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Yearly Archives: 2014

April 30, 2014 no comments

Drug prices are (unnecessarily) high because R&D is (unnecessarily) inefficient

Let me put it in bold text and a large font, lest there be any misunderstanding of DrugBaron’s position:


Healthcare costs are manifestly too high and completely unsustainable in the medium term.  That includes drug prices.

This is not inconsistent with the two recent articles (here, here) on drug pricing, which set out to defend the mechanism by which prices are set for proprietary medicines, for at least two reasons.  Firstly, drugs and medical devices represent a minority (by some estimates as little as 10%) of healthcare spending, so even dramatic falls in drug prices would hardly move the overall budget.  And secondly, approval for the mechanism of setting drug prices does not equate to approval for paying the prices demanded.


The open letter to Henry Waxman, berating his ill-conceived intervention on drug pricing, drew (perhaps unsurprisingly), considerable support from the broadly-defined drugs industry and howls of protest from healthcare consumers.


The voices of disagreement, though, focused on the actual prices – branding them, probably correctly, as “unaffordable” (among some stronger language) – rather than, as DrugBaron had done, on the mechanism that yielded those prices and the appropriateness of Congressman Waxman’s intervention.


Repeating the central point: governments should defend Gilead’s right to charge whatever it wishes for Solvaldi™ while it remains patent protected – simply because that is the contract implicit in the patent.  Without strong patents, there would be much less innovation, to the detriment of us all.


But that is not the same thing as saying that governments (or other healthcare providers) should pay what is demanded

That, historically, they have done so is driven primarily by the powerful “entitlement culture” that pervades Western democracies, and grows stronger with each passing decade.  Everyone expects to have access to every possible medical intervention, no matter the cost.


Yet, ironically, it is this entitlement culture, and the social and political pressure that results, which underpins the unsustainable cost of healthcare.  Paying high prices (and not just for proprietary drugs) supports a hugely inefficient healthcare market, bloated by public cash spent to satisfy the demands of those who equate inputs with outputs.  It sustains broken R&D strategies within vast, global pharma companies.


Refusing to pay for inefficiency is the only way to drive essential reforms.  That may well include refusing to pay what is demanded even for life-saving drugs.   The pressure is building, and the revolution may be nearer than you think.



April 16, 2014 comments

An open letter to Congressman Waxman on the subject of drug pricing

Dear Congressman Waxman (and anyone else concerned about …

April 15, 2014 comments

What Thomas Dimsdale, arguably the world’s first biotech entrepreneur, tells us about drug pricing

Thomas Dimsdale (born in 1712) was arguably the …


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