The High Cost of Drugs isn’t Just a Problem for Insurance Companies
Recently, I was asked by Modern Healthcare Executive to contribute to an article on the high cost of certain drugs and what can be done to make drugs more affordable. There’s nothing like being asked to participate in research to get you digging for factual information that can help to separate the wheat from the chaff. I found the entire process to be a great learning experience.
I was asked to address the high cost of rare disease drugs, but first, a note about proprietary or branded drugs and generic drugs. We understand that generic drugs are the “cheap” version of branded drugs, and are usually the low-cost alternative to branded drugs. The research bears this out; generics generally have very low increases in price due to multiple manufacturers selling a particular drug, with easy entry into that drug by other competitors. In short, market competition helps to limit the cost of generics.
Branded drugs are the opposite of the generics. Branded, proprietary, and orphan drugs are protected by patents and often have double-digit price increases. No competition means no market forces to hold down the price increases.
Here is what I contributed to Modern Healthcare Executive:
“Eculizumab (Soliris), developed for the treatment of myasthenia gravis, a chronic autoimmune neuromuscular disease that causes weakness in the skeletal muscles, has an annual cost of over $500,000, according to John Sarich, VP of strategy at VUE Software, a firm that specializes in innovating and automating business processes for the insurance industry.
‘The 39 most expensive drugs in the U.S. range from an annual cost of low $10,000’s to high $500,000’s,’ Sarich says. ‘They are designed to treat very serious medical conditions. It should be noted that pharmaceutical companies are international businesses with drug manufacturers spread throughout the world. While subsidies abound, the U.S. does, in fact, pick up a disproportionate share of the drug costs.’”