Dec 23, 2015

A Modest/Radical Proposal

Are you paying more for effective drugs and less for less effective drugs? Probably not…
It seems the discussion surrounding cancer drug costs is never ending and never changing. Patients and doctors complain, articles are written, and drug prices continue to go up—rapidly.
Peter B. Bach, a Director at Memorial Sloan Kettering Cancer Center, recently published an article in the Harvard Business Review proposing a new way to define drug pricing. We suggest you read the whole article.

In a nutshell, Dr. Bach proposes that patients and insurance companies pay for drugs based on how well they actually work (better quality of life, modest side effects, and longer lifespan). More effective drugs would continue to demand high costs and less effective drugs would cost less. Sounds reasonable doesn’t it?

This, of course, is easier said than done. It costs drug companies just as much to develop a drug whether or not it is effective or even if it duplicates what another drug does.

Many cancer drugs now retail for $100,000 a year or much more. The prices are going up every year whether that drug is working for you or not. So it seems logical not to pay incredibly high prices for a drug that does little to keep you alive or symptom free. 

Some drugs work better for some people than others. How do you price those drugs? Who decides how ‘effective’ a drug is? Should it be the patient, doctor, or drug company? What if you take two or three drugs? How do you determine which is most effective or least effective? How do you measure the impact of drug side effects? There are many questions to answer before something like this could ever happen. And drug companies are still free to charge whatever they decide will be accepted by the market.

This is something to think about. It may be just fantasy. Watch for future research and articles about “paying for value.”

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(c) 2012 Tom Beer and Larry Axmaker