“America’s drug-pricing system is broken,” writes Matthew Herper on Stat. “Any system in which the list price of insulin triples in a decade, leading patients to ration it and sometimes die, is not working. Cancer patients should not worry that their disease will bankrupt them. The U.S. insurance system, which has instead gone decades without making tough decisions about how to pay for medicines, should not be passing on so many costs to patients. But it’s also a reality … that cutting drug prices will mean companies spend less money on research and development. The result will be fewer new drugs. When nearly 150 biotech CEOs warned that the drug pricing bill passed by the House of Representatives on Dec. 12 would destroy their businesses, they were freaking out for a reason.
“What should be bracing is that it’s impossible to gauge how, exactly, the bill would affect the development of new medicines. Anywhere between 17 and 59 drugs are approved annually. The Congressional Budget Office concluded the House bill would reduce the number of drugs approved over a decade by as many as 15. The President’s Council of Economic Advisers puts the number at 100. …Facing this seemingly intractable problem, both sides are retreating into fantasy. Drug company executives still don’t realize how much things need to change. But reformers often seem more focused on vilifying drug companies than proposing commonsense solutions. Pharma, they say, is super-profitable and spends more on marketing than on research and development. (This is not true, though the industry does spend more on selling, general, and administrative expenses, which includes a lot more than marketing, than on R&D.) The good news is that there are paths forward, ways to lower drug prices while minimizing the impact of those changes on the invention of new drugs. But getting the best of both worlds requires dealing with reality as it is, not as either side of the debate wants it to be. I’m not going to solve the problems inherent in our drug pricing system here, but I have some stories that I think can get us closer to the truth.” Matthew Herper, “The debate over America’s drug-pricing system is built on myths. It’s time to face reality,” Stat.