The Pill or The Bill?
Updated: Apr 11, 2020
Making Affordable Prescription Drugs a Reality
By Arnav Sankaranthi, May 2018.
Patients in America struggle everyday as prescription drug prices skyrocket. The Wall Street Journal reports that Brien Johnson, owner of a legal advertising company, was diagnosed with mantle cell lymphoma. After an ineffective chemotherapy treatment, he began taking Imbruvica, developed by Johnson & Johnson and Pharmacyclics LLC and later acquired by AbbVie Inc. In early 2015, after a year of payments from his health insurance company, his insurer declined to continue paying for the drug with a reasoning that the drug cost exceeded his maximum limit of $5,000 per year for prescription drugs. Even though Johnson’s household income was nearly $200,000, he says, the cost of Imbruvica “at $12,000 a month, it would have wiped us out in a year.” When the drug ran out, his cancer aggravated leading to an 80-pound loss.
“I don’t know how much longer I have to live, and I don’t want to spend my last days fighting Blue Cross / Blue Shield over Imbruvica.” - Brien Johnson, Cancer Patient
Jacqueline Racener, a 76-year old legal secretary, was prescribed a leukemia drug to treat the cancer in her blood. Her out-of-pocket costs of the drug were $8,000 for one year, even after a majority of the expenses was covered by Medicare. Worried about dipping into her limited savings, Ms. Racener said, “There’s no way I could do that.” She then made the decision to not fill her prescription.
Huge bills for prescription pills makes it hard to swallow. Source: Flickr
Based on a study by The Oncologist in 2013, one quarter of cancer patients decided to not fill their prescription because of the costs. Due to the soaring prices of prescription drugs, Ms. Racener and Mr. Johnson’s stories are becoming increasingly common and are forcing them to make hard choices such as depleting their savings, selling their homes, taking new loans, and even giving up their treatment.
According to NPR, high drug costs are a problem for the elderly, many of whom have chronic conditions such as heart disease, diabetes, or cancer. According to a study in JAMA oncology, 10% of elderly patients with no supplemental insurance spend 60% of their income on cancer expenses. High prices of prescription drugs are contributing to unsustainable health care costs in the United States. Many American patients facing high drug costs are forced to choose between paying for their life-saving drugs or their house rents. This battle of the pill versus the bill has to end.
Prescription drugs are medications that can legally be dispensed only if the patient has a medical prescription. Let’s try to understand the background of the increase in prescription drug prices. In the US, we have many prescription drugs out in the market that are the same, if not very similar, to those circulated in other countries. As the graph below shows, Humira, a prescription drug, is substantially high-priced in the United States than in other countries. Why is this the case? Well, it all lies in the power granted to the pharmaceutical industry. According to Vox, the United States does not regulate the prices of new drugs that come onto the market.
In many countries in Europe and Asia, the government has more power to regulate the prices of drugs in the market. When pharmaceutical companies invent a potent drug and set a price to it, a regulatory body from the government performs an evaluation of the drug’s value and affordability. If this committee deems that a drug isn’t more effective than what is currently available or is not worth a high price, they have the ability to reject the drug from entering the market. These committees, in addition to determining the risks and benefits of the drug, also consider if the drug is affordable for all citizens, regardless of their income. Consequently, according to Vox, Australia’s Pharmaceutical Benefits Advisory Committee did not approve almost half of the anti-cancer drugs it was sent for review.
While other countries have access to affordable drug prices, America does not. There are no regulation committees from the government, thus major pharmaceutical companies have the ultimate control over how much money they want their drugs to cost. High drug prices bring these companies a plethora of profit, most used to fund additional research and development.
One in five Americans skip prescription drugs because of their costs. The burden of paying high prices for prescription drugs affects many of our seniors, neighbors, and communities, according to the Department of Health and Human Services. While America is a leading discoverer of new drugs, many Americans are unable to reap the rewards of these discoveries. President Trump critiques in his first press conference that Big Pharma is making significant profits and is “getting away with murder.”
President Trump critiques that the big pharmaceutical corporations are actually “getting away with murder” with high priced prescription drugs.
As per an article published by NIH, patients who are not able to afford expensive drugs seek alternative and cheaper options. Many look online to purchase cheaper versions of the same drug from other countries. However, this can cause serious harm as some of these drugs may be unsafe and untested. In fact, the FDA claims to have received thousands of counterfeit foreign medications that have been imported into the US. These unsafe drugs may worsen a patient’s health and may even be fatal, as some cases show.
You might be wondering why the US doesn’t have regulation committees like most other countries. According to TIME, the medicare drug benefit program, which covers 40 million Americans, chose not to negotiate drug prices. The medicaid program decided to cover all drugs approved by the FDA even if there was a cheaper generic and more effective drug available. Furthermore, third party pharmacy managers receive money from drug companies to shift market share in their favor causing private insurers not to negotiate with drug companies.
