New Wall Street Journal Editorial Calls the Demand to Reduce Drug Prices a “Medical Innovation Threat”

August 20, 2014 01:33 PM EDT

An editorial published yesterday in the Wall Street Journal argues that calls to reduce prices of new drugs is the latest threat to medical innovation. With pharmaceutical companies subject to a seemingly endless approval process and a narrow window of profitability before their patents lapse (resulting in affordable generic drugs which now account for 86% of total filled prescriptions), the piece claims that the ability to set their own prices is a key motivating force in driving medical innovation.

“Only two of every 10 drugs on the market ever earn back enough money to match the cost of R&D and FDA approval before patents expire,” the editorial stresses. “Successful drugs thus underwrite the uncertain, failure-prone, time-consuming and often wasteful and even random process of scientific invention.”

This debate has been reignited by Sovaldi, a promising new Hepatitis C treatment whose price, some claim, is too high. “The critics seem to know the price of everything and the value of nothing,” the piece charges, “which in this case includes the benefit to patients and eradicating this disease in the U.S. by 2036, according to an MD Anderson Cancer Center analysis.”

“Most of the some 700 Hep C projects across the biotech industry over the last two decades miscarried in the lab or in trials before Sovaldi emerged,” the piece continues.

Insurers need to step up, the editorial concludes, and develop new financial models that will allow patients access to such effective treatments – whose high cost is only a temporary byproduct of innovation.



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