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New drug pricing: does it make any sense?

Marc-André Gagnon of Carleton University asks "Why are drugs so expensive?". His analysis exposes the dangers that a business model gone adrift poses to healthcare systems and, ultimately, to patients.

Excerpts from the English version of a presentation delivered at Prescrire's 2015 "Pilule d'Or" ceremony

Specialty drugs, also referred to as niche drugs because they usually target narrow markets, are generally very expensive. What is new, however, is the general trend for these specialty drugs to become the main driving factor for escalating costs in national health systems.

A recent example is sofosbuvir (Sovaldi°, or combined with ledipasvir in Harvoni°), which would more than double the total cost of prescription drugs in the United States if every patient infected with hepatitis C virus were treated with these drugs.

Although only about 1% of prescriptions are for specialty drugs, they can account for more than one-quarter of total expenditure on prescription medications. And spending on specialty drugs is anticipated to quadruple by 2020. Unlike sofosbuvir, most new niche drugs often provide only marginal therapeutic benefits. In oncology for example, they sometimes prolong survival by only a few weeks, but provoke serious adverse effects and can cost more than US$100 000 per patient per year.

The significant and growing disparity between the therapeutic value of many new niche drugs and their price explains why these drugs are at the heart of the pharmaceutical industry’s new business model.

With rare diseases as the focus of a new gold rush for the pharmaceutical industry, a pricing policy on niche drugs that amounts to a blank cheque is a threat to the sustainability of health systems.

It is important to remember that, from the patient’s perspective, an unaffordable treatment is no more effective than a non-existent treatment.

©Prescrire 1 July 2015

"New drug pricing: does it make any sense?" Prescrire Int 2015; 24 (162): 192-195. (Pdf, free).

Download the full text.
Pdf, free

See also:

 VIDEO  Marc-André Gagnon's
presentation at Prescrire's
2015 "Pilule d'Or" ceremony :
"Pourquoi les médicaments
sont si chers ? Un modèle
d'affaires à la dérive"
Free video (in French)