Pharmaceutical Industry Haunted by Support for Government Health Care

By Klein, Philip | Examiner (Washington, D.C.), The, May 29, 2014 | Go to article overview

Pharmaceutical Industry Haunted by Support for Government Health Care


Klein, Philip, Examiner (Washington, D.C.), The


Drug makers are under fire as the $84,000 price tag on a new hepatitis medicine has galvanized the debate over prescription drug costs. But the pharmaceutical industry could be mounting a much stronger defense if it weren't haunted by its support for government health care.

At the heart of the latest controversy is Sovaldi, a miracle drug introduced this year and manufactured by Gilead Sciences, Inc., that cures 90 percent of Hepatitis C cases, a condition that affects 3 million people. The catch: the drug costs $1,000 per day, and thus the price of the full 12-week treatment exceeds that of many luxury cars.

The sticker shock has triggered a shaming campaign, led by the insurance industry, that is part of a broader economic and moral debate over what is a fair price for drug makers to charge for miracle medicines.

Some added context for this is that between 2010 and 2012, the growth of spending on prescription drugs had been nearly flat, as blockbuster drugs such as cholesterol medicine Lipitor lost their patent protection and became available in generic form.

There is mounting evidence that this trend may be coming to an end, as more specialty drugs come to market and more Americans gain coverage through President Obama's health care law.

Insurers argue that the rise of expensive specialty drugs such as Sovaldi will cripple efforts to contain the growth of health care spending. In 2012, prescription drug spending was $263.3 billion in the U.S., representing about 9 percent of overall health care spending.

In a statement defending the industry, John Castellani, president and CEO of industry lobbyist the Pharmaceutical Research and Manufacturers of America, or PhRMA, argued, "It is penny wise and pound foolish to focus solely on the price of a new medicine while completely ignoring the value it provides to patients and the health care system broadly. …

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