Who Pays for the Cost of High Drug Prices?

High Drug Prices Push Up the Cost of Health Insurance For All of Us

$259,000 for a cystic fibrosis drug? High drug prices push up the cost of health insurance for all of us. There are at least 5 drugs that cost more than $175,000 for treatment according to Motley Fool. Since they are unique and save lives, insurance companies are forced to pay for them. I started on a rant about how drug companies price their product, but remembered I already spoke out about it. Here you go:

The NYTimes had an article about the price Questcor charges for it’s drug H.P. Acthar Gel, a straightforward $28,000 for one 5-milliliter vial. The article has the history of the drug, how it was developed and for what conditions. It is now considered a last choice drug for several conditions, not effective enough to try first, but if all else fails worth a try. For one condition, infantile spasms (West syndrome), it is the drug of choice.

Questcor defends its pricing as the cost of keeping a slightly used drug on the market. It is needed in about 800 cases a year for infantile spasms. The NYTimes challenges that position, pointing out that Questcor purchased the rights to the drug for $100,000 (about the present cost of a course of treatment for one child), so there are no development costs to recapture. Further, the NYTimes states, “while the manufacturing of Acthar is complex, it accounts for only about 1 cent of every dollar that Questcor charges for the drug.”

Do Pharmaceutical Companies Have an Obligation to Charge “Reasonable” Rates for Lifesaving Drugs?

There is more to the story, but here is the question I pose today: do pharmaceutical companies have an obligation to charge “reasonable” rates for lifesaving drugs? Put aside those drugs that aren’t required to save a life and focus on those drugs needed for an immediate threat to life.

Normally I am a strong proponent for capitalism and the free marketplace. But there is a public cost Questcor is creating. Questcor only charges that high drug prices to health insurance companies. If a patient (or patient’s family) cannot afford the drug (no health insurance) that child gets it for free. Questcor will even pay help with the co-pay for families in need. Sounds generous, but instead it’s a strategy to deflect consumer complaints and push the costs off to health insurance companies. Health insurance companies don’t print money, all the money they get is from you and me — people who pay for health insurance. The concept of health insurance is that the costs are spread over a large group of people. Everyone pays about the same, with some adjustments. If one patient needs hundreds of thousands of dollars of health care — lots and lots more than that person ever paid into the company — the insurance company still pays. And all of our premiums go up.

I never thought I’d say this, but we are now dependent on insurance companies to bring some sanity into the healthcare marketplace. It’s the insurance companies that are complaining — and paying.

Does Questcor have the right to charge thousands of times its cost (sunk cost and current combined) and make millions of dollars of profit when it’s you and I who pay for it?

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