Massive Pharmaceutical Cost Increase Seems Imminent

Are Pharmaceuticals forcing us to choose between our health and our country's financial health?
Are Pharmaceuticals forcing us to choose between our health and our country’s financial health?

A few weeks ago, I wrote about how patients, insurance companies, and pharmaceutical companies are seemingly on a path towards spiraling drug costs which have the possibility of sinking the U.S. healthcare system (Everyone Acts For Themselves). The day after I wrote that piece, Senator Ben Cardin was taking questions from people at a town hall-style meeting at my work. When nobody wanted to be the first, I stood up and asked him, “Given the higher drug prices for chronic conditions are consistently being placed on a higher copays tier by insurance companies and pharmaceutical companies are paying some of these to preserve the patients’ access to the drugs, does congress have a plan to slow the incoming onslaught of higher costs?” I then gave my Tysabri example and some information on the new drug to cure Hepatitis C.

After some filler while he composed his thoughts, he said Congress is actively monitoring prescription drug costs, but at this point there is little momentum behind any fix as the various stake holders have a lot of influence to kill any proposals. Yikes.

Hepatitis Impact on Medicare

This week, we got some information on the impact of the new Hepatitis C drug on Medicare. Last year, Medicare spent $4.5 billion dollars to treat Hepatitis C, and the drug was not available all year long. Keep in mind, Medicare spent $286 million on the other older Hepatitis C drugs in 2013. That is a huge increase, and potentially it will grow fast. With 350,000 Medicare beneficiaries believed to have hepatitis C, if they have access to Sovaldi which costs $87k, Medicare is looking at a potential liability of more than $30 billion.

This is only one condition.

These numbers are just for Medicare, not Medicaid or private insurance. According to the CDC, there are approximately 3.2 million people in the US with Hepatitis C. Even if the new competition with Sovaldi cuts the costs in half, we are talking about $139.2 billion dollars to treat one condition.

At some point we will have to change the question from “can we” to “should we.” We need to make sure we are answering the right question. To me, the natural follow-up is if we can but maybe should not under the current system, do we live with the answer or change the system? There are a lot of methods to change the system which might work. My current favorite is the changing of patent law to allow the U.S. government to buy any patent for X dollars. It would have to be a lot to avoid stifling innovation, but what if the U.S. reserved the right to buy a patent for $10 billion if its importance was deemed in humanity’s interest? Could the U.S. then partner with other countries to share the costs of moving an innovation straight to generic with the world benefiting?