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The Squeeze Begins November 5, 2015

Posted by geoff in News.
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This was inevitable, once the government decided to intervene in healthcare. I speak, of course, of the easily-foreseen arm-twisting to lower medical costs. Today they’re going after pharmaceutical companies, but tomorrow it’ll be doctors and hospitals. Pretty soon we’ll have single-payer healthcare staffed completely by civil servants. Like, say, in the UK (see post below).

Here’s their first salvo, taking form as letters from Medicare & Medicaid to AbbVie, Gilead, Johnson & Johnson, and Merck:

The Centers for Medicare & Medicaid Services (CMS) remains committed to Medicaid beneficiaries continuing to have access to needed prescribed medications, a commitment we know that states share. We have issued a letter to advise states on the coverage of drugs for Medicaid beneficiaries living with hepatitis C virus (HCV) infections. Specifically, this letter addresses utilization of the direct-acting antiviral (DAA) drugs approved by the Food and Drug Administration (FDA) for the treatment of chronic HCV infected patients.

Manufacturers have a role to play in ensuring access and affordability to these medications. CMS has sent a letter to the manufacturers of these HCV medications, asking them to provide information regarding any value-based purchasing arrangements they offer for these drugs so that states might be able to participate in such arrangements.

You know this is just the beginning unless the manufacturers manage to thwart this foray. Somehow, just because the drug now exists, the government assumes it should be cheap. They like to ignore the time, effort, and money that goes into drug development. But more importantly, they like to ignore the risk.

There’s a famous statistic for Alzheimer’s drugs: from 2002 to 2012, 244 drugs were registered with the FDA for trials. Of those drugs, only one was approved. That drug, approved in 2003, lost its patent protection this year. Good news for patients, but bad news for the manufacturer. When the manufacturer developed a time release version that still had patent protection, they tried to replace the old drug with the new one so they could keep their revenue stream going. But the courts said they had to continue to make and sell the old drug.

We’ll see how motivating that is for future drug developers.

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