Letter from the Editor
Drug Prices and the Cost to the Industry
The New York Times recently ran a comprehensive editorial on the state of the industry
with respect to drug pricing. This issue, of course, is a large contributor to the poor image that healthcare companies have among the general public. And that image is driven
significantly by a few bad players in the industry.
But no one can deny that prices have increased regularly in the last few years. Our featured executive, Raj Garg, discusses this topic in our Spotlight article in this issue.
The Times editorial outlined a handful of remedies that have been proposed. We’re curi-
ous about your reaction. Read over these suggestions, and send us your own view of how
we can handle the problem.
Price drugs based on the benefits they provide. The article points out that this is how it works in much of the developed world. “Britain will cover a new medication only if the benefits it provides are high relative to its price.
Germany will pay more for a new drug [if it’s] better in some way [than the old one].”
Negotiate with drug makers. Governments elsewhere have the option to negotiate directly with drug companies.
Here, private insurers and the Department of Veterans Affairs can do so, but Medicare and Medicaid cannot.
HHS can grant waivers to states that want to exclude certain drugs from their Medicaid plans. This patchwork of
policies is confusing and often leads to consumers trying to end-run the system.
Consider seizing patents. This is a rather extreme measure, but there are laws that permit it to be enacted. Section 1498 “allows the government to override any patent if the patent holder is compensated fairly,” and has been
used in the past. “March-in rights” lets the government take over a patent on products invented with government money. This provision has never been used, but there is increasing pressure for the government to do so.
Involve the Federal Trade Commission. Noting that the FDA “has attempted to name and shame drug makers
who use dubious tactics to prevent generic medications from coming to market,” the editorial points out that
approval of generics has increased recently, although many aren’t available in the U.S.
These and more are gaining momentum as all parties wrestle with the overall cost of healthcare. Your thoughts?
We’ll be pleased to feature them here.
We try to keep up with all this, and bring you the people who have a grasp on change. We hope that it will be
informative, and assist you in furthering the work you do every day. Let us know what topics will be most useful to you!
Neil Greenberg, Editor
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