According to an Evaluate Pharma report, worldwide drug sales will reach $1.06 trillion in 2022, a drop of $60 billion in the forecast for the same period made last year. It is the first time in a decade that the Evaluate report projected a decrease in annual drug sales. Although the figure still represents a reasonable 6.5% growth in sales, it is a sign that consumers have had enough of escalating drug prices.
According to Antonio Iervolino, the group’s head of forecasting, it is a sign of the increasing level of public scrutiny over the pricing of old and new drugs. He highlighted the flagging sales of expensive cholesterol treatments such as Praluent and Repatha to prove his point. Although manufacturers of pharmaceuticals all over the world are now under pressure, drug makers in the United States are facing the largest level of condemnation for high prices. According to Evaluate, Novartis will probably have the largest amount of global sales by 2022, slightly ahead of Roche and Pfizer.
High Pricing in the United States
While no one can argue that the cost of research and development for new drugs is exceedingly high, pharmaceutical companies are spending increasing amounts on marketing. When a drug is under patent, it is the ideal time to make more profit, and some companies go way overboard as the end of the patent period comes near.
One of the best-known examples of an outrageous price increase occurred in 2015 when Daraprim, a drug used by AIDS and transplant patients, rose from $13.50 a pill to $750 almost overnight. While the cost has fallen to $375 a pill, it is still an incredible markup. Another example is the cost of a two-pack of EpiPens, which jumped from $90 a decade ago to $600 today.
Indeed, America is home to some of the world’s most expensive drugs. Here is the top five at the time of writing:
- Harvoni: It treats Hepatitis C, and a 30-day supply costs $87,800, an increase of over $13,000 in a year.
- Sovaldi: This Hepatitis C drug costs $73,800. It shows a cure rate of 90%.
- Epclusa: This is the final one in the triumvirate of Hepatitis C drugs created by Gilead Sciences. It costs $73,300 and apparently has a 99% success rate.
- Zepatier: This is yet another Hepatitis C drug, this time created by Merck. It costs $52,600.
- Bexarotene: At $49,800, Bexarotene is the most expensive generic drug around. It treats T-cell lymphoma and costs more than the branded version, Targretin.
Why Are Prices So High?
Back in 2004, a leading cancer doctor wrote an article in the Washington Post where he claimed that the “extraordinary” prices of drugs would soon ensure people couldn’t afford them. There are many reasons why the cost of drugs continues to soar in spite of this warning:
- Lack of Price Control: In Europe, governments tend to control the cost of drugs. In the UK for example, the government refuses to pay for drugs that don’t meet an effectiveness threshold. In contrast, American pharmaceuticals can set whatever official price they wish.
- Patent System: Drug manufacturers in the U.S. retain the patent to their drugs for 20 years. As a result, they can create a monopoly and increase the price as they see fit.
- Generic Backlogs: It can take the FDA several years to approve the creation and sale of generic drugs.
- The Cost of Marketing: Companies seldom spend more than 20% of their budget on R&D, as marketing costs bear the brunt of the expense. Manufacturers have no qualms about passing the extra cost on to the consumer.
- Medicare Rules:There are certain Medicare rules that help increase the level of expenditure on drugs. For example, doctors receive rewards for prescribing expensive intravenous drugs.
How Can It Change?
We can’t rely on pharmaceutical companies to initiate change, as the system is perfectly set up to help them enjoy enormous profits. In the 12-month period ending in May 2016, drug prices rose by an average of 10%. Compare this figure to the rise in inflation of 1% or the 2.8% increase in food and alcohol prices, and it is clear that Big Pharma wants to maintain the status quo.
In reality, there is no easy way to make the desperately needed change to drug pricing in the United States. The pharmaceutical and health product industry spent $231 million lobbying American politicians in 2015, by far the most spent by any industry in the attempt to influence lawmakers. In other words, if anyone proposes a change that potentially hurts Big Pharma, it has the money and influence to get its own way.
A small semblance of hope came on the horizon in June 2017 when the United States Supreme Court unanimously ruled to support a new class of generic drugs that should inject some much-needed competition into the marketplace. The new ruling will reduce the length of time pharmaceutical companies can keep near-copies of biologic drugs off the market.
However, even if this ruling makes it into law, it is only a small step in the right direction. The vast majority of the American public believes that prescription drugs are too expensive. Let’s hope that lawmakers ignore the lobbying of Big Pharma and do something about it. The reduction in drug sale projections forecast for the next few years is a sign that the public wants change. While it is not practical for patients to avoid purchasing life-saving drugs, the American people can make a stand of sorts.