Hedge funder Martin Shkreli reminded everyone of the sky-high—and seemingly arbitrary—costs of prescription medicines in this country when he bought and immediately increased the price of an established drug used to fight a parasitic infection. The price hike was eye-popping, from $13.50 a pill to $750 per pill, prompting Dr. Judith Aberg of the Icahn School of Medicine at Mount Sinai to ask, “What is it that they are doing differently that has led to this dramatic increase?” Shkreli’s answer was similar to what Big Pharma trots out all the time—the extra money will help them to make better drugs. Besides, he noted, not many people get the parasitic infection that the now-$750 drug treats. (Small consolation, one imagines, to the unfortunates who actually have it.)
The business of developing and selling prescription drugs is not just big. It’s huge. Sales for prescription meds in the world are expected to reach $1.3 trillion by 2018. That equates to 1.3% of the world's Gross Domestic Product (GDP). To put it another way, Big Pharma’s sales are bigger than the annual GDP of all but 15 countries on the planet. In the United States alone, seven out of 10 Americans are taking prescription medications. Almost 4 billion prescriptions were written in the U.S. last year. And for the unluckiest of us, those prescriptions cost dearly. Six-figure dearly. Those are the Americans with rare conditions for which Big Pharma develops what are termed “orphan drugs,” or drugs meant to treat diseases from which few people suffer.
Powerful drug companies have given a variety of reasons over the years to explain the high costs. Some of them may be more legitimate than others, but a lot are suspect, since drug prices are higher in America than any other country. Justifications include legal expenses, high drug demand, marketing (the cost of which is well north of $30 billion a year) and subsidies for poorer countries (which are unable to pay the exorbitant cost of important drugs and which, without subsidies, would either go without the drugs or manufacture their own generics—a worst-case scenario, from the drug companies' point of view). But the main reason Big Pharma usually doles out for high costs is research and development, or R&D. Big Pharma claims that for every drug it develops, it spends on average $2.6 billion and takes up to 15 years to bring it to market from conception to testing and finally approval. Further, the industry claims that only 20% of drugs earn back their R&D cost.
Critics say that Big Pharma is cooking the books with these claims by lumping successful and unsuccessful drug development projects together, and by being particularly opaque about how they came up with these figures. This has led several states, including California, Oregon, Massachusetts, North Carolina and Pennsylvania, to introduce legislation requiring drug companies to justify their drug costs with more transparent accounting methods. In the meantime, costs for drugs have had meaningful negative impact on the lives of thousands of people. Veterans with Hepatitis C, many of them Vietnam vets who contracted the disease from tainted blood supplies and vaccination “jet injectors,” are no longer being enrolled in a Department of Veterans Affairs program to supply effective Hepatitis C drugs due to cost constraints. The drugs cost morethan $1,000 a pill in the U.S. Curiously, the same pills cost as little as $10 a pill in emerging countries, seemingly corroborating a National Institutes of Health analysis that stated that drug prices “simply reflect what the market will bear.”
Economists like Robert Reich say the exclusive patents granted drug companies contribute to the high costs of the medicines, and that those exclusive patents should have a shorter duration. The U.S. grants drug companies the right to manufacture drugs exclusively for 20 years, a longer period than most other countries. The rationale is that exclusivity incentivizes companies to develop new medicines. This may be true, but many suspect that the monopoly on the drug also incentivizes making as much money as possible during the period when no one else can produce it. Indeed, the prices for a medicine tends to increase as the date for the medicine’s exclusive patent to run out comes closer.
Expensive does not always equal effective, and, in fact, some of the most expensive drugs afford minimally positive results. Here is a list of the nine most expensive drugs in the United States (plus one in the EU). Big Pharma’s accounting being what it is, this list will undoubtedly change in the coming months.
The cost: $100,000 to $300,000 per year
Myozyme is a medication used to treat a rare but debilitating disease called Pompe. Pompe attacks the skeletal muscles and the heart of the patient.
The cost: $300,000 per year
Acthar is a medication used to treat seizures in infants under the age of two. Because the Food and Drug Administration has not approved Acthar, not only is it hard to obtain, but insurance companies will not usually cover it. All of this results in high cost, and sales of over three quarters of a billion dollars a year.
The cost: $320,000 a year
Manufactured by Allos Therapeutics, Folotyn is used to fight a rare and aggressive cancer, T-cell lymphoma. The patient is subjected to a six-week regimen of Folotyn as a last ditch effort to stop the disease. Although sales for the medicine exceed $50 million annually, the drug has not been shown to prolong life appreciably, making it an extremely costly last-resort attempt.
The cost: $350,000 a year
Cinryze is used to treat angioedema, a hereditary disease affecting as few as 1 in 50,000 people in the U.S. Angioedema causes swelling of the hands, throat and abdomen. Made from human blood, Cinryze has been shown to be a fairly effective medication for the disease.
The cost: $365,000 a year
Naglazyme is used to treat a children’s disease known as Maroteaux-Lamy syndrome, which affects connective tissue. Sufferers of the syndrome have improperly developed muscles, joints and tissues, often resulting in dwarfism. Children with the disease also suffer from heart disease and sometimes neurological damage, eye damage, deafness and brain damage. Naglazyme has been shown to help promote joint mobility and tissue growth.
The cost: $375,000 a year
At a price that exceeds most houses, Elaprase treats Hunter syndrome, a rare condition affecting approximately 500 people in the U.S. An inherited disease, it inhibits physical growth and brain development.
The cost: $380,000 a year
Vimizim is an enzyme replace treatment used to treat Morquio A syndrome, a disease affecting only about 800 people in the U.S. The syndrome prevents the sufferer’s body from breaking down long-chain sugar molecules, resulting in abnormal heart and skeletal development, dwarfism and other serious defects.
The cost: $440,000 a year
Soliris wins the prize as the most expensive drug in the United States. Unlike many of the drugs on this list, at least Soliris can claim to be a very effective drug, treating paroxysmal nocturnal hemoglobinuria, a disorder affecting about 8,000 Americans. The disease destroys red blood cells, making the patient susceptible to infection, anemia and blood clots. Soliris helps alleviate these complications by up to 90%. Soliris also has proven helpful in treating atypical hemolytic uremic syndrome, another rare and occasionally fatal condition.
The cost: $1.21 million a year
And the title of “Most Expensive Drug in the Entire World” goes to Glybera, a drug so far not approved in the U.S. but recently approved in the European Union. Glybera is a gene therapy used to treat a condition called familial lipoprotein lipase deficiency, a disease affecting only about one in 1 million people. In the EU, fewer than 200 people are affected by it. The deficiency causes extremely painful swelling of the pancreas.
Watch this hilariously horrifying video highlighting the countless side effects of prescription drugs
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