A recent review from Harvard Medical School explores the factors fuelling high drug prices in the US, suggesting several ways to avoid exorbitant pricing, including increasing clinician awareness of healthcare costs .
Drug prices in the US are notoriously high; the country spent almost 18% of its gross domestic product (GDP) on health care in 2016 (~10% more than other developed countries). Despite this, significant health outcomes including infancy and maternal mortality are worse than nations that spend less. There is also significant health inequity; over 40% of Americans below average income say their healthcare needs are unmet and 45 million citizens did not fill a prescription in 2016 due to the high cost.
A recent report on drug prices in America  explores the role of physicians in this crisis, explaining that there is a lack of awareness and responsibility among healthcare providers. In a survey of almost 3,000 physicians in the US, only 36% agreed that doctors have a major responsibility to reduce healthcare costs and less than a quarter were aware of the costs of tests and treatments they recommend to their patients.
The report provides a number of case studies of both generic and branded drugs to treat infectious disease to illustrate the problems in drug pricing. Referring to branded drugs, the authors explain that companies usually use research and development costs to justify the high prices of drugs, yet this does not tally with their spending and profit margins compared to other sectors. A 2016 report to Congress said ‘the prices charged for drugs are unrelated to their development costs. Drug manufacturers set prices [after R and D has finished] to maximize profits’.
As an example of this behaviour, the authors introduce Sofosbuvir (sold by Gilead Sciences under the brand name Sovaldi). Sofosbuvir is used to treat hepatitis C, a virus which infects over five million Americans. It was sold to Gilead Sciences for US$11.2 billion in 2012 and launched at the price of US$84,000 for a three-month course. This is equivalent to approximately US$1,000 per pill, despite the manufacturing cost being just US$1.62 per pill. This pricing was significantly higher than in other developed countries; US$30,000 more expensive than the cost to patients in the UK and over US$50,000 more expensive than those in Portugal. However, in 2018, the cost for treatment dropped to US$55,700, thanks to competitors entering the market.
Tenofovir Disoproxil/Emtricitabine (Truvada), a pre-exposure prophylaxis (PrEP) drug for HIV, is also marketed by Gilead. It was the first drug approved in the US to prevent HIV; yet has come up against severe criticism due to its extortionate prices. Some activists even blame the price of Truvada for the stall in HIV prevention in the country, as only a portion of people who could benefit are able to access the drug, which costs US$20,000 per year. Although it is available through the President’s Emergency Plan for AIDS Relief for just US$57 per year, less than 20% of the one million people at high risk of acquiring HIV are receiving it. CEO of Gilead Daniel O’Day was recently questioned in Congress about the high price of Truvada , as the company made US$3 billion in revenue from the drug in 2018.
Even for generic drugs, the cost benefits do not emerge as soon as a drug comes off patent. Generic drugs too require generics market competition before prices can fall and sustained competition is essential to keep prices low.
As an example of lack of competition causing price hikes in the generic market, the authors discuss the case of albendazole, an anti-parasitic which increased in price from US$5.92 in 2010 to US$119.58 in 2013. This is because Teva Pharmaceuticals stopped manufacturing the drug in 2011, which gave one company (Amedra Pharmaceuticals) a complete monopoly on the drug in the US. Between 2012 and 2014, government spending on the drug increased by almost US$2 million.
Similar happened for Pyrimethamine, an unpatented drug for toxoplasmosis, which suddenly increased in price from US$13.50 to US$750 in 2015 when Turing Pharmaceuticals bought the rights to the drug. Despite its CEO serving time in prison for fraud, it continues to sell at this extortionate price under the company’s new name Vyera Pharmaceuticals.
Finally, the authors make a number of recommendations to prevent such inequitable pricing strategies:
• Education and awareness
Clinical programmes should include sessions around cost, such as reviews of inpatient bills, to bring attention to cost issues in day-to-day clinical practice.
• Include costs in clinician guidelines
Guideline convening agencies should be encouraged to include costs in the discussion, as such guidelines are a critical resource for clinicians.
• Government role in cost containment
The government should play a more active role in cost containment. Government regulation, legal restriction and pressure from public insurers could help to prevent exorbitant price rises.
They conclude that consumers, payers and producers of health care collectively bear the responsibility for drug costs. They say current drug pricing trends are unsustainable and a change is needed, with any cost savings made to be re-invested in health care.
Conflict of interest
The authors of the research paper  declared that there was no conflict of interest.
Readers interested to learn more about generic drug pricing are invited to visit www.gabi-journal.net to view the following manuscripts published in GaBI Journal:
How does generic drug policy affect market prices?
A comparison of European and US generic drug markets
Barriers to generics policy reform: a US case study
Readers interested in contributing a research or perspective paper to GaBI Journal – an independent, peer reviewed academic journal – please send us your submission here.
Multi-state lawsuit alleges widespread generic price fixing in the US
Escalating prices of generic drugs in the US
The 700-dollar vitamin: excessive generics prices in the US
1. Costantini S, Walensky RP. The costs of drugs in infectious diseases: branded, generics, and why we should care. J Infect Dis. 2019. doi:10.1093/infdis/jiz066.
2. NBC News. Ocasio-Cortez slams Gilead over HIV drug prices: 'People are dying for no reason'. 2019 May 17.
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