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Have We Reached the Breaking Point for Drug Prices in the United States?


May 30, 2014

The last 10 years have been most notable for rising drug prices with prices doubling for many established drugs. These drugs target a variety of diseases but in almost all cases are not curative treatments. Rather they eliminate or reduce patients’ symptoms, arrest or slow disease progression or prevent a disease or symptoms.1 Rising drug pricing results in the inability or unsustainability of patients to afford drug treatment. Patients therefore discontinue their drugs for periods of time or all together suffering return of symptoms and disease progression. 

What is pushing the prices of drugs higher? First, FDA class 1AA or 1A rating,2 considered high therapeutic category drugs which means potentially faster FDA approval, are not being discovered at the same rates as 10-20 years ago so drug manufacturers are not realizing higher ratings as often. Second, many blockbuster drugs of the 1990-early 2000s are losing patent life so drug companies are raising prices on drugs which have remaining patient life. Third, companies increase prices when new competitors (new drug entities) reach the market with higher priced drugs either to match pricing or to recover lost income.

I believe in the market system of pricing. It is the backbone of the American economic system. But let’s offer an alternative to address the core value of patient welfare, quality of life, and the occasional life or death decision-making around a curative treatment. Instead of providing society with an upward one-way road of drug pricing over time, drug pricing should be determined by the treatment result; namely does the drug cure disease, arrest, or slow disease progression, or slow or prevent symptoms. Curative drugs should be priced as the most affordable as they are the most cost effective to society. Whereas, drugs that arrest or slow disease progression or prevent symptoms should be under market forces based on demand. The initial price for these drugs would be set by perceived market demand. Monitoring of demand over time would be under the direction of a neutral third-party so as to insulate drug sale evaluation from government or business pressures. This system would result in neutral or slower price increases. Furthermore, there is potential for lower pricing when product demand falls due to medical advances, lower use, or patent life expiration with generic market penetration. Most importantly, a person or their family would not have to financially suffer from a life or death decision when a disease cure is available because these drugs would be the most economically priced. Drug manufacturers could still market their products to society and healthcare providers but with a definable outcome we all understand in our current economic system: market share. This model would stop the current black box approach to setting and escalating the drug price by a manufacturer, allowing a transparent system for the government and the public to understand how drug pricing is set.

Yes, we have reached a breaking point for drug pricing in the United States. Patients should not have to ask why the price of a drug has escalated to a point unaffordable to them when the manufacturer has not improved the drug. Instead it would be better if market forces were being monitored rationally, and they could watch market trends and actually realize that drug price may fluctuate up or down over time.

What do you think about this issue?

 

Mark A. Munger, PharmD, FCCP, FACC, is a Professor of Pharmacotherapy and Adjunct Professor of Internal Medicine, at the University of Utah, where he also serves as the Associate Dean, Academic Affairs for the College of Pharmacy.

 

References:

1. Hepler CD, Strand LM. Opportunities and responsibilities in pharmaceutical care. Am J Hosp Pharm. 1990;47(3):533-543.

2. Sandborn MD. Godwin HN, Pessetto JD. FDA drug classification system. Am J Hosp Pharm. 1991;48(12):2659-2662.

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