Transcript fonseca-are-drug-prices-a-problem

Rafael Fonseca MD
Chair, Department of Medicine Mayo Clinic in AZ
Are drug prices a problem?
Scottsdale, Arizona
Mayo Clinic College of Medicine
Mayo Clinic Comprehensive Cancer Center
Rochester, Minnesota
Jacksonville, Florida
Disclosures
• Consulting multiple bio and pharmaceutical
companies
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Passionate to see my patients do better
Opinions my own – not political
Fierce free market supporter
Dislike wasting your time with this slide
Golden age in Medicine
• Cures for many ailments
• Hepatitis C is highly curable
• Many cancers are now controlled and more can
be cured
• Number of options is ever increasing
• Improvements in life expectancy 20th Century
• Sanitation
• Diagnostics
• Drugs
Multiple Myeloma
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15 years ago 3 yr survival ~30%
Now >90%
Basic research vs empirical progress
New treatments like lenalidomide and
proteasome inhibitors
• Monthly cost sometime in excess of $10,000
• How can patients pay for this?
Economic benefit
• Murphy and Topel (2006) estimated that a
“1 percent reduction in cancer mortality
(sic for the whole of the United States)
would be worth nearly $500 billion to
current and future Americans.”10
Murphy K, Tope R. The Value of Health and Longevity.
Journal of Political Economy. 2006;114(5):871-904.
Goals
• HERE: Everyone wants to help patients
• But we have to make a choice:
• Choice A - Broad access now
• Cheap and immediate
• Worldwide
• “Today’s best is forever best”
• Choice B - Continued innovation
• Continued discovery
• Any drug in B becomes A at patent exp.
Are the costs of drugs a problem?
• Drugs account for ~10% of cost of care
• Depends who pays
• Patients (co-pays)
• Insurers and payers
• Government health programs
• Is this concern new?... Hardly
• Is this the right question
• How to frame it
So is cost the real issue?
• It should not be! - Total cost of care
• Value is the issue
• Economic benefit of intervention
• Cost of drugs has been 10% since 1960’s
• Higher in cancer
• Despite higher costs of drugs lower
total cost of cancer care
• Economic benefit
Has the free market failed?
• Hardly a free market situation
• Third part payer system
• “A solution to lack of free market is not
less free market”
• The free markets work
• Daraprim story
• Lasik eye surgery and plastic surgery
• Peter Bach and colon cancer
Misconceptions
• Generics and patent medications
• “Red pill versus blue pill”
• We are smart and can help set prices!
• Patients have to get 2nd mortgage
• No one pays full price
• Few pay full co-pay
• Bankruptcy
Clinical Misconceptions
• Drug only improve survival by such..
• Median
• Individuals
• Long term outcomes
• Cures
• Combined benefits
• Tumor heterogeneity
• Better tolerability
Cancer Survival
Ok no new drugs, but we will have supply!
• Vaccines for children 1993
• Generic injectable medications
• http://www.ashp.org/drugshortages/cu
rrent/
• Household goods
• Toilet paper in Venezuela
Price Controls
• iShares Nasdaq
Biotechnology Index
(IBB) is down 4% while
the SPDR S&P Biotech
ETF (XBI) is off 6%.
Return of investment, not good intentions,
drive investment in biotech
September 2015
Conclusion
• Cannot fix markets by making them less
free than they are
• Proposed solutions – cost controls are
ling term dangerous
• Effective competition in generic markets
is key
• We all benefit from this
• The future remains bright