Here’s one Rx for slashing runaway drug costs: get the monopoly money out of U.S. health care. That’s the finding of a new study by Harvard researchers who blame “Government-protected monopolies” granted to drug makers for fueling the surge in prescription prices a trend that’s hitting American patients hardest of all.
In the U.S., spending on prescribed drugs exceeded $850 per capita in 2013 compared to $400 for the rest of the industrialized world, reports the study, published Tuesday in The Journal of the American Medical Association.
“Unlike nearly every other advanced nation, the U.S. health care system allows manufacturers to set their own price for a given product,” wrote lead author Dr. Aaron S. Kesselheim, an associate professor at Harvard Medical School and a pharmacoeconomist at Brigham and Women’s Hospital.
When the U.S. Food and Drug Administration approves small-molecule drugs, manufacturers get five to seven years of market exclusivity before generic competitors can be sold.
Under the same FDA umbrella, new biologic drugs are protected from competition for 12 years.
The price of cancer drugs has escalated by an average of $8,500 per year during the last 15 years, and the cost of drugs for each additional year lived by a patient spiked from $54,000 in 1995 to $207,000 in 2013, according to a 2015 commentary published in the journal Mayo Clinic Proceedings.
“Cancer care [cost] has risen more rapidly over the past couple of decades than other health care expenditures, and cancer drug prices have increased the most,” Lyman said via email.
He is an oncologist and co-director of the Hutchinson Institute for Cancer Outcomes Research or HICOR. A 2015 study of cancer-drug costs, written by HICOR director Dr. Scott Ramsey, helped inform the new Harvard findings.
EpiPens – portable devices packed with life-saving epinephrine to stop allergic reactions – now cost $365 per two-pack, unleashing national criticism this month. In 2015, the FDA approved daratumumab, a promising drug for multiple myeloma.
“We need a multipronged approach to this problem. A single solution is unlikely to entirely deal with it.” For example, the Centers for Medicare & Medicaid Services, CMS, which oversee Medicare and Medicaid, must be allowed to negotiate drug prices with industry as is the rule in all other major markets globally, Lyman said.
On that same point, the Harvard group recommends enabling Medicare to negotiate drug prices for individual Part D plans and to exclude coverage for pricey products that add limited medical effect.
“Hopefully, the introduction of biosimilars will increase competition and reduce costs over time.” But as Lyman and his HICOR colleague Ramsey wrote in a recent JAMA Oncology editorial, any policy changes that are deemed politically viable still will require some tradeoffs, perhaps even lessening patient access to cancer medicines.
“It’s not just the drugs but also rising use and costs of advanced imaging and the rising costs of hospitalization due to mergers and reduced competition among providers and health systems,” Lyman said.