THE NEED FOR TRANSPARENCY IN THE PHARMACEUTICAL INDUSTRY
by David P. Lesch, Esq.
During a recent visit to my local pharmacy I encountered a woman who became very upset upon learning that the cost of her monthly medication had recently doubled. The pharmacist had a reasonable explanation. He said he wasn’t getting many prescription orders for her particular drug which gave the drug maker the leverage to set its own price. After speaking to the woman for awhile and I promised would devote my next column to skyrocketing prescription costs and the pharmaceutical industry.
Recently, the drug company Mylan responded to national outrage over the 400 percent increase in its price for the lifesaving allergy treatment, EpiPen. The company’s CEO Heather Bresch testified before Congress and attempted to blame the increase in the cost of her company’s EpiPen on a lack of transparency in the healthcare system. She also blamed the “rise in prices” on the increase in “co-pays” and “deductibles”. She recently told CNBC that “the system needs to be fixed. No one knows what anything costs.” I agree.
Last year when Martin Shkreli, the then CEO of Turing Pharmaceuticals hiked a drug made by his company by 5,000% there was immediate public outrage. Though he later backtracked, the pharmaceutical and biotech industry was now on the public radar.
The problem is as follows: Pharmaceutical companies are not transparent about how they price their drugs. We know that many factors go into drug pricing including researching and development as well as various operating costs. However, the public has no idea as to the actual costs associated with a particular drug. Unfortunately, when few prescriptions are filled a year for a particular drug, it simply isn’t worth it for other companies to try to come up with a generic alternative. This gives certain companies a monopoly in the field in which anti-trust laws do not seem to apply.
Bill George, a Harvard professor recently commented: “Is the role of leading pharmaceutical companies to discover lifesaving drugs or to make money for shareholders through financial engineering?” I have no problem with pharmaceutical companies making money off of the drugs they create. If there was no incentive for profit the drugs would never be created. However, the industry needs more regulation. Transparency is key.
Whether you believe in social responsibilities, moral as opposed to legal responsibilities, is up to you. What I would like to see is a spreadsheet detailing for the public the exact costs that go into the making of every prescription drug. Similar to looking at the back of a product in any supermarket aisle to see the ingredients, I’d like to see the costs listed on every packet of prescription drugs. Maybe then the woman I recently met at the pharmaceutical counter would feel better knowing what exactly she is paying for on a monthly prescription basis.
David P. Lesch is an attorney and host of ‘Today’s Verdict with David Lesch‘ on Bronxnet. Today”s Verdict airs Tuesday nights at 6:30pm, Cablevision channel 67, Fios channel 33. On Facebook and Twitter @DavidLesch.
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