Excessively high prescription drug prices are a substantial financial burden on Americans like Louise and her husband, but they also increase insurance premiums and taxes for you and me by increasing costs for insurance companies, Medicare. and Medicaid. The company will pay the remaining $ 200,000 from these higher premiums and taxes.
Tafamidis isn’t the only super expensive drug that the FDA has recently approved. Danyelza, approved for neuroblastoma, a type of cancer, costs nearly a million dollars per year per patient. Folotyn for one type of lymphoma costs over $ 800,000 and Blincyto over $ 700,000 for one type of leukemia.
I’m an oncologist who has seen his patients reap huge benefits from the kind of high-priced innovation that pharmaceutical companies love to talk about. I am also a health policy scholar who has carefully considered the long-term impact of drug company prices and profits. I am convinced that we do not have to choose between reasonable prices and innovation. The truth is, if Congress passes a law to give Medicare bargaining power to make drugs more affordable, we’ll still have solid innovation.
It’s not just my personal opinion. In August, the non-partisan Congressional Budget Office looked at the past investments of drug companies and estimated that if their returns on the top 20% of drugs fell by 15-25%, drug companies would not develop two of the 200 drugs. likely to be marketed. FDA approval over the next 10 years. This means that drug price regulation such as that envisioned in the reconciliation bill would only prevent 1% of all new drugs from reaching the market.
It’s harder and much more uncertain to predict more than 10 years into the future, but the CBO estimated that from 2031 to 2040, this price regulation would lead to the development of 23 fewer drugs, which means we would still get 95 % of new drugs. which would hypothetically be produced without any price regulation in place.
We must also remember that all New drug is a innovative medication. Indeed, a study by Deloitte found that out of 35 drugs classified as “innovative” because they are “new molecular entities”, only seven of them – 20% – were truly innovative in the sense of combating. disease in a new way, not just by copying. mechanisms used by previous drugs. Likewise, a study of the 46 new drugs approved in 2017 found that 17 of them, or 37%, offered no or minor additional benefits over existing drugs. (And this percentage could be even higher, since 19 of these drugs were not evaluated for their degree of innovation). It’s not a lot of innovations that could be scrapped due to drug price regulation.
There are several other reasons to believe that drug price regulation will not reduce R&D for innovative drugs. Companies in other sectors spend more on R&D than pharmaceutical companies, even though their profit margins are lower. The company that spends the most on research – over $ 40 billion a year – is Amazon, famous for its low prices and low profit margins. Many automakers, such as Volkswagen, Daimler, and Ford, often invest more in R&D than pharmaceutical companies, even though their profit margins are lower. Indeed, among the 20 companies in the world that invest the most in research, only four are pharmaceutical companies – and the first pharmaceutical company ranks only ninth. Obviously, many other industries don’t need the same super high prices and profits to justify high investments in innovation.
More importantly, the prices in the United States for only the top 20 best-selling drugs are so high that their profits more than pay for all pharmaceutical company research in the whole world. A 2017 study showed that pharmaceutical companies made $ 116 billion from high prices in the United States compared to what they would have earned at European prices, but they “only spent 66% of that amount. , or $ 76 billion, for their [total] Global R&D. In other words, high prices in the United States inflate the profits of pharmaceutical companies by $ 40 billion compared to what they invest in all research and innovation. Of course, they can afford a little less profit, or on the contrary, spend less on marketing and lobbying, and be able to maintain their current investment in R&D.
All the evidence suggests that the regulations in the Congressional Reconciliation Bill will only reduce prices by about 10 percent and lead to well over 95 percent of the planned drugs reaching the market. This hardly constitutes the “end of innovation” that drug companies and others worryingly warn is inevitable with any price regulation. Regulating drug prices also does not mean that millions of Americans will have to suffer for lack of a cure or transformative treatment for their cancer or serious illnesses.
This means that tens of millions of Americans, like Louise’s husband, could finally afford the drugs that could save their lives.