As the cost of new drugs skyrockets, health systems are asking themselves if they should accept pharmaceutical companies’ full conditions.
Sovaldi is a new drug used to treat hepatitis C. It is said to cure almost 90% of patients in just 12 weeks. This is a leap forward in the fight against this disease, as current treatments have a far lower healing rate and are often accompanied by unwanted side-effects.
The catch? The price. A three-month course of treatment in the US costs more than 80,000 Swiss francs. The 80 pills are sold for around 49,000 Swiss francs in Germany, while a Swiss citizen would have to shell out almost 60,000 Swiss francs to benefit from the miracle cure. But in Egypt, where almost 15% of the population is infected, the US laboratory behind the medicine, Gilead, is offering the treatment for around 800 Swiss francs. The company argues that the price charged in Western countries enables it to sell the drug at cost price in places where it is needed most.
These differences sparked a heated polemic a few months ago when the drug was released in France, where the cost of treatment has been set at around 41,000 Swiss francs following persistent negotiations by the French Health Minister.
In reaction to this controversy, the Swiss Federal Office of Public Health (FOPH) published a report in early February. It observed that “certain representatives of the pharmaceutical industry are using a new type of pricing strategy to try to generate as much profit as possible thanks to social security systems in developed countries, which are financed by taxes and insurance premiums.”
According to Thomas Cueni, general secretary of the central association of Swiss pharmaceutical companies, Interpharma, the long-term benefits should be considered. “Hepatitis C is an illness that generates considerable costs due to procedures such as transplants and treating cirrhosis of the liver. The fact that the disease could now be treated in the majority of cases, and in a very short time, should push us to put the price of a drug like Sovaldi into perspective.”
The cost of research
This example is far from marginal. Today a great number of new medicines are released at staggering prices, particularly in the field of immunotherapy, where cancer treatments are developed to boost patients’ immune defences. In the US, a drug called Avastin has been developed to fight colon cancer, and costs between 4,000 and 9,000 Swiss francs per month, depending on the patient’s weight. Blincyto, a treatment for leukaemia, costs around 13,000 Swiss francs per month. And a new drug developed by Novartis to treat lung cancer, sold under the name Zykadia, costs around 14,000 Swiss francs per month.
Pharmaceutical groups justify these prices by citing regulatory constraints, shareholders’ expectations and increasingly expensive research and development costs. “It’s true that, when you consider the amounts invested in research that ultimately proves to be fruitless, R&D costs for a drug can vary from single- to double-digit billion amounts, say from $4 billion to $11 billion,” says Quebec biologist Jacques Beaulieu, author of a recent work entitled Ces médicaments qui ont changé nos vies (Multimondes, 2014).
A study carried out by the economic magazine Forbes shows that a pharmaceutical company must pay out at least $350 million before being able to sell a given drug. Since most large groups develop several projects at the same time, the American magazine calculated that the total bill adds up to an average of $5 billion for each new drug that hits the market.
These are enormous figures, but figures alone cannot justify the prices demanded by the pharmaceutical industry. According to Forbes’ analysis, R&D costs represent around 20% of the sale price, while pharmaceutical groups spend higher sums to promote their products and rake in profits of between 20% and 30% per drug sold.
The Swiss case
In Switzerland, the FOPH judges whether a drug should be reimbursed by the Swiss basic health insurance system. “We make this decision based on opportunity, efficiency and cost criteria,” says Oliver Peters, Vice President of the FOPH. “We have decided to reserve the use of the drug in the treatment of hepatitis C for patients suffering from advanced liver disorders. This limitation has been medically justified by a recent study that showed that healing rates for this illness were quite positive, even in cases of late treatment.”
But after taking everything into account, what is an acceptable price for saving someone’s life? The Federal Supreme Court of Switzerland was called to review the question a few years ago. An elderly patient had been diagnosed with an adult form of Pompe disease, a genetic disorder that causes muscle damage due to an anomaly in the metabolism of glycogen. The patient’s insurance first accepted a six-week Myozyme treatment, a medicine used to treat some of the symptoms and which costs around 500,000 Swiss francs per year. However, after judging the treatment to be too expensive, the patient’s health insurance refused to continue its reimbursements. The patient brought the case before the Supreme Court, which acquitted the insurance company, stating that the cost of the treatment was disproportionate and that the therapeutic benefits were insufficient. In its decision, the Supreme Court judged that around 100,000 Swiss francs was a reasonable cost for each year of extra life in good health.
Is the solution to this problem to develop generic medicine? “Unfortunately Switzerland’s generic medicine market is too small, and there is a sort of tacit agreement between manufacturers,” says Thierry Buclin, physician-in-chief of the Clinical Pharmacy Division at the CHUV. Buclin did, however, put forward several ideas to improve the situation. “There would be a place in our country for the manufacturing of generic medicine, which would be available to the people – a sort of public cooperative. It could produce combined generic medicine, as most elderly patients, who are big consumers of medicine, suffer from similar pathologies including heart problems, diabetes and hypertension.”
One thing is sure: Swiss patients will have to keep paying high prices for their pills in 2015, as the price of imported medicine is not immediately adjusted to the current exchange rate. This situation concerns Stefan Meierhands, the Swiss federal price watchdog. A document published by the Swiss newspaper Berner Zeitung calculated that, based on the current exchange rate of €1.05, the potential annual savings would amount to almost 800 million Swiss francs.
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