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States Asking Big Pharma About Astronomical Drug Prices

— April 28, 2015

colorful-pillsColorful Pills by Vera Kratochvil

Continual increases have states asking big pharma about astronomical drug prices. Many states are even proposing legislation that will force big pharma to share its development costs and profits as justification for ever-increasing prices.

Tony DeLuca, a democratic representative in Pennsylvania, introduced legislation this week saying, “We need to have some transparency. Some of the sticker prices are outrageous. I’m hoping it achieves lower health-care costs.” The timing for these legislative efforts couldn’t be better as debates over pricing continue to heat up nationwide. Some of the proposed bills would make big pharma share profits as well as operational expenses for any medicine that costs over $10,000 per year. Other bills require such reporting for all drugs.

As rising prices cause public and private payers heartburn (don’t worry, there’s a pill for that!), big pharma has gone on the defensive. Critics of the prices argue that newer medicines for hard-to-treat diseases shouldn’t be as expensive, nor should older generic drugs, the purpose of which was to provide lower-cost alternatives. Big pharma’s response to that is that certain drugs, especially the newer hepatitis C treatments, are a good bargain in light of the longer-term price tag for traditional treatments. How compassionate, right?

Despite the efforts of supporters of the bills, some of whom helped legislators write them, (including insurance companies), big pharma is pulling out the big guns. Such a bill was recently defeated in Oregon and efforts in California this week managed to get the vote postponed until next week.

Ken Kaitin from the Tufts Center for the Study of Drug Development (full disclosure: the Center gets backing from big pharma) says, “The price charged for an individual drug is not a reflection of development costs. Pricing strategies are based on therapeutic value, market size, usage, patent life, competition and other factors.” This, he argues, is why big pharma simply can’t meet the demands of the proposed legislation.

The proposed bills are a great start as far as dealing with rising drug costs. When deep pocketed insurance companies are complaining about the prices that deeper-pocketed big pharma is charging, you know those are some high prices! I understand the idea of “for profit” corporations and I don’t expect big pharma to give away treatments for hep-C at no charge.

However, I take exception to charging $80,000 for one course of one of these treatments. It’s possible to make a profit without charging so much that insurance companies refuse to pay. Sadly to big pharma’s eyes, a profit is not the king of all profits. I eagerly await the results of the rest of these proposed bills.


Drug Prices Trend Up, and States Want to Know Why

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