costs. Over the last few years, that’s focused on drug costs. This article from the New Yorker is chock-ful of interesting tidbits about tidbits to add to the debate:
- How claims that high prescription drug prices are driven by extensive R&D costs are somewhat countered by cases where simple tweakings of the formula — and subsequent new patent status — mean that the only substantive costs are massive advertising campaigns.
- How costs are also driven upwards by patients demanding the Newest Thing (whether it’s the best thing or not), doctors willing/eager to prescribe it, and insurance companies willing to pay for it.
- How under-patent prescription drugs in the US are much more expensive than in Europe and Canada — but generic and OTC drugs are actually cheaper (due to price competition). This is actually of some concern to pharmaceutical companies, as more big-ticket drugs fall out from under patent.
- How overall drug spending has gone up faster than inflation in recent years — but a significant amount of that has not been drug prices, but more people being prescribed more meds, as more conditions (e.g., asthma) are treated more aggressively. Not just the prices, but the prevalence and intensity of drug use have increased.
- How the increasing use of Pharmacy Benefit Managers (PBMs) by employers and insurance companies could provide some significant cost savings more intelligently managing formularies and cost-effectiveness of different treatments in different circumstances, or more “managed care” horror tales of folks being kept from the treatment they need (and, most likely, both). Part of that, though, may also be communication and education of consumers — getting across the idea that the latest-greatest (and most expensive) med being flogged by a major pharma company may not be the best treatment, at least to start with, and that a consumer isn’t being cheated because they’re being “deprived” of that cool pill they saw on TV.
In other words, if producers, prescribers, and consumers of medication could be trained to act more rationally, at least some of the problems with drug costs in the US would be taken care of. And isn’t that a pretty thought?
(ObDisclaimer: My employer does major engineering/facilities contract work for some pharma-bio corporations, and my wife works for a major HMO.)
(via Andrew Sullivan)
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Speaking of the whole patent thing, the prices in Canada are only partially due to good bargaining. Canada blackmails the drug companies by saying if we don’t get a good price then we will invalidate your patents. It is cheaper to lower the price below market than start competing with a generic. The difference is made up here in the states. Something has to give, so as we see in high tech, R&D is the first to be cut. Thus, if we start re-importing these drugs, then we will get more formula tweaking and less truly innovative drugs. We may even get flu-shot style shortages.
Go ahead and reform what is or is not patentable, but this drive the prices down at all costs has huge unitended consequences. I’ll not have E.D. and my toenails will be fungus free, but I won’t have a clot buster if I a heart attack. Yuck.
Another thought here. We really do need to have a fairly large price differential between countries and not dip into the differential through re-importation. I will give the one drug that would do the most good to the most people in the world:
An effective sub-$1 a dose anti-malaria drug.
It is worth it to make some people insanely wealthy doing this. It would though require a large price differential so that people in sub Saharan Africa get the low price and I pay a far higher price when I travel there.
In addition to this, the research spillover to other mosquito-vector diseases, e.g. West Nile Virus, would also be great.