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An Arm and a Leg

How serious and widespread is the problem of overpriced drugs?

It’s an incredibly complicated and pervasive problem. Our federal policies create and protect monopolies so drug companies can charge whatever they want, even for old off-patent drugs, and in a growing number of cases, for generic drugs. It’s statutory, regulatory and it has permeated our drug economy at the cellular level. We have created the opportunity for exploitative behavior like the infamous Martin Shkreli, who increased the price of the toxoplasmosis drug Daraprim from $13.50 a tablet to $750 overnight. Hauled in front of Congress, he plead the Fifth Amendment, and then later tweeted to the world that his Congressional interlocutors were “imbeciles.” However, the reality is that those same people angrily questioning Shkreli that day made the very policies that created his opportunity in the first place. And guess what? Nothing has changed.

In a year where there will likely be reform of the Affordable Care Act, we should consider reform of the other areas of the healthcare value chain, including drug pricing. While wages have been stagnant for most Americans for decades, drug companies raise prices every year and sometimes twice a year. Patients are dealing with increasing out of pocket costs and higher deductibles. While we need to reward innovation, we should use market-based principles to rebalance patient exposure to high drug pricing.

How do we make the distinction?

Consider cataract surgery, the most commonly performed elective surgery in the world. It’s an incredibly successful and safe procedure, but it can always be improved, right? The problem arises when innovation results in increased costs to patients for only minor improvements in their outcomes. Does using that expensive laser to make a hole in the bag really give much better results than a surgeon doing it by hand? It certainly costs more! Do we want to invest in improvements of products that are marginal or do we want to invest in truly innovative products such as Sovaldi and Harvoni that have the power to cure hepatitis C? As a society, we must encourage and reward transformative innovation and consider the value we are willing to pay for more marginal advancements, while always allowing patients to have the freedom to buy what they wish.

How did you manage to offer a one-dollar alternative to Daraprim?

When drugs are affordable, you don’t need discount cards, rebate programs, “patient access” teams, prior authorizations or pharmacies “switching” prescriptions. In that specific case, making a drug where the chemicals used to make it costs less than potting soil was the easy part. These types of drugs should be affordable – but they’re not, in large part because our country’s policies do a much better job of advancing the interests of large pharmaceutical companies instead of the customers who rely on their products. It would be a good thing if pharmaceutical companies believed their “customer” was a patient-in-need instead of an insurance company or a drug benefit manager. For too many, the opposite is true.

What about the regulatory landscape?

We need reform, including amending the mission of the FDA to overcome our current competition and affordability challenges. There are many opportunities to make effective change. For example, one in five prescriptions in the US is written off-label. It’s common and, candidly, necessary. The question is: why, when we have the FDA, is there even such a thing as an off-label drug? That doesn’t sound good or safe, does it? The next question is: how do we make it easier to get drugs approved so that we have fewer off-label uses of drugs?

And what does that reform look like?

If something isn’t working, we should change – and not persist in failure. A first step is to commit to reform. Second, regulatory barriers need rethinking. Why should orphan drugs be approved with one efficacy trial, not the two or three it usually takes? If a new chemical entity orphan drug can be approved with a less expensive and risky standard of evidence, then why do we require two or three trials for new uses of old off-patent, already approved drugs – or for any drug for that matter? Why should people with orphan diseases be treated any differently than a patient who cannot afford a medication because Martin Shkreli finagled the creation of an artificial monopoly for its product? Reforming these policies and embracing competitive forces in the market would squash the likes of Shkreli and his ilk.

I also say we need a strong FDA to protect the public from unsafe drugs. But how about allowing the market to work more with respect to efficacy? In practice, companies spend millions (if not billions) of dollars to take a drug through multiple risky and expensive efficacy trials, yet insurance companies can decide not to put the drug on formulary and in effect deny access. Patients are beginning to understand that they are ultimately paying for the high cost and risk associated with multiple efficacy trials which limit competition and increase the costs of drug development.

So for new chemical entities, let’s treat non-orphan drugs the way we treat orphan drugs. For old off-patent FDA-approved drugs, if it is legal to prescribe an approved drug off-label, why make companies take massive risk to go through multiple efficacy trials to get a new label? Why not eliminate efficacy trials for new uses of already approved drugs, or allow an efficacy submission to be based on the clinical experience of the many off-label uses? The bottom line is that the entire process needs rethinking, but we also need lawmakers to have the gumption to take action.

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About the Author
Mark Baum

Mark Baum is the founder and CEO of Imprimis Pharmaceuticals.

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