In support of Pharma Pros -- not Pharma Bros

  • by: Peter Pitts |
  • 04/08/2016
From the pages of the Detroit News:

Don’t burn drug execs at the stake

There’s a torch and pitchfork sale underway in the nation’s capital — or so it would seem from Congress’ recent witch hunt targeting the pharmaceutical industry.

The Senate Special Committee on Aging has called upon a long list of industry executives to explain their pricing practices. House Democrats recently launched a task force to investigate supposedly excessive drug prices and consider potential legislative remedies.

And a probe led by Sens. Ron Wyden, D-Oregon, and Chuck Grassley, R-Iowa, scoured 20,000 pages of emails from Gilead looking for evidence of wrongdoing.

The closest thing to a smoking gun was the senators’ meek conclusion that Gilead fulfilled its legal, fiduciary obligations to maximize shareholders’ returns. Oh, the horror!

But drug costs aren’t climbing faster than general health care inflation. In fact, robust market competition has helped drive down prices. Federal intervention is unnecessary and counterproductive to the goal of improving American health care.

Pharmaceuticals represent only about 10 percent of national health care spending — a share that’s remained remarkably stable since the 1960s.
That doesn’t mean medicines aren’t becoming more expensive. They are. But their prices aren’t increasing faster than health care services as a whole. Much media coverage has focused on last year’s 13 percent increase in the list price of brand-name drugs. Far fewer journalists and politicians bothered to mention that, factoring in rebates and discounts negotiated by insurers and pharmacy benefit managers, actual net drug spending has only increased 5.5 percent. That’s right in line with overall health care spending growth.

Sadly, Congress will probably ignore such facts. It’s much easier to score cheap political points by demonizing an entire industry based on isolated anecdotes. But even those misleading examples of bad behavior prove that government intervention isn’t needed.

Consider Turing Pharmaceutical’s recent price gouging on Daraprim, a seven-decade-old treatment that combats parasitic infections in people with weakened immune systems. Turing’s 5,500 percent price hike, from $13.50 to $750 per pill, prompted toothless outrage from the media and politicians — and a crippling response from a private sector competitor, Imprimis, which released a $1 per pill alternative.

Simply put, competition works.

New regulatory intrusions on drug pricing would undermine innovation. Firms would be less willing to risk billions creating new medicines.
And since medicines lower health care costs by improving patient health and warding off more serious complications, government interventions that discourage drug development will increase health care spending, not cut it.

For instance, anti-retroviral drugs have cut the HIV/AIDS death rate a stunning 85 percent since the mid-1990s. That didn’t just save tens of thousands of lives — it also saved the U.S. economy $615 billion by averting health care spending and increasing worker productivity.

Congress’ inquisition of the pharmaceutical industry is meant to justify government restrictions on drug pricing. If facts still matter, free-market competition will be exonerated and upheld as the best way to contain health care spending while delivering quality care. If they don’t matter, and legislators insist on imposing innovation-killing price controls, future health care savings will go up in smoke.

Peter Pitts is president of the Center for Medicine in the Public Interest.

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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