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Pharmaceutical Companies Taking America to the Edge of Financial Disaster
By now, you have probably seen that Facebook meme which tells you that a bag of saline solution, which costs hospitals about $1, is billed to insurance companies at $500 per bag. In turn, it appears that drug companies are trying to stick it back to insurance companies by billing a 12 week course of pills that can cure hepatitis C at a whopping $84,000. This would make these new pills about $1,000 each. The actual price of this 12 week program? About $136. Then Americans wonder why their health insurance costs so darn much!
Welcome to the land of the greedy.
Back in December of 2013, the FDA approved a drug called Sovaldi, which is a new cure for hepatitis C. Another drug company made a similar drug (which is called sofosbuvir) combined with another drug and called it Harvoni. This is the good news because this new drug will literally be a lifesaver for millions of people around the world who die from Hepatitis C infections.
Hepatitis C is a disease that slowly kills the liver. It takes time, decades, for this to happen, but eventually, infected persons end up with damaged livers and terrible consequences including kidney disease and joint pain. Some end up with cirrhosis or the liver or even liver cancer. Until this new drug, there was little doctors could do but treat symptoms. There are a few drugs that tried to attack the virus itself, but they did not work well and most had even worse side effects including fevers, anemia, and depression. Also, about 50 percent of patients with Hepatitis C were not strong enough to tolerate these drugs.
This drug is now the perfect illustration of how the American health care system is being bled dry and brought to the brink of bankruptcy through greed, lobbying, and an outrageous policy regarding the pricing of prescription drugs.
India is refusing to play this game. They simply refused to grant the pharmaceutical giant Gilead a patent for their drug. Now, you can find the generic version in India for a mere $300 for a 12 week course.
How can Gilead have the nerve to charge Americans $84,000 for a program that costs them about $136? First, it’s due to their patent, which will be valid until 2028. This allows them a virtual monopoly in America. Second, many state and Federal medical programs will pay $84,000 for a pill program, so apparently Gilead figures that if they will pay, why not milk the system for all they can? Third, there are some private insurance companies that will also pay, a few people who will have to come up with some of the funds out of their own pocket, but there are plenty of others who have no coverage, cannot afford to pay for these pills, and they will more than likely die from their infection, even though treatment is available.
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Big Pharma defends their prices by stating that they need to recover their research and discovery costs. Although no one is denying that companies have a right to recover research costs and turn a profit, but everyone would also agree that they should turn a reasonable profit.
The research and discovery private sector layout for Sovaldi were in the area of $300 to $400 million. Even if you stretch this to $500 million, in the first year alone, sales of this drug reached an unbelievable $12.4 billion. That’s billion with a B. This means Gilead recouped their costs within just a few weeks. Let’s not forget that much of the research was already footed by the US government, aka, you and I, folks, John. Q. Taxpayer.
If America had a rational drug pricing system, these private investors would be able to earn a very reasonable rate of return for their super successful drug. Even 5 to 10 times their investment would be a well-earned investment return that everyone would feel was fair and reasonable. However, at $84K, this means investors are receiving a return of about 40 times their initial investment. Is that type of return reasonable or fair to the American people?
One of the problems with this drug is that, by law, those who are in state Medicaid programs, which are health care programs for the elderly, disabled, or poor, are legally required to pay for any drug that has been approved by the FDA. Although Medicaid gets about a 23 percent discount on all drugs, this is still a far cry from a reasonable price. Prisoners, also, are going to be given this treatment. As you can see, the outrageous price on this one drug could lead to the financial ruin of America.
There is a Washington advocacy group, Campaign for Sustainable Rx Pricing, that has devoted itself to objecting to the cost of this medication and they are pressuring Congress to look into how Gilead Sciences reached such an outrageous price for this drug.
Some are hoping that other drug companies will come out with copycat drugs, which will drive the prices down. Also, once the backlogs of persons who currently have Hepatitis C are treated, the demand will also go down, forcing prices to diminish. But these are merely hopes and speculation, friends. Big pharmacy will continue to force the American people to work hard to provide them with huge, overinflated profits, as long as Congress allows them to get away with it.