“Drugmakers Push Their Prices Higher” is the top story under the Business & Finance banner in today’s Wall Street Journal.
That’s in terms of drugs’ list prices, which most patients don’t pay. But drug costs to patients are in the eye of the beholder, who in a high-deductible plan or Medicare Part D donut hole becomes the first-dollar payer. Patients continue to face rising drug costs, pushing them into what I’ve been thinking about as luxury-goods territory.
The economic definition of a luxury good is a product for which demand increases more than proportionally as income rises, so that spending on the good become a greater proportion of overall spending.
Remember that demand, in your Econ 101 course, is filtered through one’s ability to pay for a good. In other words, Khan Academy instructs, “If you can’t pay for it, you have no effective demand.”
No, people aren’t choosing between buying a Louis Vuitton satchel bag, Manolo Blahnik shoes, or a Rolex watch. The consumer-facing costs of those prototypical luxury goods can pale in comparison to the price of Bluebird bio Inc.’s product, Zynteglo, which can be acquired on a gross basis at 1.58 million Euros or on an installment plan for 315,000 Euros over five years (each successive year paid on an outcomes/success basis) for people in Europe facing the condition beta thalassemia. This is a rare disease, so the company rationalizes the price based on the very limited market size potential. The drug is expected to be available in the U.S. in 2020.
You don’t have to look so astronomically high as a gene therapy to find self-rationing of drugs due to costs in U.S. families. Take insulin, which hits millions of families who have a loved member managing diabetes.
Two weeks ago, the Washington Post published a story featuring a caravan led by a Mom driving from Minnesota to Fort Frances, Ontario, to buy insulin for her daughter, dealing with Type 1 diabetes, at one-tenth the price in Canada as it was in the U.S.: $1,200 versus $12,000. (There an entirely other important discussion here about shopping and health, transparency, Moms as caregivers, etc. — but I’m limiting this discussion to drug costs and self-importation for the moment).
Back to shopping and household budgets…an LV bag can retail around $3,000; Manolo pumps about $1,000; and a new Rolex would run about $10,000.
So it’s not the bag or shoes or timepiece that people trade-off in a household budget: it’s the mortgage payment or food or gas tank or utility bill.
Tonight, my collaborator and friend Colin Hung will host the #hcldr tweetchat at 830 pm Eastern time. Join us to brainstorm the timely topic of “Foreign Influence on Health Care.” The conversation will focus on the “foreign” influencers of Canada (for prescription drug importation and access) and China (in the instance of Patients Like Me, United HealthGroup, and ICarbonX, the China-based investor from which PLM had to separate). (My colleagues, Susannah Fox and Lisa Suennen, and I, covered aspects of the UHG/PLM story in our respective blogs yesterday).
Colin will be asking four questions for us to discuss via Twitter:
T1 One argument drug makers use to justify high prices is that the $$$ are needed to fund research and the flow of new medications. How do you respond to that?
T2 It’s laughable to think about lobbying gov’t to set a max price for cell phones or cars. Why should/shouldn’t medications be different?
T3 Who would you least want to have easy access to your data – a foreign company, an insurance company that isn’t your own or a device company? Why?
T4 What can UnitedHealth do to ensure PatientsLikeMe continues to be helpful/useful for patients?
I’m looking forward to tonight’s chat to learn and share and dig into the many complex issues that will continue to shape U.S. health care, and particularly Americans’ prospects for becoming health citizens guaranteed access, full data privacy protections, and health citizenship.
For added insight from the Canadian prescription drugs lens, check out Andre Picard’s analysis in the Globe & Mail, Canada’s great national paper. My take on drug reimportation, which I’ve discussed here on Health Populi, is that if Prime Minister Trudeau can negotiate drug prices with pharmaceutical companies, why shouldn’t President Trump — or previous Presidents of the U.S. — do or have done the same for U.S. health citizens. And there’s that phrase again…
PS – if you “needed” these Manolo Blahnik Blue Duke sequin red, white and blue shoes, you could once find them on Tradesy discounted down to $599…