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The drug pricing racket

The extortionate prices of some new drugs supposedly reflect their "value" for patients and for society. This argument does not hold water.

Researchers from US public health and health economics institutions studied the price of 58 cancer drugs approved in the United States between 1995 and 2013.

According to this study, newer drugs do not prolong survival compared to older drugs. Yet drug prices have increased by a staggering 12% per year. For example, an additional year of survival cost 54 000 dollars in 1995, 139 000 dollars in 2005 and 207 000 dollars in 2013 (prices expressed in 2013 US dollars, to adjust for inflation).

These researchers found that the prices charged for cancer drugs have risen to a level that corresponds to the amount studies by health economists have shown the public is willing to pay per year of life gained. This strategy involves applying the economic concept of "willingness to pay" to health.

It is easy to imagine study respondents reporting that they are willing to spend large sums of money to stay alive for an additional year. But what if they were very old or in very poor health? And whose money would be used, society’s or their own?

It is dangerous and absurd to apply this concept to health. If we apply it to drugs, why not extend it to all healthcare procedures? In which case, how much would parents be willing to pay for a midwife to remove an umbilical cord wrapped around the neck of their newborn baby? How much would patients pay for a life-saving tracheotomy? And so on.

A group of US oncologists is urging patients to sign a petition calling for cancer drug prices to be lowered. The French Cancer League (Ligue Contre le Cancer) has started a similar petition. Such initiatives are worth supporting and expanding.

©Prescrire 1 June 2016

"The drug pricing racket" Prescrire Int 2016; 25 (172): 144. (Pdf, free).

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See also:

New drug pricing:
does it make any sense?
(July 2015)