CMPI: Value of Prescription Drugs Is Underestimated

Sept. 21, 2015 – Despite widespread reports about the soaring prices of prescription drugs and calls by the federal government and members of Congress to lower these prices and break patents, the Center for Medicine in the Public Interest (CMPI) contends that it is time for a “careful examination of the rest of the story” – specifically the role that innovative medicines play in “reducing the cost of medical care [and] reducing the pain and suffering of sick people.”

Peter Pitts and Robert Goldberg author the CMPI report, entitled “Price vs. Value: The story and the rest of the story,” which refutes many of the often-made criticisms of the prescription drug industry.

“Pitts and Goldberg take a careful look at the recent political hype over drug prices and go beyond the finger pointing and sometimes draconian solutions suggested by regulators and Congress,” said Coalition for Healthcare Communication Executive Director John Kamp. “Let’s hope the mainstream press will begin to give more than token attention to the industry side of the story,” he asserted.

The CMPI report addresses five claims made by industry critics in the following ways:

(1)    U.S. drug prices are higher than in other developed countries. The authors argue that although this statement may be technically true, “most developed countries also spend more on medicines as part of their healthcare budget that we do” in the United States.

(2)    Most new drugs are not that different from those already on the market and provide incremental value. According to Pitts and Goldberg, “this assumption is based on average efficacy rates rather than individual patient outcomes.” They also note that as personalized, precision medicine evolves, the right medicine will get to the right patient, which increases that drug’s value.

(3)    The new drugs that are impactful are too expensive, so prices should be controlled or negotiated to increase access and generic substitution of drugs should be mandatory. “Most if not all private and public payers mandate generic substitution when applicable,” the report states.

(4)    Competition in the innovative new drugs category is non-existent, so pharmaceutical companies gouge the system. The authors assert that in reality, companies marketing these new drugs (for example, Gilead with its Hepatitis C drug Sovaldi) offer generous discounts on these drugs to private payers, but that “unfortunately, payers are not transferring those savings to the patients.”

(5)    Spending on prescription drugs is unsustainable and not worth the cost. In fact, the CMPI report states, pharmaceuticals consume only 10 percent of healthcare costs in the United States and only two out of 10 medicines approved will be profitable enough for drug companies to recoup their investment.

CMPI provides numerous charts and statistics in its report to support its arguments. Addressing the Sovaldi example, the report authors point out that even though that drug is expensive, when compared to the costs of other current treatments, including weekly injections or liver transplants, “it is clear that new medicines almost always reduce the cost of living [a] longer and healthier life and increase the value of such improvements.”

In the case of breast cancer, the report states that “innovations enabled breast cancer patients to buy longer, healthier lives in the presence of the disease, with access to these innovations often the result of healthcare coverage.” Further, innovations in HIV treatment have similar results.

“Thus, in the most literal sense of the phrase, cumulative medical innovation provides real ‘health insurance,’ and investment in medical R&D is the premium required for improved risk reduction in health,” according to the report.

To view the full report, go to: CMPI Price vs. Value Report