HEADLINES Published July24, 2015 By Bernadette Strong

Drug Companies Are Pressured to Explain High Prices for Certain Meds

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State legislatures and other groups are pressuring the pharmaceutical industry to explain why some drug prices are so high.
(Photo : Spencer Platt, Getty Images )

The price for certain medications is being called outrageous and the pharmaceutical industry is being pressured to disclose how it comes up with its pricing. High prices for drugs to treat cancer and hepatitis C, just to give examples of two conditions, are causing consternation on the state level, where they can bust Medicaid budgets. At least six state legislatures are introducing bills that will require drug companies to justify the cost of their products.

Pressure is also coming from elsewhere. The top Republican and Democrat on the U. S. Senate Finance Committee demanded detailed information on costs from Gilead Sciences, whose hepatitis C drugs cost $1,000 a pill and more and which have strained the budgets of state and federal health programs. The United Auto Workers Retiree Medical Benefits Trust tried to make Gilead, Vertex Pharmaceuticals, Celgene, and other companies report how they set prices. The trust cited the more than $300,000 per year price of Vertex's cystic fibrosis drug Kalydeco and roughly $150,000 for Celgene's cancer drug Revlimid.

Drug companies say that they must charge high prices because of the high costs of their research and development programs. But they do not outline what these costs are. They also cite the fact that they must cover the cost of research and development of the more than 80% of drugs that never reach market

State legislatures are up in arms, but the physicians who must prescribe these expensive drugs are truly angry. More than 100 prominent cancer doctors called for support of a movement to stem the rapid increases of the prices of cancer drugs. Prices for cancer drugs have increased more than tenfold between 200 and 2015. The group called for allowing Medicare to negotiate prices with pharmaceutical companies and to allow patients their prescription medications from Canada, where prices are lower.

Even patients who have health insurance are affected by high drug prices, since some insurers ask them to pay 20% to 25% of the cost for some drugs. The high prices can force insurers to raise premium costs. 

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