Soaring Drug Prices Prompt Demands for Pharmaceutical Cost Transparency

Exorbitant drug prices are prompting insurers, physician groups, politicians, and state legislatures to demand transparency from pharmaceutical companies in how they determine a drug’s cost, the New York Times recently reported.

The article cited pharmaceutical cost transparency bills introduced in a half dozen state legislatures that have drawn support from insurers and consumer groups, an article by more than 100 oncologists in the recent Mayo Clinic Proceedings supported a protest against the high price of cancer drugs, and comments from high-ranking senators and even former President Bill Clinton calling for better explanation from drug companies on how they set their prices.

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“If a prescription drug demands an outrageous price tag, the public, insurers, and federal, state and local governments should have access to the information that supposedly justifies the cost,” reads a bill introduced in the New York State Senate in May, which is in the report.

Steep drug prices are often attributed to the expensive process of research and development, but, according to the New York Times, drug company executives tend to avoid tying the price of a drug to its cost of development. Rather, they point to the drug’s value, a concept that is vague and rarely broken down in terms of dollars and cents.  

One director at a multiple sclerosis drug developer, who spoke to the newspaper on the condition of anonymity, was more forthright in how pharmaceutical companies set their prices. “We all look at each other, and keep pace with each other,” the source said. “Honestly, there is no science to it.”—Jolynn Tumolo

Reference

Pollack A. Drug prices soar, prompting calls for justification. New York Times. July 23, 2015.