Ever wonder why drug prices are so high?

[Norman Bernstein]

I've often wondered too, but I'm way too suspicious to buy the usual conservative crap about the costs of R&D.... so, this article might be worth a read:

http://www.latimes.com/news/opinion/commentary/la-oe-brownlee25apr25,0,453349.story?coll=la-news-comment-opinions

Here's an interesting highlight:


The recent case of drugs known as atypical antipsychotics is instructive....Earlier this year, the American Journal of Psychiatry published an analysis of 30 separate trials involving head-to-head comparisons of five drugs. Nine out of 10 times, the drug made by the company that funded the study came out on top. When Eli Lilly, the maker of Zyprexa, funded five studies of its drug, Zyprexa was found superior in all five. But when Janssen, the maker of Risperdal, ran its studies, Risperdal came out ahead.

....Meanwhile, industry-funded research is failing to provide the clinically useful answers physicians and patients need in order to pick the best treatment....If we want answers to such questions, the public is going to have to start paying for them. Earlier this year, a $44-million National Institutes of Health study found that drug makers' claims notwithstanding, not one of the five newer antipsychotic drugs offered any meaningful improvement over an older drug that cost up to 10 times less.

[uncas]

The excuse will be the costs of research and development
I would like to ad the cost of advertizing.
No, just read your synopsis. Not the article.

[Phillip Allen]

doesn't supprise me

[Norman Bernstein]

That's the problem, Phillip. Nobody is surprised... and nobody is outraged. The truth is there to see, but people are simply blind to it.

[Nicholas Carey]

One of the problem with blaming drug costs on "the costs of R+D" is that the a huge amount of drug R+D is government-funded: 42% overall and that goes way up when it comes to the highest-risk projects where the probability of a [profitable] commercial payoff is least. And if the gov't funds the pre-clinical trials, that covers 2/3 of the total R+D cost for a new drug.

That's a lot of insulation for the pharmaceutical industries (and a whole lot of public vesting in the rights to the drugs developed, IMHO).

[Norman Bernstein]

The politically correct answer, Fred, would be to argue that free markets and open competition will reduce prices.... but since it hasn't, one might wonder just how 'open' and 'free' the markets really are.

The politically incorrect answer... or at least, a partial answer: since the gov't regulates prescription drugs, and part of the charter of the FDA is the determination of effectiveness, why isn't the FDA ranking new drugs for effectiveness relative to cost... and publicizing the results?

For example, Celebrex and Vioxx both were shown to be no more effective than ordinary ibuprofen and tylenol in terms of reducing pain and inflammation... their slim advantage (less stomach upset) would be justified in only a tiny minority of patients, and their dangers (heart attacks, etc) were grossly understated... one might say 'suppressed'... by their manufacturers. A clear and objective statement of the virtues of drugs relative to their costs by the agency charged with overseeing that industry would help.

An even more politically incorrect answer: prohibit drug companies from advertising to consumers. The right wings will HATE that idea, for sure.

[High C]

Drug prices are high because they are now routinely being bought with insurance. Once again, as the consumer is removed from the process, any sense of value goes out the window.

[Norman Bernstein]

Drug prices are high because they are now routinely being bought with insurance. Once again, as the consumer is removed from the process, any sense of value goes out the window.

This fails the test of ordinary logic.

Insurance companies make money by reducing costs... so the obligation of the buyer to drive prices down falls on insurance companies, not on the consumer, these days...so why aren't the insurance companies bargaining for lower prices? (Hint: there's an answer for this which does NOT fail the test of ordinary logic)

[huisjen]

I think there's an arguement for decriminalizing them to take the profit out of them. Make it legal to grow....

Oh wait, that's not really what we're talking about, is it?

Dan

[High C]

...(Hint: there's an answer for this which does NOT fail the test of ordinary logic)

I remember, maybe in the early to mid 80s, the first time my major medical policy added an RX benefit. I had never heard of such a thing. I had previously bought prescriptions with cash, and they were always pretty dern cheap.

As RX coverage became more and more common, I began to hear more and more about the dramatic increases in drug costs. "Hmmm", I though to myself, "there seems to be a corelation here."

