Government Not the Cure for Drug Prices

August 19, 2014

By Eric Peterson

Politicians have been trying to provide affordable prescription drugs for more than a decade. Before the Patient Protection and Affordable Care Act, also known as Obamacare, there was Medicare Part D seeking to lower costs for senior citizens. Unfortunately for politicians, breakthrough new drugs often take billions of dollars and millions of man hours to produce and higher prices are needed to recoup these costs; such is the situation with the new Hepatitis C cure courtesy of Gilead Sciences.

Currently, around 3.2 million American’s are infected with Hepatitis C and over 80,000 individuals a year die worldwide because of the disease’s effect on the liver.  For years the only “cure” had been a liver transplant, which could run close to a half million dollars, provided an individual could find a matching donor.  The new drug Sovaldi, however, cures the virus in 9 out of 10 patients over a 3 month treatment period with few of the side effects that come from liver transplants, such as rejection. Considering a patients previous option, a three month treatment to completely cure the disease is a steal at $84,000.

Despite the clear advantages to Sovaldi over the previous treatment options, many are questioning the company due to the perceived high cost of the drug. This includes members of the Senate Finance Committee Ron Wyden and Republican Chuck Grassley who requested pricing data from Gilead writing, “[g]iven the impact Sovaldi’s cost will have on Medicare, Medicaid and other federal spending, we need a better understanding of how your company arrived at the price for this drug.” Even more troubling than the government getting into the business of price setting is that many state governments are balking at the prospect of making this product widely available and instead are moving towards a rationing approach.

Despite receiving more than a 23 percent discount as mandated by federal law, the Oregon state Pharmacy and Therapeutics Committee is already working to restrict access to Sovaldi, despite growing demand for the cure. Oregon is hoping to restrict treatments until more competition becomes available lowering the costs for the state. While Oregon cannot be faulted for attempting to find a good deal for its citizens, this revelation of health care rationing is troubling to say the least. While a far cry from the supposed “death panels,” this situation once again shows the problem with government run healthcare–bureaucrats rather than  patients are ultimately the ones making the choice.

Rather than blaming higher medical costs on makers of breakthrough drugs, which provide a better product in terms of both price and quality, the government should be working to encourage innovation in the medical industry which will ultimately drive down costs. Furthermore, the situation in Oregon shows the inherent flaws of bureaucrats making health care decisions rather than individuals and their doctors. Instead of trying a one size fits all approach, America should work towards health savings accounts in which individuals can choose how best to spend their resources as opposed to waiting until their disease reaches highest levels of seriousness.

Health care decisions should be made by patients and their health care providers, not government bean counters.

Read more: http://americansforprosperity.org/legislativealerts/government-not-the-cure-for-drug-prices#ixzz3AqWdsXlw

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