The US could be set to introduce a new law that will ‘lift the veil’ on pharma’s drug pricing policy as patients and the government struggle to pay for ever-more expensive medicines.
Assembly member and San Francisco Democrat David Chiu has introduced the new Bill, known as ‘AB 463’, that for the first time will require drug companies to reveal operational costs in order to better understand pricing for “ultra-high-priced drugs”.
“In recent years we have seen drug costs climb to new heights with little transparency for these astronomical prices,” explained Chiu. “With this Bill, we will lift the veil on drug prices and offer the public greater insight so that we can identify meaningful strategies to ensure prices do not threaten access to life-saving treatments.”
The Bill would require pharma to provide the Office of State-wide Health Planning and Development (OSHPD) with annual cost reporting on its most expensive drugs. OSHPD would then compile the data into an annual report submitted to the legislature and publicly posted online.
Specifically, the manufacturer of any drug or course of treatment that costs more than $10,000 per year, must report production costs for the drug, including:
• R&D costs paid by the manufacturer or predecessor;
• Any R&D grants associated with the drug, including those from any governmental agency or other source;
• Clinical trials and other regulatory costs;
• Manufacturing costs;
• Marketing and advertising costs;
• Acquisition costs, including patents and licensing;
• Profit attributed to the drug;
• Financial assistance provided to patients through patient prescription assistance programmes.
Currently, the pharma industry in the US – or indeed any market – is not mandated to reveal the specific costs related to the creation of any individual medicine. In fact pharma has for many years not shown how it prices its new medicines – although recent external research suggests that it can cost between $1bn and $2.5bn to bring a new drug to market.
These figures have however been disputed, leaving many confused as to the true cost.
But the issue of pricing is coming to a head as a new batch of drugs for a range of diseases are coming with higher price tags, and healthcare budgets are struggling to keep up.
Speaking about the need for such a Bill Michael Weinstein, president of the AIDS Healthcare Foundation, said: “As drug costs continue to rise, the need for transparency is critical. People now have to choose between basic necessities and filling their prescriptions for drugs they need to live healthy lives. At the same time, these companies are making record profits.”
Payers and patients are now grappling with six-figure price tags for medications that treat complex chronic diseases such as rheumatoid arthritis, multiple sclerosis, cancer, and hepatitis C.
Chiu says that Gilead’s $1,000 hep C pill Sovaldi (sofosbuvir), which costs $84,000 for a regular course of treatment, and its follow-up Harvoni (sofosbuvir/ ledipasvir) that comes with a $94,500 price tag, represent “important breakthroughs in biologic treatments for patients with these conditions”.
“But the prices for these drugs are a significant burden on the health care system and ultimately unsustainable in the long-term,” he warns.