According to an article published in the New Republic, there are three main stages of development for a prescription drug. First, researchers discover and create a new drug in their lab. The second stage involves clinical research and trials. The third stage is when the FDA approves the drug and it goes to the mass market.
The US government is involved in the first stage, with the National Institutes of Health funding over $37 billion annually for science research. The government is also involved in the third stage, purchasing medicines worth $300 billion through medicare, medicaid, and other programs.
The middle stage of drug development is where the system runs into issues. The US government protects drug companies for their innovation by not allowing low cost generic drugs, drugs that perform the same as brand-name drugs, to be released into market. Because of the Bayh-Dole Act of 1980, private drug companies are allowed to claim patents on their innovation that extends exclusive rights to make and sell for 20 years or more. This blocks the creation of generic drugs that could reduce the prices significantly.
Government officials have proposed various ideas and concepts to put into action and solve the far-reaching implications of high drug costs. As stated in the blog of the Commonwealth Fund, one of the main reasons that pharmaceutical companies enforce high drug prices is the lack of competition. Even if competitors were available, high start-up costs, government approvals, and patents may hinder these companies from success. Accordingly, less competition leads to higher drug prices. The Commonwealth Fund cites papers published by medical experts to introduce pathways to not only increasing competition, but also lowering drug prices. Agencies and companies can provide sufficient information to patients and doctors in order to help them make informed decisions about which drug will be most beneficial financially and medically.
Additionally, pharmacists have the ability to provide drugs that are effective, but cheaper than more expensive ones. Organizations such as the FDA could also expedite approval for competitors who make generic drugs to existing therapies. Some experts propose that the government should stop patents that protect band-name drugs from competition--they should instead allow more valuable drugs to get longer patent protection time.
On the contrary, these solutions are not as simple as they seem. Big pharmaceutical companies need money in order to fund research and development, the process that encourages and enables new discoveries and treatment options. In fact, according to article in Forbes, it costs 2.6 billion dollars in research for pharmaceutical companies to develop a new drug. In order to expand their reach to gain more profit, pharmaceutical companies may wish to sell their product internationally. But if they go to another country to sell their drug, regulatory committees may hinder them from actually getting enough money to support their initiatives. Therefore, since the US does not have a regulatory system, these big pharmaceutical companies use the US market as their main avenue to profit and to compensate for the R&D costs. They do this by increasing their prices to meet their needs as a company.
Furthermore, there is a monopoly in place for the pharmaceutical companies that are doing research, development, and manufacturing of drugs. Since these brand-name drug companies hold a patent for 20 years, according to TIME, generic drug makers cannot create the same drug, resulting in high prices for the branded drug.
There is very little competition for drug manufacturers, which also contributes to high drug prices. Without enough incentives for competition, higher drug prices will cause a situation where the general population will not be able to afford to care for their seniors, children, or themselves.
In addition, if the solutions proposed are put into place, many companies can lose lots of money. According to the New York Times, the falling prices of generic drugs have decreased Teva Pharmaceuticals’ share price and caused the company to plan to lay off thousands of workers. When generics are being sold, company profits are decreasing. However, at the same time, branded drug prices are increasing and burdening patients across the US.
Analysts argue that the pharmaceutical companies are not actually spending a significant amount on R&D but rather on marketing and shareholder benefits.
The idea of value-based drug purchasing is promising. Instead of allowing all drug companies to price their products however they want, the government must regulate the prices of these medications. Through regulation, pharmaceutical companies can lower their prices and ensure consistency with those of other countries.
Regulation committees have had success in countries all over the world. Countries like Canada benefit from regulation committees, according to CNN. Canada’s health ministry uses a the drug review board, CADTH, to determine if a drug is effective and potent relative to other drugs in the market. Review Boards like CADTH can determine prices that are both fair and low.
But what about the pharmaceutical companies? Don’t they need some way to gain enough profit, if review boards lower prices? Since these companies must make their drug prices cheap and universal across the board, the patients who have previously skipped or delayed treatment due to high costs will now be able to afford these medications. If drug prices decrease, pharma companies can still be able to get as much if not more profit than before just due to their wider customer segment.
Another way to make prescription drugs affordable is to increase competition. The government could reduce the patent duration for brand-name drugs from twenty years to a shorter period of time. Consequently, generic drugs will have more chances to enter into the market and increase competition, thereby decreasing prices.
Indeed, high drug prices are not curing patients; they are killing them! Exorbitant price increases risk to a patient’s life. Many, like Brien Johnson, are not able to afford their medications and therefore have to cancel their treatment completely. America should push for measures of change, installing review boards, reducing drug patent durations, and voting for politicians who promote and implement these solutions.