Consumers Not Given Whole Story on Rising Prescription Drug Prices
During the Independent Voter Project's 2015 Business and Leadership Conference, experts in the pharmaceutical and medical fields, along with California legislators, participated in a panel discussion on medical innovation up to now and what the future may hold for the industry and patients alike.
While much of the discussion piggybacked off Dr. Lanhee Chen's presentation that kicked off the conference, attendees also discussed a major concern among voters: the notion that prescription drug prices are on the rise and there is nothing stopping it.
Echoing the central theme of Dr. Lanhee Chen's presentation, members of the roundtable discussion marveled at the major steps the medical field has made in a relatively short period of time.
- In the last century, life expectancy has doubled, due in large part to advancements in technology and medical discoveries/innovations.
- In the last 14 years, 73 percent of increases to life expectancy came from health care innovations.
- 5-year cancer survival rates are up 39% across the board.
- Hepatitis C cure rate is at 90% -- a disease Dr. Chen referred to as a silent killer. It can result in liver cancer, liver failure, and other serious medical conditions.
- Death rate for HIV/AIDS is down 90 percent since its peak in 1991 and 1995.
The last statistic was remarked on as perhaps the biggest accomplishment the medical field has made in the last two decades.
Industry experts explained that in 1989, economists broadly believed that AIDS treatment was going to destroy the health care industry. However, the industry worked on more efficient ways to approach new therapies, lowering the cost of development. Years later, the economists' predictions turned out to be wrong, and lives were saved.
"HIV/AIDS went from a death sentence to manageable," one industry expert remarked.
Experts say that not only has treatment for diseases like HIV/AIDS and Hepatitis C become better and more efficient, they are also now financially manageable for most people.
Yet, a common concern among health care consumers is that prices for medical services and prescription drugs are on the rise. Headline after headline after headline further lead to greater concern over this perceived trend. Insurance companies point the finger at pharmaceutical companies while these companies in turn point the finger at insurance companies and rising premiums.
During his presentation, Dr. Chen mentioned that 90% of prescription drugs are filled with generics, a statistic repeated by industry experts during the discussion on drug prices. Experts explained that when a biopharmaceutical company develops a new treatment, over time more generic versions of the treatment begin to emerge, leading to lower costs for the drug.
"Discussions on cost components of our health care system and proper utilization of services is always a valuable exercise. Any careful analysis of the costs of medicines show that component has remained a consistent 10 percent of the health care dollar and is the most effective means of holding down other costs in the system," said industry expert Merrill Jacobs in a comment for IVN.
According to Devon M. Herrick of the National Center for Policy Analysis, while the average cost of a name-brand prescription drug was $268 in 2011, it was only about $33 for a generic drug. In theory, he says, generic drugs should face unlimited competition. More competition means more generic drugs in the market which should, in theory, keep prices down and in check.
For years, this was indeed the case. Recently, however, some generic drugs that had been on the market for decades increased in price. Herrick explained that approximately one-fourth of generics in the market rose 10 percent to 100 percent in price in 2014. There are many variables that factor in, but among the biggest Herrick cites are market consolidation and a slow regulatory process.
"Due to industry consolidation — and an FDA that is slow to approve new entrants into the field — there are many generic drugs for which there are only two or three competing manufacturers," he writes.
Some attendees at the roundtable discussion said 2014 was a unique year because so many drugs went off-patent and many new drugs entered the market, drugs that had little competition. When drugs go off-patent, it should -- again, in theory -- open the door for more generic drug makers. The problem is that it hasn't in recent years.
Policy experts and industry leaders may not be able to fully agree on who is to blame for high health care costs, but they do agree on one thing: competition is the key to keep drugs affordable for the average consumer -- more of whom are now insured under the Affordable Care Act, but still need access to affordable care and treatment.
It will take a collaborative effort by policymakers and industry professionals to encourage this competition, whether that means not discouraging more drug manufacturers from producing generic medication in the private sector or making the regulatory process more efficient to avoid long delays at the FDA for processing applications from generic drug makers.