That's logical.

[Jagermeister]

The recent case of drugs known as atypical antipsychotics is instructive....Earlier this year, the American Journal of Psychiatry published an analysis of 30 separate trials involving head-to-head comparisons of five drugs. Nine out of 10 times, the drug made by the company that funded the study came out on top. When Eli Lilly, the maker of Zyprexa, funded five studies of its drug, Zyprexa was found superior in all five. But when Janssen, the maker of Risperdal, ran its studies, Risperdal came out ahead.


Unfortunately, I have all too personal experience with atypical antipsychotics prescribed for a family member (not myself, if any of you were wondering). I don't care what the studies show, different people react differently and finding the appropriate drug is almost certainly a matter of trial and error. The psychiatrist needs an arsenal of drugs to choose from, as they try to find one that stabilizes without prohibitive side-effects (which also varry by individual). The other problem is that sometimes a patient will become resistant, and they will need to switch to another drug.

My family member, who is now too old to be covered by my insurance, is currently taking Risperdal, which would be about $600 / month out-of-pocket. Luckily, Medi-Cal covers the cost, or there could very well be another "street person". In my family member's experience, Zyprexa wasn't even appropriate for the particular affliction.

In my experience, psychiatric medication isn't like other medication, where you can substitute one for another with impunity. There is too much variability. Doctors aren't even certain why or how certain medications work for some afflictions.

I'm not sure how much this applies to Norman's original issue, except that antipsychotics aren't probably the best class of drugs to use as examples for medication studies. After all, the typical user probably doesn't want to be on the drug and can't pay for the drug by themselves. It's not the type of market you can advertise for and attract new consumers. I'm not sure why they cost so much. I hope the money goes into new research, because even as good as the new drugs are, they still lack quite a bit as far as controlling the affliction without undesirable side-effects.

[George Roberts]

I don't think drugs or anything for that matter can cost "10 time less."

Perhaps the various trials are measuring different things.

[Jagermeister]

not one of the five newer antipsychotic drugs offered any meaningful improvement over an older drug that cost up to 10 times less.

Not sure which one this is. I know lithium is very helpful for some types of bi-polar, and the costs are much lower for lithium. But lithium has potentially very harmful effects if the does is incorrect, and so much be accompanied by frequent blood tests to check the drug level, which are another associated cost. I wonder if the older antipsychotic had similar limitations.

[Norman Bernstein]

As RX coverage became more and more common, I began to hear more and more about the dramatic increases in drug costs. "Hmmm", I though to myself, "there seems to be a corelation here."

That's logical.

I can't quite agree.

First, it is true, and has always been true, that non-patented medications fall in price to very low levels, due to genuine competition. An aspirin, for example, is positively a miracle drug, yet it costs less than a penny a tablet to make, and can be bought for little above that amount.

The number of high priced patent medications available in the early 80's or before is but a tiny fraction of what's available now... and what is commonly prescribed for what might be called 'low level chronic conditions'. For example, Lipitor is one of the most common prescription drugs prescribed, and a very high percentage of adult males have elevated cholesterol. Prior to Lipitor, I took niacin... cheap as dirt, nowhere near as effective, and not without side effects... but Lipitor costs nearly $3 per 10mg tablet... and patients who take it are recognized to probable need to take it in perpetuity. The dangers of elevated cholesterol were not appreciated 20 years ago... and the payoff for cholesterol control is a reduced incidence of heart attack.

Do the insurance companies care? Not really... they can raise rates with impunity to cover expenses, and it's less expensive than covering a heart attack. If anyone complains, they can always point to the prices of drugs. They don't write the prescriptions, so they really don't have any meaningful negotiating power... but then again, neither would the consumer. If anything, putting the drug decision making process into the hands of the consumer would only increase costs, not decrease them, because the drug company advertising could scare the pants off the average uninformed consumer: 'take our new expensive drug every day, or you'll die a miserable death!'.

[Norman Bernstein]

I'm not sure how much this applies to Norman's original issue, except that antipsychotics aren't probably the best class of drugs to use as examples for medication studies....

You're probably right on this one, Jaeger.... psychiatric medications do vary in effectiveness qwuite widely, for different patients.

