Look no further for proof that our health care system is broken, and merely reforming insurance rules won't fix it. Today's the Associated Press carries this story about a drug used for preventing premature birth. Makena, a form of progesterone, is not a new drug. Compounding pharmacies have been making it for years. It's take as a weekly shot, and used to cost about $10-20 per dose. But a Missouri company, KV Pharmaceutical, got the FDA to grant it orphan-drug status. So now KV has a monopoly on it for seven years, and has started sending cease-and-desist letters to anyone else who tries to sell it. Doctors are afraid to use anyone else's. And KV has raised the price to $1500 per dose.
KV did not develop the drug; they merely paid for some tests to make it an official on-label use. It is cheap to manufacture. Orphan drug status was created to give manufacturers an incentive to produce low-volume drugs. Such drugs are normally expensive in order to cover the cost of development.
The United States is most unusual in not regulating the price of prescription drugs. The FDA did not bless the $1500 price; it's outside of their jurisdiction. Since Makena could be needed for as long as 20 weeks, a single patient could need up to $30,000 worth now, for what would have been $200. Insurance companies are of course stuck with the bill, which they will pass along in the form of higher premiums to everyone Medicaid will also take a hit for this, if they allow its continued use. And we'll probably see fewer mothers get it, and more premature babies as a result. This is the opposite of what was expected when the FDA granted its on-label approval recently, but the price was announced later.
KV's excuse for the price is that raising a preemie is very costly, so paying $30,000 to prevent one is still a net savings. But what Makena really does is reduce the likelihood of a premature birth from 55% to 36% among certain high-risk pregnant women.
This is the key problem with our health care system. Our obsession with "free markets" means that there are no price controls, yet there is little choice but to pay up or face a malpractice suit or higher costs of greater care later. Other countries would simply not allow this, and the US shouldn't either. Drug prices need to be regulated, and orphan drugs should not be granted that status without first agreeing on a price.
Drug companies claim they need the big bucks to pay for research and development. What they mean is that US consumers need to pay the world's costs, since other countries regulate prices more. We're the saps. And most R&D doesn't go where it's needed anyway. We get lots of copycat drugs, where one molecule differs from a previous drug, or where a new market is opened (Viagra) and others try to enter it (Cialis). The most needed drugs don't get developed because they're less profitable. Targeted government research money, followed by immediate generic status, would make more sense.
But don't expect anything to happen now. The outrage isn't great enough yet. The Republicans are merely interested in hurting Obama, so they won't do anything that might make the Affordable Care Act work better. And the Democrats have no stomach for a battle, nor to make the drug companies even angrier.
Updated by K S LaVida at Wed Mar 9, 2011, 09:11:39 PM
WOW, Rec list! Thanks everyone. Much appreciated.