The magnitude of the problem is astonishing. Although expensive specialty drugs are only 2-3 percent of all prescriptions, they account for approximately one-third of all medication costs. According to a report late last year by IMS, a market data supplier for the pharmaceutical industry, the costs for these specialty medications will keep rising 15 percent a year until it reaches almost $235 billion in 2018, at which point they will constitute half of the total spending on all pharmaceuticals.
It's no wonder that pharma is concentrating more and more of its R&D in specialty categories such as cancer, where the opportunity to resist exorbitant prices is weakest. 60 Minutes reported that more than 1,000 cancer drugs are under development with price tags that average $120,000 a year.
Diabetes, another major health issue that affects 30 million Americans, has also seen the prices for medications rise enormously. Newsday reported that the cost of diabetes medications is expected to continue rising 18.3 percent annually over the next three years. That represents a growth rate 60 times greater than recent increases in family income. For example, the price for Januvia, a diabetes drug from Montgomery county's Merck, rose 93 percent between 2010 and 2015.
Shake a stick in almost any direction and extraordinary drug price increases will appear. Teva, an Israel-based drug company with offices in North Wales and Malvern, makes Copaxone, an injectable for multiple sclerosis. Copaxone used to cost $2,358.60 for 30 syringes in 2008. It now costs $6,072.40 for the same 30 syringes, an increase of 157 percent.
That's actually a modest increase. The injectable antibiotic doxycycline was $20 per bottle in 2013, but the price rose 9,145% in 2014 and it now sells for $1,849 per bottle.
So does anyone think that the exploding costs for medications are acceptable?
Yes, and unfortunately they're in the driver's seat.
First, the pharmaceutical industry itself, along with its flacks in the media and Congress, see nothing untoward about this trend which is making medication unaffordable.
Forbes' columnist and pharma cheerleader John LaMattina stated last week that concerns among insurers and pharmacy benefit managers about the high prices of PCSK-9 inhibitors are irrelevant. He argues it shouldn't matter that this new drug class for high cholesterol will cost $14,000 per patient per year and add $100 billion to the nation's annual health care bill, thereby raising everyone's premiums. He believes if outcomes studies of those products which will start appearing in 2017 show that they reduce heart attacks, strokes and other cardiovascular episodes, insurers should cover them regardless of the costs and the premium increases.
Recent history shows that such thinking usually prevails in this country. In the early and mid-1990s, HMOs and other health insurers made a serious effort to control rising health care costs. Unfortunately, they did so with a meat axe, denying coverage for useful tests and procedures in the process. By 1997, a strange phenomenon emerged around the country during showings of the popular movie, As Good As It Gets, starring Jack Nicholson and Helen Hunt. When Hunt's character blasted her HMO because they wouldn't cover allergy testing for her asthmatic son, audiences in movie theaters everywhere spontaneously rose and cheered her condemnation.
Reaction to the movie reflected a political pressure on payers that soon rose to a furious level and forced them to relent. The result has been a steep escalation in health care costs and premiums ever since.
The country doesn't necessarily have to face a Hobson's choice between saving lives and paying shamefully high health care costs that will knock the economy on its butt. The nationwide adoption of electronic medical records that the Affordable Care Act encouraged and subsidized was intended to resolve the dilemma by using Big Data to determine which patients can only be helped by super-expensive medications, while others can use less costly therapies with good effect.
Unfortunately the state of health care IT (HIT) does not yet permit such decision making. Dr. Robert Wachter, Associate Chairman of Medicine at the University of California, San Francisco and a leading expert on the subject, said HIT "has been overhyped, riddled with problems and, so far, has not even developed the kinds of universal standards that would enable capabilities to progress."
Most authorities on HIT expect it will take another decade before database analyses can help navigate this matter. Pharma intends to use that time to line its own pockets.
At least one other influential source in the country sees nothing wrong with that. The Chicago School of economists resolutely maintains that whatever the market permits is economically efficient and, if it proves to be otherwise, then the market itself will do away with it.
This approach recently led to a droll standup comedy routine.
Question: How many Chicago School economists does it take to change a light bulb?
Answer: None. At the University of Chicago, they believe that if the light bulb really needs changing, then the market will do it.
Unfortunately, since the time of Ronald Reagan, that thinking has prevailed in the United States, much as it did before the Great Depression of the 1930s.
Absent an entirely unanticipated breakthrough in HIT, that thinking which places private profit ahead of social benefit will lead to either an unacceptable rationing of health care or spending levels that will squeeze out education, infrastructure and other necessities.
The only alternative lies with a government cram-down on drug prices. That prospect it at least worth some consideration.
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