International and High-cost of medicines

The following content was originally published in 2015.

PHARMAC  provides the best health outcomes from within the funding provided. We can do that, as a small country in a big market, because we can encourage competition and, ultimately, have the power to say no to pricing being offered. Increasingly, other countries are thinking along these lines too and trying to replicate the PHARMAC model.

Below is a collection of information about international concerns related to the pricing of medicines.

Internationally, prices are high for new pharmaceuticals(external link)

“…current prices …  are too high, unsustainable, may compromise access of needy patients to highly effective therapy, and are harmful to the sustainability of our national healthcare systems.”

 and for older ones too(external link)

“Novartis, the company that makes the leukemia drug Gleevec, keeps raising the drug’s price, even though the drug has already delivered billions in profit to the company. In 2001 Novartis charged $4,540, in 2014 dollars, for a month of treatment; now it charges $8,488.”

Prices don’t always reflect the cost of the product(external link)

“…private investors spent perhaps $300 million in R&D outlays for sofosbuvir over the course of a decade, and perhaps well below that sum. Those R&D outlays were likely recouped in a few weeks of sales in 2014.”

…in an industry that is highly profitable(external link)(external link)

“Dr Brian Druker, director of the Knight Cancer Institute has asked: "If you are making $3bn a year on [cancer drug] Gleevec, could you get by with $2bn? When do you cross the line from essential profits to profiteering?".

Companies often mirror each other’s pricing behaviour(external link)

“Contrary to the consumer’s ideal in which bare-knuckled rivals cut prices to grab market share, competitors in branded pharmaceuticals often drive each other’s prices higher. This behavior, known as “shadow pricing,” is one reason U.S. drug costs are surging.”

But high prices may cost lives as well as money(external link)

“The York research highlighted the Cancer Drugs Fund — a special scheme set up by the coalition government to provide extra money for cancer medicines — as a glaring example of waste. For every QALY gained from the fund, five were lost, the study found.”

International payers have systems that don’t promote competition, so have to resort to:

Payers are starting to explore what can happen when they say no(external link)

“Saying no, or even the threat, works to lower prices in the United States, too. But it’s rare. In 2012(external link), my hospital said we wouldn’t give the colon cancer (external link)drug Zaltrap to our patients because it cost twice as much as another drug (Genentech’s Avastin(external link)) that was just as good. When we refused to use it, the company realized that other cancer hospitals and doctors might follow, and halved its price nationwide.”

High prices and company activities flow into NZ(external link)

“Big drug companies," says Helena McAlpine are 'absolutely taking the [....]'. The margins on their products are indefensible.”

…and are causing concern among leading NZ clinicians(external link)

"I strongly believe now there needs to be a strong focus on the costs that pharma are charging when they introduce new targeted therapies into the market.

"We certainly can't afford all of them and I think our process of carefully assessing the drugs is a good one."

High prices mean lost opportunities(external link)

“According to a cost calculator developed at York University, if the £230m spent on the Cancer Drugs Fund between April 2013 and April 2014 had instead been spent in the wider NHS, it could have added over 17,800 “quality-adjusted life years” — a measure that combines survival and quality of life. It estimated that the Cancer Drugs Fund added less than 3,400 during that time.”

NZ promotes competition to achieve low prices in international terms(external link)

“Globally New Zealand is a tiny player, representing just 0.1 per cent of the pharmaceutical market.

“Yet Pharmac pays some of the lowest prices in the world for medicines, using a combination of tendering and negotiations to encourage competition between drug companies.”

When prices reduce, we create opportunities for better health outcomes

“The introduction of lower cost biosimilar filgrastim and the subsequent price reduction on pegfilgrastim means we use fewer hospital resources and deliver optimal chemotherapy more safely to more women with breast cancer.”

MidCentral Health oncologist Dr Richard Isaacs

International pricing concerns
Pharmaceutical industry gets high on fat profits(external link)(external link) BBC News November 2014
Why drugs cost so much(external link)(external link) New York Times January 2015
Kalydeco: A Price Too High to Pay?(external link)(external link) Milwaukee Sun-Sentinel  October 2013
The Drug That Is Bankrupting America(external link)(external link) Huffington Post February 2015
The Price of Drugs for Chronic Myeloid Leukemia (CML)(external link)(external link) Blood Journal, May 2013 (PDF)
Expensive drugs cost lives, claims report(external link)(external link) Financial Times February 2015 (subscription required)
In cancer care, cost matters(external link)(external link) New York Times, October 2012
Financial toxicity – who’s really to blame for high cancer drug prices?(external link)(external link) Wall St Journal Oct 2014
Studies fuel criticism of high drug development costs(external link)(external link) Financial Times, 6 April 2015 (subscription required)
Companies compete on prices that rise in lockstep(external link)(external link) Bloomberg News 6 May 2015
Prescription costs rose faster than ever for many Americans(external link)(external link) Wall St Journal 13 May 2015
High prices for drugs attacked at leading cancer meeting(external link)(external link) Wall St Journal 2 June 2015
International responses
Healthcare: The race to cure rising drug costs(external link)(external link) Financial Times February 2015 (subscription required)
Doctors challenge hepatitis C drug patent in price protest(external link)(external link) The Guardian February 2015
The cancer drugs fund – benign or malignant?(external link)(external link) The Economist, January 2015
Canada wants Alexion to repay sales generated by `excessive pricing’(external link)(external link) Wall St Journal February 2015
Italy to set up innovative drug fund as pharma spending row simmers(external link)(external link) Scrip February 2015
Varadkar may use legislative powers to cut drug prices(external link)(external link) Irish Times February 2015
Hepatitis C drug delayed by NHS due to high cost(external link)(external link) The Guardian January 2015
The WHO suggests Europeans cooperate to lower drug prices(external link)(external link) Wall St Journal, 27 March 2015
China drug price reforms may put hospitals on life support(external link)(external link) Financial Times 27 May 2015 (subscription required)
NZ experience
Drug companies in spin cycle(external link)(external link) Sunday Star Times August 2014
Drugs giant incites war of the sexes(external link)(external link) Sunday Star Times August 2014
Big Pharma – the price of life and the cost of silence(external link)(external link) Sunday Star Times May 2015
Big Pharma has the upper hand and they know it(external link)(external link) Sunday Star Times May 2015