Runaway cost of drugs

A drug that is used to treat dry eye, xiidra, was just sold from Takeda to Novartis for $5.3 billion dollars. Yes you read that right, $3.4 billion upfront and $1.9 billion depending on sales.

To put this in perspective, the Medicare reimbursement for cataract surgery physician fee 66984 is about $640 in Phoenix. $5.3 billion would pay for about 8.3 million cataract surgeries. According to google, about 3.6 million cataract surgeries were performed in 2015. This money could pay for about 2.3 years’ worth of all physician fees for cataract surgery in the USA.

If you’re a medical student reading this, especially if you’re worried about student loans, let’s assume tuition is $60,000. Given that there are about 20,630 medical students in each class every year, $5.3 billion could pay medical school tuition for each and every medical student this year, and some money would still be left over.

For those of you who aren’t ophthalmologists, xiidra isn’t the first line treatment for dry eye, among many ophthalmologists. Over the counter artificial tears and ointment are used, and sometimes punctual occlusion. There’s another prescription drug, restasis, that will hopefully be available as a generic soon. The phase three clinical trials to get xiidra approved compared it to vehicle, not to artificial tears or restasis.

Interestingly enough, the year it was approved, when I flew to the AAO conference in Chicago there were signs all over the subway advertising it. And a travel magazine I just read had direct company to consumer advertising.

Now I’m not saying that xiidra is a bad drug. If my own dry eye were severe enough I would certainly want to try it out to see if it helped me. But it isn’t a “cure” for dry eye, and most patients with mild or sometimes moderate dry eye can be controlled with artificial tears, and I’d like to see a clinical trial comparing it to restasis.

But the health care cost pie can be divided so many different ways, and to me it seems as if the pharmaceutical companies are “winning” at taking more and more of their share of it. According to this article written by actuaries, in 2016 $329 billion, or 1.8% of the GDP was spent on prescription drugs. And this number is going up, more and more every year.

For the sake of discussion, here are some articles about the prices of drugs from Forbes, a second one from The Atlantic. My favorite quote from the first article is, “Do high R&D costs justify high drug prices? Of course not. Not by themselves. The medicines have to be worth the money, too.

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