Hillary Clinton, Senator Bernie Sanders and other political leaders are saying they will push for Medicare to negotiate prices for prescription drugs in light of outrageous increases for old drugs reported this week. The New York Times reported on a 5000% increase in a drug produced by Turing Pharmaceuticals taken over by a former hedge fund manager. The drug, Daraprim, used to treat a parasitic infection went from $13.50 per table to $750. The drug has been around for 62 years. By the end of the day yesterday, Turing was backing off on the size of the price increase.
Meanwhile here in Albany the Capital District Physicians Health Plan (CDPHP), a nonprofit managed care plan which offers Medicare is asking state legislators to pass a bill that would require drug companies to reveal expenses for marketing, lobbying, along with research and development. The Albany Times Union reports this morning that CDPHP CEO John Bennett commented, “Left alone drug costs will bankrupt our system.” The company said the price of albuterol, an asthma inhaler jumped from $11 to $434 per inhaler.
It should be noted that the wholesale price is not what patients or what plans pay. They do negotiate to get better prices and patients pay co-payments. However, if the prices even go up significantly though not to the outrageous level, patients end up with higher co-pays which can reach $50 or more dollars or can be a percentage of the total cost.
It used to be just a decade ago that drug companies would justify high costs as necessary to pay for research and development costs. It is hard to see anything but outright greed though when an old drug which is bought by a new company has its price raised by hundreds per tablet. What is the justification for that other than a get rich quick scheme? It is very short-sighted though because you have to have customers able to pay. The average health consumer can’t so government and health plans are left to pay and, they are going to resist, forcing the drug companies to back off.
If government can’t negotiate prices this is what happens, prices that are as high as the market will bear. However, drug companies trying to gouge the public are politically out of touch if they think they can get away with it without a backlash. There may not appreciate the politics of it but they ought to understand that politics effects their bottom line as they watched they stock prices drop this week when politicians started talking about controlling prices in government programs.