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WSJ Article Cherry Picks Cost, Ignores Value of Medicines

October 6, 2015
Today’s Wall Street Journal story, “Price Increases Drive Drug Firms’ Revenue” reaffirms that old chestnut, “…a little information is a dangerous thing…”  When speaking to the complexities of the costs and benefits of America’s healthcare system, a publication like the Wall Street Journal should not cherry pick one aspect of that system to cover while ignoring the rest. Unfortunately and uncharacteristically, in this case, the paper focused on particular costs while ignoring value. In fact, to understand the system as a whole – much more must be considered, including:

  • Innovative treatments and cures have radically transformed how we treat disease – saving and improving lives and providing tremendous benefits to patients and society as a whole.

  • Innovative treatments and cures save the healthcare system money by keeping patients healthier longer, reducing complications and disease progression and thus reducing more expensive medical procedures and hospitalization.

  • Competition and free market negotiations work to drive down the costs of new treatments and cures – just as they do in other industries, regardless of the initial “list price” focused on by the media.  It is not uncommon for large payers, all of whom are quite sophisticated actors, to negotiate discounts of 40-50 percent or more off the list price.

  • Drugs only make-up about 10% of the total health care costs – a figure that has remained remarkably steady for decades and that is expected by government actuaries to remain so for at least the next decade.

  • Within a year of facing generic competition, the average price for a drug falls 80 percent or more. Today, approximately 88% of prescriptions are filled with generics, providing substantial savings for patients and payers.

  • Most critically, the article ignores the real issue – the problem is not the innovative new treatments and cures delivered to sick patients by America’s biopharma industry, but rather the complex and hidden health insurance schemes cooked-up to discriminate against patients with chronic and rare conditions who are in need of medicines that their insurance company (to which they pay ever-increasing premiums) will not adequately cover.

Finally, the article ignores the fact that America’s biopharma industry routinely provides hundreds of millions of dollars in free or deeply discounted drugs to patients in need of medicines who cannot afford them. When was the last time an insurance company provided free insurance to those in need?