U.S. Prescription Drug Prices Are Unsustainable, Experts Say

U.S. Prescription Drug Prices Are Unsustainable, Experts Say

By Victoria Kim 06/11/14

Doctors and industry experts have been sounding the alarm on the rising costs of drugs in America as compared to the rest of the world.

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When the breakthrough hepatitis C virus (HCV) drug Sovaldi made its debut last December, its high price tag caused an uproar. Currently at $1,000 a pill, or $84,000 for a 12-week course of treatment, the drug’s exorbitant price spurred a campaign against “unsustainable and abusive” prices, fueled by a coalition ranging from doctors to labor unions. In April, the World Health Organization called for a “concerted effort” to reduce the price of HCV medicines.

While the U.S. is a drugmakers’ paradise where people pay top dollar for prescription medications, Europe and emerging markets are not as friendly to drug companies. In Europe, national health systems use their influence for big discounts. India has rejected applications for drug patents or weakened them to let local companies produce cheaper copies. Cancer drug prices are 20 to 40 percent lower in European countries than in America, according to IMS Health, a data and consulting firm.

Sovaldi was a tipping point, said Dr. Steve Miller, chief medical officer for Express Scripts, America’s biggest pharmacy benefit manager (PBM) hired by insurers and employers to control the drug costs for the patients they cover. Typically, the most expensive drugs have been for small groups of patients with rare conditions, but there are about 3.2 million Americans living with HCV. If each was given Sovaldi, the cost would exceed $250 billion.

“If we don’t change the basic pricing structure of pharmaceuticals, this system will collapse,” said Miller.

According to lobbyists like John Castellani of PhRMA, the drugmakers’ lobby, American prices subsidize innovation that benefits patients worldwide. Gregg Alton, an executive at Gilead Sciences which makes Sovaldi, agrees. He argues that Sovaldi’s high price is worth paying, noting that patients are essentially cured after a 12-week course, avoiding the suffering and costs of HCV such as liver transplants.

In the meantime, Express Scripts is encouraging doctors and patients (“when clinically appropriate”) to wait about a year for Sovaldi’s competition to emerge on the market. UnitedHealth Group, America’s largest insurer, is paying some doctors a capped price for cancer treatment to discourage prescribing medications that provide little benefit.