Is Big Pharma and the FDA both to blame for the soaring costs of drugs?
11/08/2016 / By JD Heyes / Comments
Is Big Pharma and the FDA both to blame for the soaring costs of drugs?

Americans were promised that the passage of the Affordable Care Act would usher in universal health coverage and lower healthcare costs. None of those promises have been kept, nor have several others that the law’s chief advocate, President Obama, made.

Drug costs have soared, and while that may not surprise many people, the reasons why drug costs are higher in the U.S. than most other developed nations likely will — and make you angry as well.

A recent report from Intelligence Squared says the blame for higher drug costs can be placed squarely on Big Pharma.

During a recent spirited debate at New York University’s Skirball Center auditorium moderated by veteran reporter and writer John Donovan and consisting of four expert panelists, one of them – Neera Tanden, policy director for Hillary Clinton’s 2008 presidential campaign – led off by noting that pharma companies spend more on marketing than they do on research.

Meanwhile, Dr. Zeke Emanuel, a University of Pennsylvania bioethics and former Obama administration adviser, said that Big Pharma’s profits are higher than those earned by automobile manufacturers, oil and insurance companies. He added that in recent years drug prices have risen at three times the rate of hospital costs and doctor visits (which have also gone up).

Other panelists argued not in defense of insurance companies, but in defense of more innovation. Paul Howard, a senior fellow and director of health policy at the Manhattan Institute, a conservative think tank, said that, for example, a drug that didn’t cure Alzheimer’s disease but merely delayed it for five years, would save Medicare hundreds of billions of dollars over 10 years.


But the primary issue Donovan noted was the massive amounts of profit earned by the drug makers. Wouldn’t pharmaceutical companies charging less for their drugs still be okay earning lower profits?

“What other industry do you want to be more profitable than the one that’s attempting to get a cure for HIV? If you want to see investors send their money into a less risky industry — maybe software, the next Snapchat — by all means, cut the profits for the pharmaceutical industry,” Howard responded.

Tanden argued next that patients in other nations are paying far less for drugs than Americans have to pay. That’s because the U.S. is the world’s medicine chest, said Howard, mostly because they are “free-riding” on American research and development. It’s hard to imagine what would happen if the United States stopped supplying research to the world, would citizens in these countries be prepared or seize to exist?

Howard also noted that the “biggest barrier” to bringing new drugs to the market was the federal government, via the Food and Drug Administration.

“The FDA is the biggest barrier here. It’s the barrier in generic drugs. It’s a barrier to more innovative medicines. We need to find ways to bring more effective medicines to market less expensively,” he said.


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