Drug Prices Soar, Prompting Calls for Justification

“Drug Prices Soar, Prompting Calls for Justification,” by Andrew Pollack, The New York Times.

Prices for cancer drugs, some of which extend lives by only a couple of months, routinely exceed $100,000 a year, and some new ones exceed $150,000. And it is not unusual for the list prices of existing drugs to rise 10 percent or more year after year, far beyond the rate of inflation.

More than 100 prominent oncologists called for support of a grass-roots movement to stem the rapid increases of prices of cancer drugs, including by letting Medicare negotiate prices with pharmaceutical companies and letting patients import less expensive medicines from Canada. “There is no relief in sight because drug companies keep challenging the market with even higher prices,” the doctors wrote in the journal Mayo Clinic Proceedings. “This raises the question of whether current pricing of cancer drugs is based on reasonable expectation of return on investment or whether it is based on what prices the market can bear.”

So-called pharmaceutical cost transparency bills have been introduced in at least six state legislatures in the last year, aiming to make drug companies justify their prices, which are often attributed to high research and development costs.

Pharmaceutical executives often say they price the drugs based on the value they provide, though often a detailed explanation of that is not provided. In many cases, it appears, the price of new drugs is set in comparison to rival drugs already on the market, and usually a bit higher. Companies then can raise their prices for the older drugs.

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