The high cost of health care
A newspaper story the other day caught my eye. It reported that 16 people have contracted severe eye infections and some have gone blind from a drug injected into their eyes to treat a disease called macular degeneration (MD). The drug in question is called Avastin. It was developed as a cancer treatment drug but it’s been used for macular degeneration treatments for the past six years. Despite its efficacy in treating macular degeneration, the pharmaceutical company that makes it, Genentech, only packages it in the fairly large doses used in cancer treatments, not in the pre-loaded syringes needed for MD treatments.
Genentech, it turns out, makes another drug that was developed specifically for MD treatments. That drug is called Lucentis which it does package in the proper dosage for MD treatments. When repackaged by pharmacies for MD treatment, Avastin costs $50 per dose. The already packaged by the manufacturer for MD treatment Lucentis costs $2000 per dose. According to the article, “A clinical trial sponsored by the National Eye Institute found that Avastin and Lucentis were equivalent in preserving or improving vision after one year.”
To me, that means the only difference between the two drugs is that the manufacturer gets paid $2000 for one and $50 for the other even though they are equally effective. Presumably the manufacturer refrains from packaging the less expensive drug for MD treatment to provide an incentive to use its more expensive drug. Because of the huge price differential, there is great demand to use the less expensive drug. Consequently, pharmacies are repackaging into MD treatment size. It’s been in this repackaging process that bacteria has entered the system and caused these infections. Presumably if the cheaper drug was packaged in the MD sized doses by the manufacturer, it would be safer to use. But that’s not in the manufacturer’s economic interest so they don’t do it. Should they be forced to? I’m not advocating that. My point is that the health care system prices its products to maximize its profits, not to do what’s best for us, the patients. So anytime you hear someone say “the market is the best way to control healthcare costs” remember this story about the economic incentives of the health care industry.
There’s a drug called Lucentis that’s injected into the eye and is an effective treatment. It goes for $2000 per injection. There’s another drug manufactured by the same company called Avastin, but this is a cancer treatment drug. It’s equally effective for macular degeneration and many eye doctors give it to patients via injection. The cost for an Avastin injection is $50 per dose. But the pharma company only packages Avastin in cancer treatment quantities, not in single dose injections. Consequently, pharmacies have been repackaging it into single doses. That’s where bacteria has entered into it and caused infections which have blinded 16 people (the subject of the story). My inference is that the only reason the company doesn’t package Avastin in single dose quantities right at the factory is that their other drug yields much more profit. If this is an accurate assessment, it’s a pretty good example of how health care costs get driven up by the profit pursuing practices of providers.
One Response to The high cost of health care
“Presumably the manufacturer refrains from packaging the less expensive drug for MD treatment to provide an incentive to use its more expensive drug. ”
From what I have read, the product is not approved by the fda for MD yet. Its being used “off label” for that purpose, and thus cannot be packaged for that.
What would be the solution? Tax profits at 100% and drive the companies out of the country (the FDR approach)? Fix the prices, and thus end all drug research in the country and drive those jobs overseas?
I agree there is a problem, but its the system that causes the creation and testing of drugs to the point where the prices to make up for those costs become enormous.
You could of course nationalize all the drug and medical research and the result would be the creation of many fewer drugs in our country, and the creation of new drug industries in others instead, ( which is already happening ).
Its a tough problem. I think the better approach is for patients to research the options before they allow treatment.
Perhaps a new industry of private “medical advocates” could evolve, that would help people to understand their health care (advocates that would not accept funds or gifts from the medical establishment).
Education is the key to making the market work. Just as it is in improving government.