The drug price hullabaloo…


The Weekly Packet for Friday, December 11, 2015

This post comes a couple of days early. Dermatologic cancers are part of the price one eventually pays for a career in the cardiac catheterization laboratory, along with skiing, tennis, and fly-fishing. I have my third new lesion of the past 2 years, a real beauty (imagine growing a rhino horn just in front of your right ear). I’m having Mohs surgery on Friday. It’s all under local, and not a big deal, but can take quite a long time.

Campus issues at my alma mater, Amherst College in Amherst, MA, made the New York Times last week. My class of 1964, now 55 years post-graduation, has an active email list-serve (yes, kids, the old guys can adapt!) and the commentary has been spirited. Give me a bit more time on this one, though.

From time to time, “A-ha” moments come along where observations from several different settings suddenly click into place and make sense. Something along that line happened this morning while I was walking with Posie. For the past fortnight, the media have been filled with discussion about drug pricing and the rather significant bump in US healthcare costs this year. The “A-ha” went as follows.

In the disciplines of scientific and clinical research, we repeatedly tell ourselves that association is not causation. This is not true in journalism, where the process can easily be extended further to “juxtaposition implies association, and association implies causation.”

The journalists who do not do their homework would like to lead you along a path that is marked by logical, but false assumptions. A dramatic increase in the price for an off-patent drug for toxoplasmosis (Daraprim, Turing Pharmaceuticals) may be socially unjustifiable, but the incidence of toxo is not high enough for its treatment cost to impact the US healthcare budget. (See: )

Here are a few facts to discuss with friends, family, and co-workers.  First, the three key drivers of US healthcare costs in decreasing order are: hospital care, physician and clinical services, and other professional services. Prescription drugs are very near the bottom of the list, just ahead of durable medical equipment. See: for the data.

What percentage of our health care spending goes for pharmaceuticals? The various figures range from a low of 9.7% to a high of 11.9%. The 11.9% figure comes from a reputable source, the OECD, so let’s use it, and round it off to 12%. If spending on pharmaceuticals increased a breath-taking 20%, the increase in total health care spending would be less than 2.5%. Actually, as a percentage of overall per-capital health spending, the US expenditures on pharmaceuticals are rather middle of the road. See:

This may be because “generics now account for 28 percent of pharmaceutical spending and 84 percent of drugs dispensed in the U.S., which is high by OECD standards.” Absent the introduction of the very costly anti-hepatitis C drugs, the bill for branded drugs would probably have grown very little.

Now, to wrap up, let’s ask why the industry is getting such bad press when most of the facts don’t support it? Here, I am going to venture into opinion. I think the time has come to have some serious discussions with senior management about marketing. Here’s a direct quote from Ron Shinkman,  “But the marketing of those [prescription] drugs has become at times questionable. John Oliver’s take on his HBO show last week was spot-on, poking fun at the young, sexy (and undereducated) pharma sales reps, the free meals and “thought-leader” designations for doctors, and the anthropomorphized bladders and other visual insanity in television commercials (Oliver was also kind enough to cite our sister site, FiercePharma). As a matter of fact, drug companies now spend more on marketing than product development. He didn’t even get into some of their even more troubling practices, such as lobbying Congress to bar Medicare from negotiating on pharmaceutical prices in bulk or buying them overseas, where the predominance of single-payer healthcare systems has forced drug companies to price their products at much lower prices.”

My take? When the ethical pharmaceutical companies ventured into “direct-to-consumer” marketing, they gave up far more than they gained. The widespread public respect for science-based companies that developed new medicines to manage or cure serious diseases was bound to crumble with “ask your doctor about (insert out drug)” followed by a list of contra-indications and adverse effects in the verbal equivalent of small print.

If those of us who work (or worked) on the scientific side of the pharmaceutical industry want to feel proud of what we do (or did), we have to realize that the industry itself has made some decisions that have not worked out well.