Dr. Stephen Prescott: "Express Scripts made the newly approved treatment
from AbbVie the exclusive option for patients who suffer from the most
prevalent form of hepatitis C (known as genotype 1). Express Scripts has
done what the U.S. government couldn’t: It has started a price war."
In the U.S., Medicare and Medicaid are legally forbidden from
negotiating drug prices. If a treatment is approved by the FDA, the
government has to pay the sticker price—and it cannot bar access to it.
And, generally, whatever rate the federal government pays, private
payers (like insurance companies and health plans) fall into line.
So Express Scripts has done what the U.S. government couldn’t: It has
started a price war. The hope is that Gilead will respond by lowering
Sovaldi’s price. That’s generally how markets work. In this case, it’s
happening a bit belatedly, but it’s happening. And the special sauce
that made it all work was competition.
Companies like Gilead and AbbVie have created products of real value
in these new drugs. They’ve invested significant time and money in
developing and bringing to market these life-changing therapies. They
are certainly entitled to profit from their work, not only to recover
their costs and reap the benefits of their innovation, but also to
encourage others to follow suit in developing new therapies for other
Labels: price war