Drug Prices and the Pharmaceutical Market

In recent weeks a fair amount of discussion in the news has focused on the high price of drugs. Some of that is attributable to the high price Gilead Pharmaceuticals set for Solvadi, as mentioned in my last post. Last week, the Massachusetts Biotechnology Council “MassBio” issued a report which warned that the increasing pressure on drug prices along with the overall push to contain healthcare costs could threaten the future growth of the biotechnology industry and the rate of innovation in the pharmaceutical industry.1 For many years, the major pharmaceutical companies and their trade association, now known as PhRMA,2 have been engaged in a reasonably successful effort to convince the American public and their elected representatives that the high cost of many drugs is the result of the very high costs of drug development, which is frequently estimated at $1.2 billion to bring a new drug to market. I don’t want to use this post to debate that $1.2 billion dollar figure. Drug discovery and development is a very expensive process, with high costs and many failures, which may well bring the total costs per new drug approval to $1.2 billion. However, I begin my course on FDA Law by asking students “What determines the high cost of drugs?” The success of the PhRMA public relations effort is reflected in the very large percentage of students who do indeed answer, “The high cost of developing new drugs.” I then proceed to give them their first lesson on pharmaceutical policy– which is that the market for pharmaceuticals is like almost every market in our essentially free market U.S. economy. This means that sellers set the price of their goods at what the market will bear. Continue reading

Continuing the Discussion of “Conditional Approval” and the Accelerating Access/Ensuring Safety and Efficacy Dilemma

Last week I commented on an excellent New England Journal of Medicine article by Darrow, Avorn and Kesselheim -New FDA Breakthrough-Drug Category- Implications for Patients, 370 New Eng. J. of Med. 1252-1258 (March 27, 2014)- on the problems of accelerated approval. Then today my attention was drawn to another excellent article on the early access dilemma for critically ill patients: Karl Thiel, Did Chimerix, Inc. (CMRX) Set A Bad Example For Biopharma?, available at http://www.biospace.com/News/Did-Chimerix-Set-A-Bad-Example-For-Biopharma/328076?type=email&source=BE_032614 (visited April 4th 2014). The topic is clearly an extremely important one, and in need of much more serious discussion. Continue reading