Contemporary Issues in Health Care Thursday, April 28, 2016 11:06 AM
Lecture 4/28/2016
i. Prescription Drugs: Causes of Rising Costs ii. Government Role in Regulation
Sovaldi: The Dilemma Dec 2013, gilead sciences released solvadi, a breakthrough hepatitis C drug that costs 84,000 over 12 weeks (one pill per day at $1000 each). Has a 90% cure rate and fewer side effects 2.7 million americans have hepatitis C if everyone with hepatitis C was treated with sovaldi, the cost would exceed 300billion (about what is spent on all drugs) Daraprim Sept 2015 turing pharmaceuticals bought a 62 year old drug daraprim (treats a food bourne illness that harms people with compromised immune systems such as AIDS patients) and raised the price from 13.50 per pill, to $750 Should drug companies be allowed to sell drugs at such high prices? Will efforts to control price reduce innovation Rise in drug spending from 80s to 2013- under 20 billion to over 400 billion
The US pays more for the same drugs Drug companies set prices Individual health plan negotiates with drug companies The average price of Nexium in the Us is almost 3 times more than the average price in Switzerland
Prescription drug costs More conditions are now treated with drugs and drugs are used to help prevent catastophic health problems like heart attacks (cholesterol lowering drugs) and strokes (blood thinners) Insurance companies have tiered structures of which drugs they will cover. Try to control costs by giving lower co-pays for generic drugs or specific brands have negotiated.
Specialty drugs like sovaldi or cancer drugs are in highest tier and patients must pay co-insurance 2003 medicare added a prescription drug benefit. Medicare part D. seniors
Plans vary in cost and types of drugs covered
Affordable care act more people have insurance through plans purchased on the exchange and expansion of medicaid= more can buy drugs Obama promised creation AcA and exchanges would not lead to government negotiation of drug prices
How much does innovation cost? Research and development costs for new drugs are high. Range from $500
million to $2.6 billion from research through trials and FDA approval process Must prove the drug is safe and effective (works better than placebo for the condition but not necessarily better than other things on the market Takes 12-15 years to develop a new drug. To make a profit the drug must cover
its costs and the cost of other drugs that fail
The cost of innovation
Drug companies need to make a profit so they are more likely to research drugs that have a proven market (Cholesterol drugs, allergies). Harder to find drugs that treat more rare diseases.
1992 Prescription Drug User Fee Act reauthorized in 2012 requires drug companies to pay a fee when they submit applications for new drugs. 60% of money to review drugs comes from these fees. The law was designed to help
speed the process of new drug approval (hire the needed staff etc.). These fees are used to cover