Wall Street’s drive for profits is depriving society of the benefits of new life-enhancing medications for which companies can charge patients hundreds of thousands of dollars per year. Gerard Anderson, PhD, of Johns Hopkins University in Baltimore, calculated that most of the recent sharp increase in U.S. drug spending are from the rise of specialty drug prices, not increased utilization. Americans believe in the free market. However, the pharmaceutical market in this country is a stunning example of market failure. Anderson found that the U.S. pays twice as much as other countries for most brand-name drugs.
In the last 20 years, pharmaceutical companies have developed novel, effective treatments, sometimes even cures, for some of the worst illnesses dogging humanity: HIV, hepatitis C, leukemia and other cancers, and autoimmune diseases like rheumatoid arthritis. Moreover, the new so-called specialty drugs are often safer and less toxic than older ones. The bad news is that the prices of the new drugs are high and rising. Kalydeco, a drug for cystic fibrosis patients with a particular genetic mutation, for example, costs over $300,000 a year, and this drug is taken for life.
The most notorious of the new drugs is Sovaldi, which cures hepatitis C virus (HCV). HCV plagues more than 3 million Americans: for 20 or so years it is asymptomatic, but it silently damages the liver; eventually 20% of patients develop cirrhosis, of whom 20% go on to liver cancer. The prior HCV treatment -- interferon and ribavirin -- had toxic side effects, with only mediocre results in American HCV patients. By contrast, Sovaldi, along with a combination product, Harvoni -- both oral drugs marketed by Gilead -- cure about 90% of patients, in 12 weeks with fewer side effects. Miracle drugs indeed. The price tag? For Sovaldi, $84,000 for a 12-week course, or $1,000 per pill. Enough to bankrupt a patient. The sky-high price bear no relationship to costs; instead, they say we should pay based on the value of the drugs -- Gilead should get $84,000 because that's less than a liver transplant.
In the specialty drug market, the manufacturers receive a legal monopoly so they can set prices where they wish, even if many patients cannot afford to pay. Wall Street demands increasing profits every quarter, ever more "blockbuster" drugs, quick extraction of maximum "shareholder value" by whatever means necessary. The companies that don't produce the profits are taken over by those that do.