SEATTLE (AP) — Britain does it. So do France, Germany and Canada. The only major industrialized country that doesn't regulate the cost of prescription drugs is America.
Here, prices reflect what the market will bear. That’s dictated largely by insurance carriers, which negotiate reimbursements, and Medicare, which pays for essential treatment no matter the cost.
Sometimes, those prices stun. Soliris, an Alexion Pharmaceuticals drug used for a rare anemia, costs up to $440,000 a year. Gattex, a short-bowel-syndrome drug from NPS Pharmaceuticals, came out at $295,000 — three times the price first floated. Both drugs are licensed for only a few thousand U.S. patients each year.
Typically, the mega-blockbusters are orphan drugs licensed for multiple disorders, expanding the patient pool. A celebrated example is botulinum toxin type A, known today as wrinkle-remover Botox. Licensed in 1989 as an orphan drug to treat uncontrolled eye blinking, it generated $1.8 billion in sales last year.
The pharmaceutical industry says high prices offset costs of research, which can take years and cost a billion dollars or more. The winners help support the many losers, subsidizing the chase for new drugs, according to industry trade groups.
A Thomson Reuters industry report published last year noted that more pharmaceutical companies are entering the rare-disease market because profit margins often exceed those for non-orphan drugs.
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