Major price hikes by pharmaceutical companies have become big news these days, and many consumers are none too pleased about what they’re hearing. Ironically, much of this has been brought to light by Turing Pharmaceuticals’ ill-fated attempt to raise the price of Daraprim by a whopping 5,000% overnight. Daraprim is a treatment for people with compromised immune systems.
Turing’s move rankled many, and a media backlash ensued. Although Turing CEO Martin Shkreli announced that the firm would bring the drug’s prices back down, as of this writing that hasn’t happened yet.
Turing might have misstepped on its own behalf, but that wasn’t an isolated case. Industry analysts and political leaders are increasingly up in arms about rising prices for other prescription drugs.
Rising Prices, Rising Awareness
The Wall Street Journal recently wrote about the rising cost of multiple sclerosis drug Avonex, which manufacturer Biogen has increased 21 times over the past decade. And, according to the Journal, wholesale price increases for 30 top-selling drugs averaged more than 76%, eight times more than general inflation increases.
In the US, these price increases have traditionally gone largely unnoticed because neither consumers nor physicians were typically aware of the actual costs of prescription medications. Historically, it’s been insurance providers, government agencies such as Medicare and the Department of Veterans Affairs, and large employers that have felt the sting of ever-increasing prices.
However, that trend is reversing, and rising drug prices are becoming more noticeable to patients, who are paying a growing share of their prescription costs out of pocket.
Cause and Effect
Pharmaceutical companies have responded to the public’s concerns by saying that price hikes help pay for the research and development of new and innovative treatments. Furthermore, some have stated that looking at the price of a drug in and of itself is shortsighted; we should instead take into consideration the overall impact a prescription has on the health system (including the prevention of additional health problems).
According to PhRMA, the industry’s primary lobbying arm, efforts to cap skyrocketing “would restrict patients’ access to medicines, result in fewer new treatments for patients, cost countless jobs across the country and end our nation’s standing as the world leader in biomedical innovation.”
Scary prospects, all. But do those claims hold up to scrutiny?
These issues have not gone unnoticed by regulators and politicians, and legislative proposals have been introduced to drive down drug costs. Critics say that the lobbying power of Big Pharma has allowed drug manufacturers to raise drug prices, citing that the industry has spent more than $900 million on lobbying in the US since 1998. In the same period of time, the amount of money Americans spend on prescriptions annually has more than doubled to $234 billion.
The US pays higher prices for prescriptions than any other country. In certain plans to bring down costs for consumers, there are provisions that would allow Americans to import drugs from Canada. (Some drugs cost as little as 10% of the US price when purchased in Canada.) Some patients are already doing just that, but buying drugs from Canadian pharmacies is currently illegal, and the FDA has stated that these consumers are taking a health risk in purchasing non-FDA approved medications. Still other patients who can’t afford their medications are simply doing without.
Change of Heart?
It appears as though Big Pharma is beginning to buckle under all of the pressure. Financial Times reported last week that Valeant — which has hiked prices on old drugs as recently as early this year — has announced that it will reconsider those types of activities going forward. And Allergan CEO Brent Saunders told FT that he believes these deals will slow down with all of the negative publicity.
Separately, Teva Pharmaceuticals research chief Michael Hayden is calling for an end to irresponsible raising of drug prices. For years Teva has faced negative publicity in light of its raising the price of its multiple sclerosis drug Copaxone.
Industry analysts aren’t convinced that these practices will be completely stopped, though. What is likely is that pharmaceuticals will shift away from making eye-popping overnight price hikes but will instead make changes in a slower, less-pronounced manner.
Big Pharma says that introducing legislation to cap drug prices could limit access to medicines and even prevent the discovery of new and improved drugs. Meanwhile, opponents and critics say that unnecessary price gouging is rampant in the pharmaceutical industry and something needs to be changed. Unfortunately, there is danger that this debate will become politicized, which could ultimately thwart any potential for change for the foreseeable future.