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The New War on Drugs


High-priced drugs are becoming a hot-button political issue. But the solutions are much more complex than political soundbites.

Cost of Drugs

More and more patients are paying more and more out of pocket for prescription drugs. The average cost of employer-based coverage is now $17,000 and patients are digger deeper and deeper into their pockets, particularly for drugs like the HCV drug, Sovaldi.

The outrage has reached the private server of Hillary Clinton, who has now come out, along with other candidates, for price controls, along with other regulatory mechanisms to limit the rise in prices. Even hedge fund managers are buckling under the pressure.

The new war on drugs and drug companies has created a front with two basic opposing camps. The Red Team claims that most don't understand the economics of drug discovery and development or the overall cost effectiveness of new drugs when compared to the status quo or competitive offerings. They advocate for a free market solution that would support the realities that drug innovation takes lots of money and involves lots of risk, investors need to be assured that they can get fair returns on their investments, and the solution lies in finding better ways for patients to get the money they need to pay for innovation.

The Blue Team favors a more regulatory approach, questioning the veracity of research and development and marketing claims and demanding more transparency and the ability to negotiate price discounts for Medicare users.

Demonizing BIG PHARMA is blood sport reminiscent of BIG OIL and plays well in Peoria.

The reality is that escalating drug prices are an existential threat to bundled pricing schemes, particularly as more and more elderly people take more and more boutique or biosimilar drugs, have orphan diseases, or have genotypes that limit effectiveness and therefore require more complex and expensive trials to demonstrate safety and efficacy. There are solutions:

1. Speed innovation.

2. Remove regulatory barriers to create competition.

3. Allow Medicare to bargain for prices and group purchasing.

4. Remove the bio-medical complex revolving doors.

5. Create better ways to do cheaper, faster, better clinical trials.

6. Educate the public and professionals about biosimilars.

7. Better cross talk between the Food and Drug Administration and the Centers for Medicare and Medicaid Service.

8. More stringent cost-effective analysis.

9. Pay for value pricing.

10. Better genomics to remove “one size fits all” prescribing.

It remains to be seen how we balance regulation and public health concerns with innovation. But there is nothing more dangerous than a voter with a wounded wallet during a Presidential election year.

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