Getting to the Key Question on Drug Prices


The topic of health care can be a difficult one to take up analytically.  I hesitate, for example, to raise a long CNN article by Wayne Drash that profiles a Rhode Island family’s experience with the historic price increase of a drug that, at first, seemed like a miracle for their special needs son.  Click over for the details, but here’s an entry point for the fundamental question:

“It’s a very real thing living with a child that could have a [fatal] seizure,” Jonathan [Foltz] says. “It just seems kind of silly to be worrying about the bottom line of a company when you’re talking about kids’ lives.” …

News of Mallinckrodt’s $100 million settlement jolted them again.

“It seems like a slap on the wrist,” Jonathan says. “I’m not against capitalism. I’m not against people making a profit. But when small market drugs are making billions and they’re supposed to be using the money to help the community with new drugs, it seems like a failure.

Similar questions came up recently, for me, when I learned about cutting-edge medicines to treat a genetic disease.  In essence, the disease prevents DNA from producing cells that behave as they are supposed to behave, and the new drugs attach to the DNA to fix its operation.  In other words, it’s a treatment, not a cure, but it’s like a cure that plays out over an entire lifetime.  With a potential annual cost in the hundreds of thousands of dollars, how does one set the value?

On one hand, the seller could take the measure of the patient’s willingness to pay.  For any of these drugs, what is the value to a person of staying alive?  What is the value to his or her family and community of keeping him or her alive?

However, capitalism requires not only a demand-side calculation of value, but also a supply-side calculation of cost.  How much does it cost to develop and manufacture these drugs?  How unique are the resources or skill sets of the seller in the marketplace?  Within one’s line of vision, the bottom line of a company is a cold thing to measure against the lives of children, but the bottom line keeps production and innovation going, saving lives that currently have no hope.

Once we’ve acknowledge that the equation has two sides, the next question is whom we entrust to balance them.  Is it the government?  That only translates the equation into one involving the ability of advocates to promise votes and the willingness of corporate interests to supply donations.

This is a very complex matter to consider, and yet, I can’t shake the feeling that Drash’s article doesn’t quite name the real problem.  Yes, when a drug that has been around for decades and that once sold with a much-lower price tag suddenly rockets in price like Venezuelan inflation, something in the market isn’t operating correctly.  To know how to respond to the story, we have to know whether production really is much more expensive than it once was or some quirk of the law is perpetuating an unjustifiable monopoly.

Unfortunately, the public at large typically has to dig well beyond feature essays for that level of information (with the essayists, after all, responding to their own audiences), and few have the time or interest to achieve even that level of expertise on a narrow matter.  This points to something that needs fixing in our civic society.