Drug Price Gouging: When Will It End?


Am Fam Physician. 2017 Jul 1;96(1):20.

  Related editorial: Problematic Jumps in Drug Prices and What You Can Do

Price gouging. There's no other name for it. In recent years, many in the pharmaceutical industry have embarked on a largely unfettered campaign of drug price gouging. American Family Physician contributing editor Allen Shaughnessy, PharmD, outlines many examples in the accompanying editorial on this topic.1 Michael Munger, MD, president-elect of the American Academy of Family Physicians (AAFP), has blogged about unreasonable drug prices and their adverse effects on patients,2 as has Richard Bruno, MD, MPH, last year's resident representative to the AAFP Board of Directors.3 And recently, the AAFP joined the Campaign for Sustainable Rx Pricing (http://www.csrxp.org), a coalition representing consumers, health care professionals, insurers, and hospitals, to seek solutions to lower drug prices.4

The Trump administration has promised to negotiate a reduction in the price of prescription drugs, despite the fact that Medicare is prohibited from any attempts to negotiate or determine drug prices.5 How this potential response to the problem plays out remains to be seen.

The Pharmaceutical Research and Manufacturers of America has touted (1) market-based and (2) value-driven strategies to address the issue of drug pricing. My concern is that these are code words for (1) charge as much as the market will bear, and (2) pay especially exorbitant prices for drugs that treat serious diseases. Cancer drugs are leading this charge, with many costing $100,000 to $200,000 per course of treatment, despite some having only marginal benefit, at best.69

The system seems structurally flawed and designed to maintain perverse incentives. There is a disconnect among patients who foot the bill, physicians who prescribe treatments, often without knowing the cost to a particular patient, insurance companies that must decide whether to cover the cost of a drug (and have an incentive not to), and the pharmaceutical industry. The latter is in part motivated by profit, and has an incentive to exaggerate the cost of research and development while defending ever-increasing drug prices.

Of additional concern, the U.S. Food and Drug Administration's (FDA's) role in safeguarding the drug supply may be at risk because of the current administration's plan to have the FDA approve drugs that seem safe but whose effectiveness has not been proven.10 This would take us back to the days of snake oil, only at greatly increased expense, when products could be promoted without proof that they worked.

Price gouging will end only when the structural elements responsible for the unchecked costs of drugs are addressed in a systematic way. Until this happens, the inexorable rise in drug costs, now at 2% of our gross domestic product,11 will continue.

Address correspondence to Jay Siwek, MD, at siwekj@georgetown.edu. Reprints are not available from the author.

Author disclosure: No relevant financial affiliations.

editor's note: Dr. Siwek is editor of American Family Physician.



show all references

1. Shaughnessy AF. Problematic jumps in drug prices and what you can do. Am Fam Physician. 2017;96(1):16–18....

2. Munger M. Unreasonable drug prices force patients to skip meds. Leader voices blog. American Academy of Family Physicians. October 5, 2016. http://blogs.aafp.org/cfr/leadervoices/entry/unreasonable_drug_prices_force_patients. Accessed February 10, 2017.

3. Bruno R. Right thing to do: making the case for drug pricing transparency. Leader voices blog. American Academy of Family Physicians. August 24, 2016. http://blogs.aafp.org/cfr/leadervoices/entry/right_thing_to_do_making. Accessed February 10, 2017.

4. AAFP joins campaign to push back against rising drug prices. https://www.aafp.org/news/practice-professional-issues/20170407rxcampaign.html. Accessed April 11, 2017.

5. Nocera J. Commentary: Trump had a good idea on drug costs. He ditched it after meeting with pharma execs. Chicago Tribune. February 2, 2017. http://www.chicagotribune.com/business/ct-trump-drug-costs-20170202-story.html. February 10, 2017.

6. Kresge N. Cheating death can cost $200,000 as cancer leads sales. Updated January 7, 2017. https://www.bloomberg.com/news/articles/2017-01-06/cheating-death-can-cost-200-000-as-cancer-tops-pharma-sales. Accessed February 10, 2017.

7. Garg PK, Jain BK. New cancer drugs at the cost of bankruptcy: will the oncologist tell the patients the benefit in terms of days/weeks added to life? Oncologist. 2014;19(12):1291.

8. Rupp T, Zuckerman D. Quality of life, overall survival, and costs of cancer drugs approved based on surrogate endpoints. JAMA Intern Med. 2017;177(2):276–277.

9. Fojo T, Mailankody S, Lo A. Unintended consequences of expensive cancer therapeutics—the pursuit of marginal indications and a me-too mentality that stifles innovation and creativity: the John Conley Lecture. JAMA Otolaryngol Head Neck Surg. 2014;140(12):1225–1236.

10. Thomas K. Trump's FDA pick could undo decades of drug safeguards. The New York Times. February 5, 2017. https://www.nytimes.com/2017/02/05/health/with-fda-vacancy-trump-sees-chance-to-speed-drugs-to-the-market.html. Accessed February 10, 2017.

11. Countries with the highest expenditures on medicines as a percentage of GDP. August 25, 2016. http://www.worldatlas.com/articles/countries-with-the-highest-expenditures-on-medicines-as-a-percentage-of-gdp.html. Accessed February 10, 2017.



Copyright © 2017 by the American Academy of Family Physicians.
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