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drugs healthcare

Drug Prices: Trends

The world’s most expensive drug, as of 2016, is Soliris® (Alexion Pharmaceuticals) being priced at $409,500 a year per patient. The disease that this drug treats only affects 8,000 Americans, but the drug maker generated $295 million in one year for that one drug (Herper, 2010). Turing Pharmaceuticals raised the price of an anti-infection drug by more than 5,000% in 2015 (Smith, 2017). Drug pricing is largely based on the number of people who have the disorder: as the number of people affected by the disorder increases, the drug price decreases. Initially Soliris® was tested for treating patients with Rheumatoid Arthritis (RA). If it would’ve been FDA approved for treating RA, it would’ve cost $20,000 a year per patient. Since the drug was approved for treating Paroxysmal Nocturnal Hemoglobinuria (PNH), which only affects 8,000 Americans, it’s priced at $409,500 per patient per year.

The prices of these new drugs that treat rare diseases seem to increase every year. A long time ago they were $100,000 per year per patient. Now, that is typical of any drug’s price (Herper, 2010). Since there are only a few patients in need of these drugs, Big Pharma doesn’t need to advertise these drugs because the government and insurance companies typically pay for the drugs. However, there is hope on the horizon. Since Pfizer and other companies are awaiting FDA approval for similar drugs that treat these rare diseases, competition will enter the market soon and drive down these astronomical prices.

References

Herper, M. (2010). The World’s Most Expensive Drugs. Forbes. Retrieved from http://www.forbes.com/2010/02/19/expensive-drugs-cost-business-healthcare-rare-diseases.html

Smith, R. (2017). The Private Equity Firm That Quietly Profits on Top-Selling Drugs. The New York Times. Retrieved from https://www.nytimes.com/2017/07/08/business/dealbook/drug-prices-private-equity.html