Once again, advances in technology are threatening the way we do business. This time, the question is, how do we price drugs that cure an ailment rather than treat it? 3 million Americans suffer from hepatitis C which can cause liver cancer and require a transplant. Antiviral drugs exist to treat the ailment, but what if there were a cure? Happily, there is. Gilead Science has a three-month regime that will eradicate the disease. Unfortunately, the treatment costs $84,000. (“How Much is a Miracle Worth?” by Caroline Chen, Bloomberg Businessweek, April 10-22. 2017, pg. 22)
GlaxoSmithKline has a cure for the “bubble boy” affliction, an ailment that attacks people’s immune systems. The price tag? $634,000. (Ibid, pg. 22.) Spark Therapeutics, Inc. has a gene therapy to cure a rare form of childhood blindness. What is the value of gaining one’s eye siight? That is the question we face in the future. As one pharmaceutical executive said, “We don’t want to have the world’s most expensive therapy that nobody ever uses.” (Ibid, pg. 22.)
When people read about the high price of cures, they think “price gouging.” We’ve had plenty of examples to support that sentiment, like the recent scandal over the cost of the EpiPen. (Click) But consider. As big pharma moves from treatments to cures, what is fair compensation? Is it reasonable to suppose companies will pursue innovations that will put them out of business or deny them sufficient funds to pursue ongoing research?
Europe, with its single-payer healthcare system, has one answer, “value-based pricing.” (Click) For third world countries, where governments are impoverished or unstable, non-profits like the Bill and Melinda Gates Foundation, guarantee manufacturers a minimum purchase of the drugs to be developed. Other means of compensation are under discussion. Solutions vary with political and financial circumstances.
In the United States, consumers have had little say about drug pricing and our government, by law, is barred from negotiating for us. As the rules of the game change, the public needs a new role. First, however, we must accept that profit isn’t an evil concept. No business can afford to produce products that will put them out of business. The idea is a non-starter for big pharma and bad for the public that would benefit from the cures.