Patients Struggle With High Drug Prices – By Joseph Walker December 2015

 Out-of-pocket costs for pricey new drugs leave even some insured and relatively affluent patients with hard choices on how to afford them

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BELLEVILLE, Ill.— Jacqueline Racener ’s doctor prescribed a new leukemia drug for her last winter that promised to roll back the cancer in her blood with only moderate side effects.

Then she found out how much it would cost her: nearly $8,000 for a full year, even after Medicare picked up most of the tab.

“There’s no way I could do that,” Ms. Racener says. “It was just prohibitive.” Worried about depleting her limited savings, Ms. Racener, a 76-year-old legal secretary, decided to take the risk and not fill her prescription.

The pharmaceutical industry, after a long drought, has begun to produce more innovative treatments for serious diseases that can extend life and often have fewer side effects than older treatments. Last year, the Food and Drug Administration approved 41 new drugs, the most in nearly two decades.

The catch is their cost. Recent treatments for hepatitis C, cancer and multiple sclerosis that cost from $50,000 annually to well over $100,000 helped drive up total U.S. prescription-drug spending 12.2% in 2014, five times the prior year’s growth rate, according to the Centers for Medicare and Medicaid Services. High drug prices can translate to patient costs of thousands of dollars a year. Out-of-pocket prescription-drug costs rose 2.7% in 2014, according to CMS.

For many of the poorest Americans, medicines are covered by government programs or financial-assistance funds paid for by drug companies.

For those in the middle class, it is a different story. Though many patients can get their out-of-pocket costs paid by drug companies or drug-company-funded foundations, some patients make too much money to qualify for assistance. Others are unaware the programs exist. Medicare patients, who represent nearly a third of U.S. retail drug spending, can’t receive direct aid from drug companies.

The upshot is even patients with insurance and comfortable incomes are sometimes forced to make hard choices—tapping savings, taking on new debt or even forgoing treatment.

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Billion-dollar babies – The Economist Nov 2015 | From the print edition

The high cost of R&D is used to explain why drugs giants merge, and why they must charge high prices. The reality is somewhat different

AS THEY announced the proposed merger of Pfizer and Allergan to create the world’s biggest drugmaker, on November 23rd, the two firms’ bosses stressed the scale that is needed to keep inventing blockbuster treatments. As Ian Read, Pfizer’s boss, put it, the merger will create “a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and therapies to more people around the world.”

A more convincing explanation for the deal is that, by shifting Pfizer’s tax domicile from America to Ireland, where Allergan is domiciled, the combined group’s tax rate will fall from about 25% to 17-18%. But even leaving that aside, the common suggestion that size is needed to create a research-driven powerhouse does not stack up. The figure of $2.6 billion cited by PhRMA, the American drugmakers’ lobby, for the cost of developing a new drug, is questionable. And the industry is in any case moving away from a model in which giant firms throw huge sums at in-house research in a quest for ground-breaking new treatments.

Start with the $2.6 billion figure. Two years ago, when the number being bandied about was just $1 billion, even the boss of GSK, one of Pfizer’s biggest rivals, described it as a myth. Médecins Sans Frontières, a charity, claims that new drugs can be developed for as little as $50m and no more than $190m, even taking into account the cost of those that fail during clinical trials. Some of the assumptions used to arrive at the $2.6 billion figure are easy to pick apart. One example is the padded estimate for the drug firms’ cost of capital. But at least as important is that the figure is based on data from between 1995 and 2007. It says more about the failures and inefficiencies of the drug giants’ in-house laboratories back then than it does about how much it should cost to bring a new treatment to market now. That matters because the industry has been moving towards a new model.

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As Drug Costs Rise, Bending the Law Is One Remedy. – By ELISABETH ROSENTHAL Published: October 22, 2013

Nathaniel Brooks for The New York Times

Diana Simonson at her home in Glens Falls, N.Y. Ms. Simonson buys her asthma medication from Canada to save money.

Lee Higman, a 71-year-old artist from Bellevue, Idaho, who considers herself a law-abiding citizen, was shocked last month when she got a notice from the Food and Drug Administration telling her: “A mail shipment addressed to you from a foreign country is being held.”

Nathaniel Brooks for The New York Times

Some overseas drugs are identical to ones in the United States.

The 90 tablets of Vagifem, prescribed by her physician, that she had ordered from a Canadian pharmacy had been impounded as an illegal drug at Los Angeles International Airport.

First marketed in 1988, Vagifem estrogen tablets are used by millions of women to relieve symptoms of menopause. There is no generic version available in the United States, and brand-name drugs are expensive here. So about five years ago, Mrs. Higman started ordering the tablets from Canada, where a year’s supply that would cost about $1,000 in the United States sells for under $100.

“The price went up. And we’d lost a lot on the stock market, and we’re living on fixed incomes,” Mrs. Higman, who is an artist, said in an interview. She and her husband, a writer, are covered by Medicare. In an e-mail to the Food and Drug Administration, she sought the release of the package, explaining, “When it became economically imperative I ordered it from Canada, a country with strict drug requirements.”

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