The birth of a drug is not easy. It’s an intense, unpredictable, and hugely stressful endeavor that it can be destroy the hopes of the world’s greatest scientific minds and the patients they want to serve. First victories in clinical trials can happen quickly evade catastrophic failures.
However, that reality, and the uniqueness of the life-changing mission of the pharmaceutical industry, becomes chaotic when it goes against the largely laissez-faire attitude of the US government towards regulating drug prices. The current system gives companies like AbbVie, Pfizer, Biogenicand all of the titans in the industry almost have a license to price their drugs no matter how long ago they were. The industry uses the prices from year to yearand 2021 is no different.
Look at AbbVie. The company that acquired another pharmaceutical company and botox maker Allergan in 2019, makes the world’s best-selling drugHumira who brought in Almost $ 15 billion in 2019 in the US alone. This anti-inflammatory drug treats a number of diseases ranging from psoriasis to arthritis to Crohn’s disease. So there is no reason to knock on science. However, Humira was first approved in December 2002. Almost two decades later, AbbVie is still increasing its price, although nothing has changed in the way the drug actually works.
Brad Loncar is a biotech investor with an affinity for the industry and the innovation that drives it. He also criticizes a model that inherently provides incentives for sustained cost increases in order to protect against the risk of scientific failure. It’s a model, as Loncar said capital during the time of the AbbVie-Allergan deal, which incentivized financial engineering over the medical magic that is the beating heart of the industry. The last Humira price increase for 2021? 7.4%.
This is the part of the story where pharmaceutical executives raise their hands. The industry regularly argues that this is an unfair characterization, as list prices do not match what a hospital or insurer pays, or what a patient pays for a drug out of pocket.
The exact amount that will be charged depends on your insurance status or the payment programs set up by major pharmaceutical companies. You can also learn new uses for an existing drug. A treatment like Humira, which was introduced to treat a disease can eventually handle a dozen.
That has serious financial implications for the average American. Even before this last round of price increases, the US list price of the standard 40 mg Humira injection pen rose from $ 16,636 for a year-long supply in 2006 to $ 58,612 in 2017, according to the University of Minnesota Institute’s AARP Public Policy Institute and PRIME.
In addition to Loncar, other long-time investors in the life science community say the model is broken. Biogen is another offender this year with its Tysabri treatment, which is used on patients with multiple sclerosis.
While AbbVie and Biogen are being selected for the price increases announced so far, many other companies are following the same pattern. Pfizer, Sanofi, and GlaxoSmithKline are All plot price increases between 0.5% and 8.6%., including for blockbuster drugs like Pfizer’s cancer drug Ibrance and its anti-inflammatory Xeljanz.
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