However, I think the original posting illustrated the more general point.... and the thirty studies they 'studied' sure weren't all psychiatric medications. We've known about a number of non-psychiatric examples, like the Celebrex/Vioxx one, for some time now.

[John Bell]

Not trying to defend the drug companies, I don't see them as 100% good or 100% evil. But in another thread Norman said:

Quality products do not sell themselves... marketing and promotion is possibly the most important element of any product/service business, and it's frankly hard to do, as well as expensive.

Most entrepeneurs want to concentrate on their product or service... and this is great. However, the best product or service in the world will not survive unless the message can be gotten out... and getting the message out can be especially difficult. Any business plan demands that the marketing and promotion aspects take top priority.

I think this is just as true of a 'cottage industry' as it is of a conventional/larger business. If you can survive and grow on word of mouth, outstanding... but if you can't, you need to know what else to do, in order to grow.


As profit making enterprises, they should be allowed to promote their wares, should they not? Why should this kind business be different from any other?

Edited to add: False advertising isn't cool under any circumstances.

[Norman Bernstein]

As profit making enterprises, they should be allowed to promote their wares, should they not? Why should this kind business be different from any other?

Edited to add: False advertising isn't cool under any circumstances.

Well, it is indeed a 'different business', John. The consumer is not empowered to make purchasing decisions... he can only exert indirect influence. The doctor does the prescribing, subject to (and aware of) the patient's insuror's rules concerning what they will or will not pay for... so drug company advertising directly to patients isn't quite 'fair'. Patients will gladly harangue a doctor for the 'latest and greatest', even if it's no more effective than some drug at 1/10th the price, and/or without dangerous side effects.

Furthermore, there's an issue of consumer education. Drugs are a regulated industry, for reasons which are necessary and obvious (unless you thought that the practice of including cocaine and heroin in over-the-counter medications, as was common prior to drug regulation was put into place) is a good idea. The problem is that the regulation is only partially useful; the FDA can control safety, and to a limited degree, effectiveness.... but it does nothing about cost-effectiveness. A drug company can put an alternative, patented medicine out on the market, price it 10 or 20 times higher than a functionally equivalent generic drug, and mislead consumers into believing that it's somehow 'better'... even if it has more serious side effects.

[brad9798]

Oh the consumer does make purchasing decisions ... I can recall several times when a doc prescribed the latest/greatest for one of the kids, only to have me asking for an old standby ... translation: copays for latest/greatest are 40 bucks ... old standbys are 8 bucks in my plan.

Doctors also get incentives from the drug companies ... just like most salespeople (get incentives from suppliers).

Other than that, no, I have not wondered why drug prices are so high.

[uncas]

Are there not currently lawsuits against the makers of Vioxx?
Something else which has to be taken into account.
I could be wrong.

[George.]

Ooops... I thought this was about recreational drugs. Of course, we all know why the prices of those are so high... ;)

[Meerkat]

One of the problem with blaming drug costs on "the costs of R+D" is that the a huge amount of drug R+D is government-funded: 42% overall and that goes way up when it comes to the highest-risk projects where the probability of a [profitable] commercial payoff is least. And if the gov't funds the pre-clinical trials, that covers 2/3 of the total R+D cost for a new drug.

That's a lot of insulation for the pharmaceutical industries (and a whole lot of public vesting in the rights to the drugs developed, IMHO).
Except that the public that paid for the research and development never recoups a dime. Corporate welfare in spades.... :mad:

[Meerkat]

Prices of some prescription drugs, those advertized on TV, went up 50% after the FDA started allowing TV ads for prescription drugs. If demand also went up (how does that happen - do more people get sick?), then the drug companies must be scrambling to collect all that manna from consumer's pockets. :rolleyes:

[uncas]

Meer
No, the ads make us think they are sick and need the medication. Hell, I have never heard of so many symtoms, diseases, and problems that we are all suffering from.
It is amazing the human race has lasted so long. My I must have everything from toe nail fungus to acid reflux, to sleepless nights, to whatever.
I must admit, on those ads, I love how they go through the dangers of taking what ever pill they are pushing faster than you can say what is in a big mac.