Category: Drugs

Does Medical Weed Lower Medicaid Drug Costs?

ReeferA new study in Health Affairs looked at the effect medical marijuana has on prescription drug use in state Medicaid programs. It found positive correlation between states that have passed medical marijuana laws and lower Medicaid drug spending. Just over half of states (28) have pass some type of law that allows for medical marijuana. Researchers reviewed fee-for-service (FFS) drug utilization (2006 – 2014) in state Medicaid programs to compare states that allowed medicinal marijuana with states that did not.

Weak Idea at Bernie’s: Bureaucrats Should Not Negotiate Seniors’ Drug Prices

Capture14Senator Bernie Sanders and Representative Elijah Cummings — along with a few other liberal Members of Congress — want to change the way Medicare purchases drugs for seniors. It is a popular talking point mainly because many Americans naively assume Medicare does not bargain over the price of drugs. Even President Trump has perpetuated the bogus idea that having the government negotiate the price of drugs would lower Medicare’s drug costs. This may sound appealing to many because drug makers don’t elicit much sympathy these days. Yet, seniors, drugmakers and taxpayers alike have a stake in the outcome because drug therapy is the most convenient and efficient way to care for patients.

Advice to the New FDA Commissioner

prescription-drug-shortageWriting in The Hill, Mercatus Senior Research Scholar Robert Graboyes discussed ways to boost the U.S. Food and Drug Administration’s productivity.  He and coauthor Jordan Reimschisel discussed seven things the FDA could do to speed approval of drugs and medical devices.

Pharmaceutical Profits And Capital Markets

captureAn interesting research article at the Health Affairs blog asserts there is no relationship between high U.S. prescription drug prices and drug companies’ research and development budgets.

The authors point out that U.S. prices for patented prescription drugs are significantly higher, in real dollars, than prices in other developed countries. (Most observers claim this is because foreign governments impose price controls. I think it is more attributable to price differentiation due to variation in national income per capita.)

The point of the article is to debunk the argument that research-based drug companies must earn high profits if they are going to reinvest in R&D. While the data are correct, the article misunderstands the nature of capital markets.

Medical Drug Tourism: An Odd Byproduct of High Drug Prices

Capture14On numerous occasions President Trump has lambasted drug companies for their high drug prices. He has suggested on more than one occasion Americans should be allowed to import medications from abroad where they are cheaper. Allowing private citizens to import their own drugs is a form of arbitrage. Arbitrage is when people are able to take advantage of discrepancies in prices in two different markets and bypass the higher prices by purchasing the lower-priced product in a cheaper market. For instance, you could argue that buying from Amazon is a form of arbitrage to avoid paying higher prices at your local brick & mortar store.

American Patients Have Much, Much Greater Access to New Cancer Drugs Than Others Do

captureNew research by scholars at the University of Pittsburgh shows how much better access American patients have to new cancer medicines than their peers in other developed countries:

Of 45 anticancer drug indications approved in the United States between January 1, 2009, and December 31, 2013, 64% (29) were approved by the European Medicines Agency; 76% (34) were approved in Canada; and 71% (32) were approved in Australia between January 1, 2009, and June 30, 2014. The U.S. Medicare program covered all 45 drug indications; the United Kingdom covered 72% (21) of those approved in Europe— only 47% (21) of the drug indications covered by Medicare. Canada and France covered 33% (15) and 42% (19) of the drug indications covered by Medicare, respectively, and Australia was the most restrictive country, covering only 31% (14).

(Y. Zhang, et al., “Comparing the Approval and Coverage Decisions of New Oncology Drugs in the United States and Other Selected Countries,” Journal of Managed Care and Specialty Pharmacy, 2017 Feb;23(2):247-254.)

Advice to Trump: Leave Medicare Drug Prices to the Free Market

President-elect Donald Trump has bashed drug prices on numerous occasions. During his campaign, he championed the idea of having the government directly negotiate the price of Medicare drugs for Part D drug plans. Trump seemingly dropped the idea later in his campaign only to resurrect it again mid-January. Many Democrats also believe the government could secure a lower price for the drugs Medicare reimburses on seniors’ behalf. However, Republicans have long opposed the idea of government meddling in private markets and codified a non-interference clause in the Medicare Modernization Act of 2003.

Congress Should Take Steps to Make Drugs More Affordable

gencompAs Republicans squabble about how to repeal & replace Obamacare, lost in the debate is the way most Americans actually access our health care system. In any given year, most people don’t ride in the back of an ambulance heading to the ER. Nor do they convalesce in a hospital bed. Most of the medical care Americans receive is not even provided in doctors’ offices. The most common way Americans access our health care system is by taking a pill.

Why Did The FDA Approve 57 Percent Fewer New Medicines Last Year Than 2015?

captureThe Food and Drug Administration has reported it approved only 19 innovative new medicines last year, versus 51 in 2015. To be sure, 2015 was a high-water mark. Nevertheless, such a dramatic drop signals a problem for patients eager for new treatments. These new drugs, though few, represent advances in the treatment of ovarian cancer, Hepatitis C, and multiple sclerosis, among other diseases.

The FDA excuses itself for the slowdown, claiming it is receiving fewer applications from drug makers. However, this is symptomatic of a vicious circle. The regulatory burden of approval has increased so much, it is contributing to a significant reduction in the rate of return on capital invested in pharmaceutical development. According to new research by Deloitte, the rate of return has collapsed from 10.1 percent in 2010 to 3.7 percent last year.

Rational Drug Prices Require Rational FDA Regulations

The House has passed and the Senate is expected to pass the pork barrel-bloated, 21st Century Cures Act. Aside from $6 billion worth of pork, the Cures Act would reform the drug approval process at the U.S. Food and Drug Administration (FDA). A rational path to drug discovery is badly needed. Once a drug finally makes it through the regulatory process to approval, it is guaranteed years of monopoly pricing due to the plethora of regulatory barriers that inhibit competition.