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Tuesday 26 July 2011

Reducing Pharmaceutical Costs

Why is healthcare so expensive?  One of the factors is the cost of medication.  Patients are prescribed an increasing number of medications – increasingly to prevent future illnesses rather than to treat existing ones – and average medication costs appear to be rising.

One of the largest medication classes in terms of sales is the antidepressants.  A recent study indicated that 20% of women in the province of British Columbia had been prescribed an antidepressant in 2006.  These medications tend to be expensive, in part, because more recently-developed medications are prescribed by physicians rather than older drugs that are no longer under patent protection.

When a new medication is invented, it can be patented by the manufacturer.  In Canada and many other western countries, drug patents last for up to 20 years, during which the manufacturer has the exclusive right to produce and sell the medication.  Because the manufacturer has what is, in effect, a monopoly on the drug in question, prices tend to be quite high.  For example, I recently priced the on-patent drug Pristiq at about $3.50 per tablet, whereas a generic version of Prozac (fluoxetine), the patent of which has expired, can be had for under $1 per tablet.

Once a medication patent has expired, the manufacturer faces competition from generic manufacturers and the price drops sharply – as do profits.  Consequently, companies that have one preparation on patent and one with an expired patent will tend to spend much more time, effort, and money promoting the medication with a patent.  Pharmaceutical representatives will emphasize the patented preparation, and the industry-sponsored drug presentations will favour the single-source medication.

In a recent survey of the most prescribed medications in the US by sales in 2009, the only antidepressants in the Top 200 were those still on patent protection.

Well, good.  If the newer medications are more effective, then let’s pay for them and help more people get well.

But are they any better?  Yes, if you listen to the pharmaceutical representatives paid to recommend their use.  But if you look at the data it quickly becomes apparent that there is precious little evidence that any of the newer-generation antidepressants are better than one another, nor any evidence that they are more effective than the older tricyclic antidepressants (though the side effect and toxicity profiles differ).  Indeed, recent meta-analyses have called the overall effectiveness of these medications into question for the people to whom they are most often prescribed.  (But that's another post.)

So here’s a suggestion.  Drug plans, both government and private, could agree to fully reimburse consumers for any antidepressant medication.  If the medication is on patent protection or is otherwise more expensive than others, it should be fully funded.

But there’s one catch.  The manufacturer must demonstrate a systematic pattern of results indicating that the patented, more expensive medication is clinically superior to the cheaper alternatives.

Isn’t that already the standard?  No.  All a new medication must show is that it is somewhat effective against a disorder.  And even that criterion appears flexible or open to significant interpretation, given the approval of most antidepressants.  It need never show that it is superior to other approved therapies.

What would the impact be?  Newer “copycat” drugs would no longer be put on the market for the sole purpose of maintaining an income stream for the pharmaceutical companies.  Physicians and others would no longer be subject to the farcical contortions of detailers and conference presenters attempting to show how the new medication really represents a significant advance, contrary to the data.  Governments and other funders would save a considerable amount of money.

And sufferers would have no ill effects, if the older medications work just as well.


  1. Lots of good information! I also suggest that the government should spare more budget to cut the cost of medication.

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  2. I believe that the main reason why pharmaceutical companies sell high-priced medicines is because they invest large amount of money in marketing their products.

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