A vial of insulin cost less than $200 in the United States 15 years ago. Today, it sells for nearly $1,500, according to one estimate
farmer who raised hogs, cattle and sheep…[I] know when someone’s trying to pull the wool over my eyes.” So declared Senator Chuck Grassley, a Republican from Iowa, this week after the Senate Finance Committee, which he chairs, ordered top executives from seven global drugs firms to explain why American drug prices are the world’s highest. Ron Wyden, the senior Democrat on the committee, denounced the industry’s “two-faced scheming and profiteering”.
Big Pharma has been pilloried for decades but still flourished, not least because it keeps producing life-saving innovations needed by Americans, who are in aggregate getting fatter, older and sicker by the year. Still, the hearing marks a dangerous moment for the industry. Reforms may force big changes to a lucrative business model.Anger is growing over rising drug costs . Insulin cost less than $200 for a vial 15 years ago but sells for nearly $1,500 today, according to one estimate.
The second push is for transparency. In America, Big Pharma sells its output mostly to pharmacy-benefit managers , a handful of intermediaries who consolidate the demand generated by many insurers.s force drugs firms to give huge secret rebates on list prices in return for favourable treatment. Drugs bosses argued at the hearing that it wasThe Trump administration calls this a “hidden system of kickbacks to middlemen”.
The third, and more promising, area of likely reform involves boosting competition. Momentum is building for American regulators to catch up with Europe in promoting “biosimilars”, which are generic approximations of patented drugs. In America drugs firms sometimes use thickets of patents and payoffs to biosimilar upstarts so that a lucrative but ageing drug can be milked a few more years.
Imperfect though these proposals are, they still pose a threat to Big Pharma. Observing that at no time in his career has he seen such bipartisan commitment to tackling drug pricing, Dr Miller insists: “Drugs are the sharp end of the spear.” Perhaps, buts should take little comfort from the misery of Big Pharma. Congress is already planning to hold hearings on them, too.
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