Pharmaceutical companies spend more money on marketing, sales, share buybacks and administration than on research and development. Medicines and therefore also insurance premiums can therefore be a lot cheaper.
Researcher Aris Angelis and his colleagues point this out a new study noted that between 1999 and 2018, the fifteen largest biopharmaceutical companies were little concerned with the development of new medicines that really make patients better compared to medicines already on the market. In other words, most new drugs have little or no health benefit over existing treatments. They mainly fund the coffers of the pill makers themselves and their shareholders.
Not optimal care, but optimal profit
This problem is extremis in the United States, where this research was carried out, but government spending and health insurance premiums are also unnecessarily high in the rest of the world, with a few exceptions, such as New Zealand, where a smart alternative system has been set up by the government. Pharmaceutical companies simply prioritize profit optimization, rather than providing optimal care for the best price.
Angelis lays in conversation with Scientias.nl puts his finger on the sore spot and tells what he thinks needs to be done to ‘provide more innovative medicines at affordable prices’. He calls on governments to step in and ensure that the bulk of pharmaceutical spending goes back to research and development, so that better medicines can be developed and healthcare becomes more affordable at the same time.
New patent, new price
The average net price of a newly marketed prescription-only drug in the US has skyrocketed between 2008 and 2021. Within 13 years, the price went from $1,400 a year to an average of $150,000. Even old, mainstream drugs have seen their prices skyrocket through a trick known as “evergreening”—the extension of nearly expired patents through rebranding and various legal and technological sleights. To the loud cheers of shareholders, pharmaceutical companies slightly modify old, well-functioning medicines, apply for a new patent, and charge the top price, while the old product is phased out, according to Angelis.
Better control
“The government authorities that decide whether new medicines can be put on the market only check their effectiveness and safety. That is, does the product do what it promises and is it safe to use? The medicine watchdog does not take into account the added clinical value compared to existing treatments. In our study, we propose, among other things, that government authorities increase the burden of proof for marketing authorization by requiring companies to demonstrate added therapeutic value. We also recommend a reform of the payment system, so that companies that develop medicines that offer additional clinical benefits are rewarded,” explains Angelis.
Pay double
Worldwide, the 15 largest pharmaceutical companies have revenues of $7.7 trillion, of which they have spent only $1.4 trillion on research and development. Most of these companies spent more money buying back their own shares (buybacks). In some cases, society even pays twice for a new drug. Initially in the form of government-subsidized research and then by paying far too much money for the expensive medicines.
fairer system
There are also countries that, despite the pressure of the powerful pharmaceutical lobby, have set up a fairer system. “In one country, the health care system, including pharmaceutical policy, is a lot better organized than in the other country. This leads to large differences in healthcare costs for the patient. In the New Zealand system, for example, there is public procurement, which drives down drug prices. In situations where the patent of the original molecule has expired, and therefore the patent of the generic drug has expired, cheaper competitors can also win the tender that have manufactured a similar drug. As an added benefit, New Zealand also has far fewer problems with medicine shortages in this way. So the country has cheap and safe medication with less risk of shortages,” says Angelis.
The researcher explains what went wrong. “Governments and NGOs fund fundamental medical research, for example to better understand how a disease arises and progresses. In addition, they encourage companies to invest in the development of medicines. Once these expensive products are on the market, governments will again pay a lot of money for the end products.”
Very expensive insulin
The problem is especially big in America. “In the US, a system of free market forces without price restrictions is in force. Therefore, excesses such as the high monthly costs for diabetics dependent on synthetic insulin medication can exist there. This is not the case in most EU countries. There, the cost of insulin is only a fraction of the price in America, where continuous patent extensions keep the generic, low-cost version of insulin off the market,” said the researcher.
Government must intervene
“Given the amount of money spent on things that have nothing to do with research or development of new drugs, and since most new drugs add little or no therapeutic value, it is clear that the pharmaceutical industry could, in theory, produce many more medically valuable innovations. can generate with the existing resources,” the team writes in the study. “However, it is unlikely that this will happen without government intervention and regulation of how new drugs enter the market.”
So there is only one solution: governments must intervene to tackle this perverse system that makes our healthcare very expensive, especially now that the population is aging and healthcare costs are rising sharply.
