“I am working on a new system where there will be competition in the Drug Industry. Pricing for the American people will come way down!”
The response of global pharma might have been a collective yawn. Flocks of high-paid lobbyists and a good script will do that for you. For years, they’ve blamed skyrocketing research and development (R&D) costs for the high cost of drugs in America. The FDA, which takes years to approve new drugs, is also an easy target for the blame game.
Unfortunately for the global pharmaceutical industry, which has never walked away from an opportunity to charge premium prices in the U.S., that story line no longer carries water. And it’s not just President Trump crying foul. The general mainstream media is now sees through it, too. Wednesday’s e-edition of Modern Healthcare hit the nail squarely on the head with a piece stating U.S. drug prices cannot be explained away by R&D expenses.
Writes Modern Healthcare’s Rachel Arndt:
“According to research published on the Health Affairs blog, the 15 drug companies that made the 20 best-selling drugs worldwide in 2015 made $116 billion in excess revenue from premium drug prices in the U.S. Meanwhile, they spent only $76 billion on global research and development.”
Rachel attributes the “excess revenue” on what we term “predatory pricing” in the United States. Per the article, drugs from 15 companies cost were much more expensive in the United States than in Canada, Denmark, Ireland, and the United Kingdom. How much more? The sample drugs were priced, on average, 2.5 times higher in the United States.
If the pricing playing field was level worldwide, U.S patients, businesses and taxpayers would have saved about $40 billion in 2015 on those 20 drugs alone. To put this in perspective, in 2015, CMS reported that Americans spent $325 billion on pharmaceuticals. The savings on this very limited number of drugs was more than 10 percent of the total U.S. expenditure on drugs. Imagine if all drugs in the United States enjoyed the same pricing as the rest of the world. Trump could spend more time sleeping and less time Tweeting.
The predatory U.S. drug pricing has more than a financial impact; Americans are suffering for it. In 2013, the Centers for Disease Control and Prevention found that 7.8 percent of U.S. adults tried to save money by not taking their medications as prescribed. While their lives and health may depend on these drugs, they simply can’t afford them.
Rachel goes on to write that U.S. community hospitals saw inpatient drug spending increase by 23.4 percent from 2013 and 2015; expenses that are not sustainable in our resource-strapped health systems.
The inconvenient truth for the pharmaceutical industry is the United States is no longer gullible. If President Trump gets his way, there will be no more ripping off the American government, healthcare system and individual Americans. Fat profits will be replaced by famine unless big pharma looks to new markets such as China. While the Chinese have a tight control on drug pricing, the 1.4 billion potential consumers represent unprecedented new volume. And PaizaBio knows how to access them within China’s rules.