The good news is we are developing new lifesaving medications every day. The bad news is they are very expensive and paying for them could bankrupt our health care system.
For example, Avastin, which is prescribed to treat a number of cancers, costs $100,000 a year per patient. Soliris, used to treat a rare blood and kidney disorder, costs almost $410,000 per year.
The latest medication drawing attention is Sovaldi. While highly effective in curing patients with chronic hepatitis C, it costs about $1,000 a pill, or about $84,000, for a standard 12-week treatment.
Chronic hepatitis C affects 3.2 million people in the United States and about 150 million worldwide. It is a devastating virus that can be deadly if not treated effectively. It is a blood-borne virus that causes inflammation of the liver, which, if left untreated, can lead to permanent liver damage.
While it can be contracted through accidental needle sticks or long-term kidney dialysis, people most at risk are IV drug users, or people who use unlicensed, unsanitary tattoo, body piercing or acupuncture practitioners. Most troubling, pregnant women with the disease can pass it on to their unborn babies.
Accurate statistics are difficult to come by because the virus can lie dormant for decades and experts estimate barely half of those infected have been tested.
Adding to the problem is the fact that many of those infected are unable to pay for their medical care. The Annals of Internal Medicine reports, “Our study and others have found that persons with chronic hepatitis C virus infection are frequently poor and less educated …”
And therein lies the dilemma.
There is no question that Sovaldi is a breakthrough drug. It can cure patients within 12 to 24 weeks, where other treatments can take up to a year. The cure rate for Sovaldi is up to 90 percent while other treatments are only about 50 percent. But its high price is driving up health care costs.
Recently, Anthem Blue Cross and Blue Shield officials cited costly new hepatitis C drugs as one reason for a 12.5 percent premium increase. And Congress, fearful of the impact on Medicaid and Medicare costs, has asked Gilead, which owns Sovaldi, to explain its pricing.
We should care because we’re paying the bill.
Since Obamacare took effect in October, an estimated 7.2 million people have enrolled in its expanded Medicaid program and the Children’s Health Insurance Program, swelling the ranks to 66 million people, according to the U.S. Department of Health and Human Services. Taxpayers are responsible for subsidizing the medical care for those 66 million people.
Elected officials need to be careful here. The government can severely restrict access to high-cost drugs for Medicaid patients, increase taxes to cover the cost or try to impose price controls on drug companies.
The most politically expedient option might seem to be price controls. But drug companies spend billions to develop these miracle drugs. The Congressional Budget Office reported in 2006 that drug companies spent on average more than $800 million to develop an innovative new drug, including the cost of failed projects and the value of forgone alternative investments.
The question is will they continue to take those risks if the government imposes price controls?
Finally, with the current focus on wellness and disease prevention, it is essential that we remind people that bad choices have bad consequences. If people understand that their bad choices lead to higher taxes and higher insurance premiums, perhaps we can put a dent in the rising cost of health care.
Until that happens, we are facing some very difficult choices and there are no easy answers.
Don Brunell, retired as president of the Association of Washington Business, is a business analyst, writer, and columnist. He lives in Vancouver and can be contacted at TheBrunells@msn.com
