Will the war on high-cost drug pricing stifle innovation? #PoliticalSpeak #MSBlog #OffLabel
“We have had much debate on the issue of high-cost drugs on this blog and have discussed the pros and cons endlessly. We have also taken a stand on the issue of the unaffordability of high-cost DMTs for pwMS living in resource-poor healthcare environments and have actively promoted off-label prescribing as a way of addressing this issue. If you have MS and couldn’t afford a high-cost drug aren’t you better off on a cheap off-label DMT that has some evidence supporting its efficacy in MS? This strategy is pragmatic and makes sense as we move from ‘simply putting pwMS on a DMT and hope for the best’ strategy to ‘treat-2-target of NEDA’. With a treat-2-target strategy pwMS who don’t respond to one DMT will be switched to another class of DMT with more efficacy.”
“The following perspective article in the NEJM highlights some of the issues in the US with high-cost drugs and some of the options the US Federal government has to reduce the price of drugs. This is not a trivial issue; in relation to MS DMTs some products cost 5x more in the US than they do in the UK. NICE has been very effective at driving a hard bargain with Pharma to get down the costs of DMTs for pwMS in the UK. This is also happening in most other countries with socialised healthcare systems. It was only a matter of time before the US Federal Government would put a stop to the US subsidizing drug development costs for the world. The new fight on high-cost drugs in the US, is the beginning of this process of sharing the burden of drug development costs. These US initiatives will have knock-on effects and I suspect as we see drug prices fall in the US we will seem them start to rise in Europe and the rest of world.”
“Some of the issues raised in this perspective piece are very interesting and hence I would suggest you read the whole article. A very interesting point highlighted in the perspective is that when central governments get involved in procuring access to new and innovative drugs they reduce pharma investment in innovation. Good examples of this is the virtual absence of a market for innovation in vaccines and antibiotics in the US. I recall a similar problem in the UK about 15 years ago when the Department of Health interfered with the market for IVIG (intravenous immunoglobulin); they allowed a subsidised product onto the market that was being made by a spin-off company from the Blood Transfusion Service. The subsidised UK product had an unfair advantage undercutting the private providers to such an extent they couldn’t make any money; they voted with their feet and pulled out of the UK market. As the blood transfusion service couldn’t produce enough IVIG we had a shortage of IVIG in the UK that led to its rationing. A a result of this rationing many patients couldn’t be treated with IVIG and we had to use resort to using more invasive alternative treatments, such as plasma exchange. This is an example of the law of unintended consequences; you think you are doing good by lowering prices, but in the long run you may be doing the exact opposite by reducing incentives for innovation. This is a difficult balancing act for politicians and is probably why there is so much debate and disagreement about how to deal with the issue of high-cost drugs. Another question we need to ask ourselves is how did we allow ourselves to get into the situation where drug development costs have become so high (and risky)?”
Conti & Rosenthal. Perspective: Pharmaceutical Policy Reform — Balancing Affordability with Incentives for Innovation. N Engl J Med 2016; 374:703-706.
……The high prices of prescription drugs have become an issue of paramount concern to Americans. This concern has now found its way into policy proposals from presidential candidates and is preoccupying state and federal lawmakers…..
…… Congressional investigations are examining the way in which drug companies set prices, and proposals for making drug pricing more transparent are pending in seven state legislatures…..
….. Lawmakers and others have identified multiple possible reforms to address the affordability of prescription drugs……
…… Direct negotiation of prescription-drug prices by the federal government, however, is a solution for which there may be little congressional appetite…..
……. Patient-advocacy groups and pharmaceutical companies are united in their concern that with substantially increased government involvement come the risks of reduced access of patients to new drugs and reduced company investment in innovation. They point to the virtual absence of a market for innovation in vaccines and antibiotics, therapeutic classes for which the federal government is the monopsony purchaser……
……. The prospect of losing ground on innovation and diminishing their own credibility with industry partners has chilled lawmakers’ previous resolve to enact direct regulation of pharmaceutical prices……
……. Public outrage over recent high-profile cases of extreme pricing in the U.S. pharmaceutical market suggest that our laissez-faire system may not be achieving the balance of affordability and incentives for innovation that Americans want…..
……. Realistically, the best options for meaningful reform of prescription-drug policy to improve this balance focus on increasing value-based competition……
…….. However, market-driven policies are not a panacea. They do not resolve the dilemma of extremely high launch prices for arguably high-value new products without close competitors…..
……. To preserve incentives for welfare-increasing innovation, the rewards for developing such products must be substantial, but if prices are the only mechanism through which returns on research flow, affordability will be compromised…..
…….. Evidently, there is no single, easy answer to high and escalating drug prices in the United States…….