In the middle of a pandemic where the U.S. death count is approaching 500,000, pharmaceutical firms have substantially raised prices for drugs. They did this in January, at a time when millions of people in the U.S. had already lost their jobs and their health insurance, forcing patients to go without drugs or pay out of pocket. The latter option is a pipe dream for many families because 30% of the American public admit they would have difficulty paying an emergency bill of $400.
Massive costs for drugs are common even for people with health insurance. Donna Talla of Springfield, Va. recently told The British Medical Journal that she’s thousands of dollars in debt for the medications she received after contracting COVID-19, despite having private insurance through her employer. “I think I’m going to have to sell my house,” Talla, 56, told The BMJ.
Amid all this calamity, the pharma companies last month raised drug prices by an average that’s more than three time the cost of living increase. In fact, according to Reuters, citing data from the research firm 3 Axis Advisors, the industry raised prices on more drugs in January than in any other month during the past three years. The prices of 619 branded drugs, those that are patent protected, rose by an average of 5.2%. Prices on some of the best-selling brands were raised even more. Humira, the world’s top-selling drug, received a price hike of 7.4%.
Physicians now report that an increasing percentage of their patients must skip doses, cut pills in half or fail to fill prescriptions because of unaffordable prices. Although this is a worldwide problem, it is especially dire in the U.S. In a study published last week, the RAND Corporation found that prices for brand name drugs in the U.S. average 3.44 times higher than in other countries. Across the world, national health systems use a variety of measures to constrain drug prices. The U.S. uses none of these.
In response to complaints about their pricing, the pharma companies give the false answer that they must charge high prices to conduct research that leads to better medications.
That is deceptive in more ways that can be discredited here. Suffice it to say that the overwhelming majority of new medications that pharma companies launch are me-too products with no therapeutic advantage over existing drugs.
In fairness, it should be acknowledged that the pharma companies have played an important role in rapidly developing effective vaccines for the pandemic. But it hasn’t been an altruistic endeavor. Nearly all of these vaccines were developed with government funding. At the same time, the government subsidized revenue for the pharma companies by agreeing to pay billions of dollars for the finished products, even before they were approved.
Take remdesivir, which treats infected coronavirus patients. The government heavily subsidized the development of this drug, which is only marginally effective. Yet its maker Gilead Sciences still set a price of $3,120 for a course of treatment that a patient or her insurer must bear.
The cost of COVID-19 vaccines is a better deal for consumers. Since the federal government has purchased hundreds of millions of doses, the vaccines are now free to all Americans, although Pfizer and AstraZeneca refused to state what prices they may charge in future years if modifications are needed.
The situation in poorer countries is more troublesome because most drug makers are charging higher prices than what many nations can afford. Although some may say that’s not our problem, epidemiologists know this is a hazard for us. If the virus continues running rampant anywhere in the world, it provides more opportunities for mutations that can re-enter the U.S. and resist available vaccines, prolonging the pandemic.
So is there anything that might constrain the drug companies from fleecing American consumers and taxpayers? The short answer is yes.
Some federal efforts, such as enabling Medicare to negotiate prices, would require Congressional approval. Other methods only need executive action, such as invoking U.S. federal statute 28 USC §1498 that would let the government use any patented technology.
Several states could also form interstate compacts to limit the prices of drugs sold there.
But proposals like these have been around for many years. It remains to be seen whether Americans will now make their officeholders address public needs instead of favoring pharma’s campaign contributions.
Daniel R. Hoffman, Ph.D., is president of Pharmaceutical Business Research Associates and co-author of, The Global Pharmaceutical Industry (Routledge).