Drug prices are costing us all but pharmaceuticals pay huge dividends by avoiding far more expensive disease complications.
FEDERAL regulators may soon approve a new class of cholesterol-lowering drugs that could halve the risk of heart attack for 10 million Americans.
The new drugs are more effective than typical statin-based cholesterol medicines — but they carry a $10,000-per-year price tag. In response to eye-catching price tags like these, some states are now moving to cap pharmaceutical prices.
Such actions are shortsighted. It is a mistake to focus on the upfront individual cost of medications, while ignoring the huge savings generated by preventing disease complications with early medical interventions. Lawmakers should avoid what may be perceived as an easy fix — issuing price controls to drug developers. Instead, they should recognize that drug spending is, in the long term, a cost-effective investment in public health. That does not contradict the very real need to explore ways to bring overall medical spending down.
No disease better demonstrates this reality than diabetes.
Roughly 29 million Americans — nearly 10 percent of the U.S. population — are diabetic. Medical costs related to treating these patients now total $176 billion per year.
These figures are expected to grow. There are three times the number of pre-diabetics — people with dangerously high blood-sugar levels — than diabetics in this country. Without intervention, 70 percent will go on to develop full-blown diabetes.
Diabetes causes serious — and expensive — health problems. It’s the leading cause of kidney failure, accounting for 40 percent of cases. Roughly 70 percent of diabetics have mild to severe forms of nervous-system damage. The cost of treating such diabetes-related conditions has grown more than 40 percent since 2007. The disease now accounts for 6 percent of America’s total health-care spending.
Much of this spending could be avoided through an upfront investment in preventive care. There are already drugs on the market that address the chief risk factors of the disease: high cholesterol and hypertension.
One study found that regular, widespread use of such medications would cut the risk of pre-diabetics developing the full disease by 56 percent. Preventing just 30 percent of pre-diabetics from contracting diabetes would save the health-care system $74 billion.
Even when people do develop diabetes, proper treatment can control the disease and reduce the risk of expensive complications. Studies show that every dollar spent on diabetes medications avoids $7 of spending on other treatments, such as surgeries and hospitalizations.
Prevention yields savings for other diseases, too. Treating more patients with medications to reduce high blood pressure could save $15 billion per year. For every $1 bump in vaccine spending, society saves more than $10 by avoiding disease treatment expenses.
Lawmakers miss these benefits when they myopically focus on drugs’ price tags. Yes, drug spending requires an upfront investment, but it pays huge dividends by avoiding even more expensive disease complications.
Capping drug prices would reduce pharmaceutical firms’ incentives to invest in medical research, resulting in fewer drugs down the road. Those effective new treatments — though initially expensive — ultimately lower health-care spending.
Prevention is the best medicine. That’s why lawmakers should encourage even more rapid drug innovation, rather than discourage it with price controls.