Why Drugs Cost So Much

Posted June 17, 2009, at 7:17 p.m.

The increasing cost of prescription drugs is one big reason why we need health care reform this year. Prices keep rising for drugs doctors prescribe to control such threats as asthma, diabetes, high cholesterol, and high blood pressure. Pills cost so much these days that many Americans must choose and pick which ones to take.

Cancer drug prices have skyrocketed, with three widely used products — Avastin, Erbitux, and Gleevec — costing $10,000 or more per month, according to a February report in the New England Journal of Medicine. Their costs have risen 267 percent in seven years, creating a special burden on Medicare, which is barred by law from negotiating lower prices.

“The United States is the only advanced country that permits the pharmaceutical industry to charge exactly what the market will bear,” said Dr. Marcia Angell, former editor-in-chief of the medical journal and now a senior lecturer in global health and social medicine at the Harvard Medical School.

She has denounced the Medicare Part D drug benefit, enacted by Congress in 2007 with great fanfare, as “a terrible piece of legislation.” It not only prohibited Medicare from negotiating drug prices but also set up a complicated formula that can force paid subscribers to spend up to $3,800 a year out of pocket. While it may help some people, she wrote in a 2007 Boston Globe article: “Mainly it’s a windfall for the pharmaceutical and insurance industries.” She noted that Rep. Billy Tauzin, the Louisiana Republican who chaired the committee that oversees the drug industry, promptly left Congress and “was rewarded with a high paying job as chief executive of the pharmaceutical industry’s trade association.”

Dr. Angell has often assailed the industry’s claim that companies must charge high prices to finance research to develop new drugs. She concedes that research is costly but contends that they spend far more for marketing and administration, which include advertising and promotion, not to mention profits.

She said in the Globe article that most of the new drugs the firms develop are not advances over old ones but just minor variations with higher prices and new patents when the old patents were running out. She calls them “me-too” drugs, which are unlikely to be better than existing ones for the same condition. She noted that the FDA doesn’t require companies to compare the new drugs with old ones, just with placebos.

The pending health care reform package should permit price negotiation, provide for judgment as to the effectiveness of me-too medications, and halt the needless cost escalation.

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