Does Cutting Drug Prices Kill People?

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  • 01/15/2015
Peter Bach yet again tries to make the case that new drugs are too expensive.

He writes: "The price of drugs is so unfair and mystifying that publlic often pays a high price when the identical drug is available at a fraction of the cost."

Actually, he didn't write that.  It's from another New York Times article: " Drug Prices Here Held Inequitable. "   It was written 40 years ago.  Burks, E. (1965) Drug Prices Here Held Inequitable. The New York Times Retrieved from

What he did write is another variation on this very old theme: "We can free insurers and government programs from the requirement to include all expensive drugs in their plans as we explain to the public that some drugs are not effective enough to justify their price. If we do this, we can be confident that manufacturers will lower their prices to ensure their ability to sell their products. Or we can piggyback on the gumption of bolder countries, and demand that policy makers set drug prices in the United States equal to those of Western Europe. Either approach would be vastly superior to the situation we have today."

First the facts.  

1. Nearly 90 percent of all brand drugs are discounted.  Companies pay rebates to Medicare, Medicaid, and the Veterans health system.    In the private sector (including Obamacare plans) drug firms pay rebates to pharmacy benefit management companies to get preferred listing.  

2. Bach is incorrect in claiming insurers have to cover every ‘expensive’ drug.  Express Scripts has 66 products on its 2015 formulary exclusion list, compared with 48 in 2014. CVS Caremark’s 2015 list has 95 products, including 72 carryovers from the 2014 edition.  

He loves this idea.  But what about patients?

From Managed Care Magazine:  

"The problem with this approach is that by adding more tiers health plans have confused employees and made some medications more expensive — the antithesis of a value-based strategy. They also have retained cost-sharing mechanisms that make high-priced drugs unaffordable for many patients, Vogenberg says. A 25% copayment on a drug priced at $1,000 a day costs a patient $1,750 each week or more than $7,000 per month. Many patients simply cannot afford their medications, even though commercial plan members often use copayment assistance programs from pharmaceutical manufacturers and can avoid such high cost-sharing amounts, says Brenda Motheral, RPh, MBA, PhD, president of Artemetrx, a specialty drug management consultant.

Bach is silent as PBMs pocket rebates while at the same time sticking patients with the higher costs of meds.

3.  Compared to Europe and Canada, on average Americans then pay slightly more for new medicines  in exchange for faster and broader access.   On average we get twice the new medicines about a year and a half earlier with fewer restrictions.  When all is said and done, using Euro-prices would save a grant total of 8.6 billion.. less than one third of one percent of total health care spending."

4.  Contrary to Bach, Americans also pay less out of pocket for medicines than in Europe. On average, out of pocket costs are about $800.  

4.   European speand more on cancer care as a percentage of health care and less on cancer drugs.  

Nowhere in Bach's article does he mention the value of broader, faster access to new medicines.   Let's stick with the European comparision.

Cancer mortality rates in the US are lower than most anywhere in Europe for every major cancer.  And five year survival rates (adjusted for lag time and incidence) are much higher and increase faster.  That doesn't include the life years lost when people with advanced forms of cancer die waiting a year and half for a new medicine or have strict limits place on access.    

American get broader access to better drugs that save money at about the same price as medicines elsewhere.  Price controls and PBM restrictions on access to new drugs actually increases cost and makes people sicker.  And probably let a lot of people die waiting for new medcines.  If a new medicine adds 3 months on average to the life of a cancer patient it would mean that each year (based on 590,000 cancer deaths a year) someone is denied access robs people with cancer of about 145000 life years annually. 

Back claims other systems are vastly superior.  The evidence suggests otherwise.  Cutting drug prices does kill people. 


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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