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High drug prices result of government protection in US

The high cost of prescription drugs in the United States is the result of drug manufacturers being granted government-protected monopolies, according to data published in JAMA Internal Medicine.

“The increasing cost of prescription drugs in the United States has become a source of growing concern for patients, prescribers, payers and policy makers,” Aaron S. Kesselheim, MD, JD, MPH, of the department of medicine at Brigham and Women’s Hospital and Harvard Medical School, and colleagues wrote. “In addition to their contribution to health care spending, increasing drug costs have important clinical implications. It is therefore important to understand what factors have contributed to recent medication price increases to lay the foundation for considering options to ensure that prescription drug expenditures are commensurate with their value, affordable within health budgets, and equitable for all parties involved in these complex transactions.”

Kesselheim and colleagues evaluated peer-reviewed medical and health policy literature published from January 2005 to July 2016 to determine the sources, justifications and consequences of the increasing cost of medications in the U.S. market and to review possible policy options that could control the cost of drugs.

Per capita prescription drug spending in the U.S. is the highest in the world, they wrote. In 2013, consumers in the US spent $858 per capita on prescription drugs, compared with an average of $400 in 19 other industrialized countries.

Data indicated that approximately 17% of all personal health care services in the U.S. consists of prescription drugs.

The investigators attributed the high spending to brand-name drug manufacturers increasing prices well over the consumer price index. According to the researchers, this is allowed due to market exclusivity, which allows up to 7 years before a generic formulation can be marketed; biologic agents receive 12 years of protection. Market exclusivity can be extended by more than 20 years depending on the manufacturer’s patent, according to the researchers.

The ability of health insurance providers to negotiate lower drug prices, which aids against excessive pricing, currently has various restrictions, they found. In addition, Kesselheim and colleagues noted that physicians prescribing choices rather than offering comparable alternatives at different prices is another key factor in drug spending.

The investigators found that the high prices were often justified by the high cost of drug development; however, a relationship between development cost and drug prices was not observed. In fact, the evaluation showed that medications were priced based mainly on market incentives.

“Opportunities to address these problems include paying greater attention to potentially unjustified granting and extension of patent exclusivity, enhancing competition by ensuring timely generic drug availability, providing greater opportunities for price negotiation by governmental payers, generating more evidence about comparative cost-effectiveness of therapeutic alternatives, and actively educating physicians and patients about such choices to promote more value-based decision making,” Kesselheim and colleagues concluded. – by Alaina Tedesco

Disclosures: Kesselheim is a Greenwall Faculty Scholar in Bioethics and is supported by the Harvard Program in Therapeutic Science. He also reports receiving grants from the FDA Office of Generic Drugs and Division of Health Communication, the Laura and John Arnold Foundation, and the Engelberg Foundation. Please see the full study for a complete list of all other authors' relevant financial disclosures.