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Sunday, September 27, 2015

Marcia Angell, "Why do drug companies charge so much? Because they can.": Not Exactly

After 32-year-old Martin Shkreli, the chief executive of Turing Pharmaceuticals, raised the price of Daraprim, used to treat toxoplasmosis and on the market since 1953, from $13.50 to $750 a pill just two months after his company acquired the drug, Hillary Clinton was quick to lambaste the pharma industry for price gouging. On the heels of this controversy, Marcia Angell, a senior lecturer in social medicine at Harvard Medical School, also accuses the pharma industry of price gouging in a Washington Post opinion piece entitled "Why do drug companies charge so much? Because they can.":

"Daraprim illustrates the way most drugs are priced: They are invented not by the companies that sell them now but by someone else. Then, like big fish swallowing little fish, larger companies either buy small firms outright or license promising drugs from them.

Very often, the original discovery occurs in a university lab with public funding from the National Institutes of Health (NIH), then licensed to a start-up company partly owned by the university and then to a large company. There is very little innovation at the big drug firms. Instead, their major creative output is trivial variations of top-selling medications that are already on the market (called 'me-too drugs'), to cash in with treatments just different enough to justify new patents.

. . . .

The public should demand something in return for all that governmental support. Other advanced countries regulate drug prices in one way or another: Some cap profits, some cap the rate of price increases, some have formularies that limit drugs in each class to those that are most cost-effective, and some regulate in more than one way. But they all have some form of regulation, and the result is much lower prices for the same drugs. In the United States, by contrast, Congress has blocked Medicare from negotiating the price of drugs or creating a formulary for patients. It’s time that we, too, move to stop price-gouging by the pharmaceutical industry — even when no one notices."

Well, not exactly . . .

Although Angell claims that the "major creative output" of big drug firms is "me-too-drugs," she fails, for example, to mention the immunotherapy cancer breakthrough being pursued by the industry.

And although Angell would have us believe that "very often" the original discovery occurs in university labs, she also fails to note that university studies in many instances are not reliable.

Even more important, Angell makes no reference to the cost of new drugs or the number of small biotechs that have fallen by the wayside while trying to reach the promised land. As observed in a Forbes article entitled "The Cost Of Creating A New Drug Now $5 Billion, Pushing Big Pharma To Change" by Matthew Herper:

"There’s one factor that, as much as anything else, determines how many medicines are invented, what diseases they treat, and, to an extent, what price patients must pay for them: the cost of inventing and developing a new drug, a cost driven by the uncomfortable fact than 95% of the experimental medicines that are studied in humans fail to be both effective and safe.

A new analysis conducted at Forbes puts grim numbers on these costs. A company hoping to get a single drug to market can expect to have spent $350 million before the medicine is available for sale. In part because so many drugs fail, large pharmaceutical companies that are working on dozens of drug projects at once spend $5 billion per new medicine."

Unfortunately the next generation of life-saving immunotherapies comes with a hefty price, most of which is not being shouldered by the government. Kill this innovation because it is costly? I don't think so . . . all of which has nothing whatsoever to do with young Mr. Shkreli's behavior.

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