Runaway Drug Prices

New York Times, May 5, 2015

A drug to treat abnormal heart rhythms can cost about $200 on one day and more than $1,300 the next. A diagnosis of multiple sclerosis can lead to a drug bill of at least $50,000 a year. How companies set prices of specialty drugs for these and other complex diseases, like cancer and AIDS, has been a mystery to the patients who need them. Now the Obama administration and some states are tackling that lack of transparency and the rising costs.

Mr. Obama has asked Congress to let Medicare officials negotiate prices with drug manufacturers, a practice forbidden by current law that may be hard to change with the antiregulatory mood among Republicans. And several states are considering bills that would require drug companies to justify their prices to public agencies. It is the least the states can do to bring costs to levels that patients, hospitals and government programs can afford.

Spending on all prescription drugs, including commonly used medicines like antibiotics, accounts for a tenth of the nation’s total health spending. Prices have been rising slowly in recent years mainly because many brand-name drugs lost protection and lower-cost generics were prescribed. But there are fewer patent expirations ahead. Specialized medicines already on the market carry huge price tags, as The Times reported recently, and strain the budgets of Medicare, Medicaid and consumers. The list price for a one-year’s supply of Kalydeco to treat cystic fibrosis is $311,000. A standard course of treatment with Blincyto, a leukemia drug, is about $178,000.