When a drug or medical device becomes available in the marketplace, few if any experts (including doctors) or individual patients question its price. In her article in the NYTimes, Elisabeth Rosenthal explains a destructive logic that pervades the American healthcare system: Health is Priceless. Consumers often look to agencies such as the Food and Drug Administration (FDA) to evaluate cost effectiveness. The reality is the FDA s role is only to establish whether a new medical product is safe and effective. Unlike other countries, America lacks a mechanism by which the value of new therapies is appraised and consequently labeled with appropriate price tags in the marketplace, such as the UK s Medicines and Healthcare Agency (MHRA). They are mandated to decide on allowing new treatments on the market depending to some extent on calculating cost effectiveness, going so far as to try to assess the value of life-years. The impact of this deficiency is no longer invisible, rather quite tangible with our steep national health care bill: $2.7 trillion a year.
Rosenthal brings to attention a new treatment, the FDA was quick to approve, called Evzio. The medical product is a portable pocket-size device that injects a drug called naloxone to rescue people who become unconscious from overdoses of heroin and other opiates. According to Dan Bigg, director of the Chicago Recovery Alliance, the value of this device is about $3. Bigg emphasizes injecting naloxone to reverse overdoses is no more complicated than basting a turkey. It s a no-brainer: You pull up this liquid and inject it into the muscle. However, medical experts are projecting Evzio s price to be close to $500, upon its initial entry into the marketplace.
This incredible disparity in value alone should have consumers and healthcare experts asking questions. What is value of a lifesaving therapy when patients are unable to access it? What justifies such an enormous financial barrier between patients and promising new treatments?
The new hepatitis C drug, Sovaldi, priced at $1,000 a pill (which amounts to $86,000 for the full-course of treatment), was much anticipated and holds true therapeutic potential, yet healthcare providers are stalled, calculating how patients will afford it. The New England Journal of Medicine comments, Costs alone cast a pall over the stunning success in achieving the long-hoped-for goal of a safe and effective therapy for hepatitis C.
Rosenthal asserts that it s time for consumers take initiative and begin asking the value of such drugs. However, drug pricing is not an easy process to understand. Steve Francesco, New Jersey based pharmaceutical consultant summarizes, To understand drug pricing you have to shed your sense of value as a consumer and as a noble human being. You have to put on the lens of the healthcare industry, where what you re doing is looking for opportunities to maximize return.
ACSH s Dr. Gilbert Ross had this perspective: It s easy to point out the problems with evaluating the value of lifesaving medicinals and improvements in medical devices, but very difficult to educate doctors and patients on this subject. As long as payments are made by someone else, it is impossible to get a patient to request or even tolerate a cost-effective approach: the urge is to get the latest and the best, damn the cost. There is no simple solution for this complex problem.