During 2017 and 2018, drug makers raised prices on seven widely used medicines by large amounts, but without any new clinical evidence to justify the increases, leading patients and insurers in the U.S. to spend an added $5.1 billion, according to a new analysis.
For instance, AbbVie (ABBV) boosted the price on its best-selling Humira rheumatoid arthritis treatment by 15.9%, after accounting for estimated rebates and other discounts, which caused Americans to spend an extra $1.86 billion than they would have if the company had not raised the price during that two-year period.
Kudos to author capturing the wide range of perspectives on this report. I think a broader discussion, however, is warranted about that fact that these are businesses, which will raise prices on successful products to offset the costs of failing or unprofitable products. There is no analysis in ICER report of the company-wide increases on drugs — they do seem to cherrypick the best sellers. That’s like saying Apple has exorbitantly raised prices on the iPhone without considering that those prices increases covered the costs of failed investments in other divisions (remember iTunes U anyone?).
For whatever reason, we seem to ignore the basic economics amid this tough debate about drug prices. These drugs work and so demand goes up, that would suggest price increases commensurate with demand go up. We need to focus on increasing supply (through competition, generics/biosims, etc.), and not continue fighting market forces which govern far more than just the health sector.
NB – Genvoya
While Mr Fein is insightful as always, his closing line is… perhaps truncated. Yes, “The cost of things goes up.” Granted, but not by that much.
May I observed that point is the apparently excessive price increases.
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