This fall, the 5,000- percent price hike of
a 62-year-old prescription
drug provoked an outcry
in the national media, on
the presidential candidate
debate stage and in some
Professor Amy Wolaver,
Public Policy, led students
in her three sections of
Economics 103 in a lively
discussion of drug
showing a video
clip of the CEO
who was declared “the
most hated man on the internet” by Benzinga, a
financial-media outlet. Students watched the rather
oily-looking Martin Shkreli of Turing Pharmaceuticals
explain why he raised the price of Daraprim, which
is used to fight parasitic infections, from $13.50 to
$750 per pill: to make his company more profitable.
The controversy inspired a lively conference-call
debate among Emily Powers ’ 18, her sister Carolyn
and her mom, Barbara Weir Powers ’84. Emily
took the middle ground in their discussion of ethics
and economics; her sister advocated for the right
of pharmaceutical companies to recoup the
exorbitant cost of research and development
before a drug can be approved; and her mother
found the price hike unconscionable.
“I don’t agree with how aggressive it was —
5,000 percent overnight — but drug companies
really do need to make a profit,” says Emily Powers.
“Making a higher profit is an incentive for companies
to make better drugs. Ultimately, that will make a
healthier society. You just can’t give away drugs for
free. The world doesn’t work that way.”
In some countries, drugs are nearly free, though,
attests Teweldeberhan Misghina ’ 18. At least that
was the case when he left his home country of
Eritrea in 2006 for a refugee camp in Ethiopia.
Another of Wolaver’s Economics 103 students
captivated by the topic, Misghina says in Eritrea,
individuals could acquire drugs for a nominal fee
at hospital pharmacies.
Although he says, as “a private person, I feel
terrible [about increases like the ones driven by
Shkreli], I understand that firms are always trying
to maximize profits.”
Misghina was among the 45 or so students,
faculty and staff who attended a Pizza and Policy
Forum titled Prescription for Trouble in late October.
The panel of Wolaver; Professors Erin Jablonsky
and Ryan Snyder, chemical engineering; and Jove
Graham, Geisinger Health System clinical research
director; addressed prescription-drug pricing and
pharmaceutical company obligations to patient
safety, innovation, access and affordability.
According to Snyder, one reason drugs cost
so much is that pharmaceutical firms spend on
average $1 to 1. 5 billion and a dozen or more years
to reach the point where FDA approval is in sight.
Only about five out of 10,000 drugs actually gain
approval, he says.
Drug patents are good for 20 years, at which
point a drug may be manufactured and sold by
other companies as a generic. Because patents
take effect before trials and safety testing begin,
the patent period after approval is often just seven
to 12 years.
“If we had the will in this country, we could
devote more federal funding [for drug research,
rather than relying on private companies to foot
the bill],” says Wolaver. “I personally think that’s
the best option. But politically, we’ve decided on
a system that results in inequity in access. It’s a
Wolaver suggests an additional remedy: regulating
drugs prices, as is done in the United Kingdom and
Canada. But she sees no hope for this.
Nor does Professor Chris Ellis, political science.
“Even if health economists agree on a technically
sound solution, actually changing policy to reflect
that solution is another matter entirely,” says Ellis.
“The gridlock in our political system makes even
really sound economic ideas politically impossible
He also doubts that the “price gouging” headlines
of this past fall will endure as a presidential
campaign or media issue.
“It’s the story of the day, rather than something
that sticks, since the drug in question doesn’t
affect that many people,” says Ellis. “It makes for
a jarring story, but it leads citizens to say, ‘That’s
weird,’ rather than something they should take
action for.” — Sherri Kimmel
HOOPLA OVER HIKE IN PRESCRIPTION
DRUG PRICES SPARKS LIVELY DEBATE