Who Pays for the Profit on Drugs?

$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.”

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 price 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?


Suzanne B. Robotti

Suzanne B. Robotti

Suzanne Robotti founded MedShadow Foundation in 2012. Learn more about Su and her mission.


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