Business of Health: OMRF president celebrates FDA approval of hepatitis C treatment

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."

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 illnesses.

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