Industry executives: Profits drive rising prices for MS drugs

November 25, 2019

U.S. Medicare patients with multiple sclerosis often pay, on average, nearly $7,000 out of pocket to treat their condition each year. And, even though drug companies have provided no new treatment breakthroughs, the price of these disease-modifying medications is rising by 10% to 15% each year for the past decade.

To find out why, a team of researchers at Oregon Health & Science University and the OHSU/Oregon State University College of Pharmacy recruited four pharmaceutical industry executives to speak confidentiality. In a study published today in the journal Neurology, the executives painted a frank picture of the rationale behind the price of medication available to people with MS.

"I would say the rationales for the price increases are purely what can maximize profit," one executive said. "There's no other rationale for it, because costs [of producing the drug] have not gone up by 10% or 15%; you know, the costs have probably gone down."

The executives acknowledged their companies' unique societal position in delivering medications to improve human health. However, each executive pointed out that their business model depends on generating a profitable return on investment to shareholders.

"The most surprising thing was how unsurprising it was," said lead author Daniel Hartung, Pharm.D., M.P.H., associate professor in the OHSU/OSU College of Pharmacy. "There was not this secret, complicated algorithm that these companies used to drive up prices."

The researchers did find some key themes.

Start high and go higher

The researchers noted that the U.S. health care system appears to be unique in its capacity to absorb continual price increases. Executives noted that in the world's second-biggest market - Europe - the price of a drug is typically highest when it launches and then declines over time.

The opposite appears to be the case in the U.S.

"When you're making these decisions you're looking at the whole world," one executive said. "And it is only in the United States, really, that you can take price increases. You can't do it in the rest of the world. In the rest of the world, prices decline with duration in the marketplace."

American consumers foot the bill

Prices outside the U.S. not only drop due to market considerations, but they're held in check by single-payer health systems with fixed resources. In this way, one participant suggested that American patients ultimately make up for potential losses in other markets around the world.

"The rest of the developed world is subsidized by the U.S. consumer," the executive said.

High price says "quality"

The price of a new drug reflected the price already set by competitors selling existing drugs that treated similar conditions, regardless of the cost of research and development. In fact, executives feared that undercutting competitors with a lower price - a hallmark of a free market - would instead undermine the attractiveness of their product.

"We can't come in at less," one of the executives said. "That would mean we're less effective, we think less of our product, so we have to go more."

Co-author Dennis Bourdette, M.D., chair of neurology in the OHSU School of Medicine, said the study provides a new perspective to public discourse around pharmaceutical pricing.

"The frank information provided by these executives pulls back the curtain of secrecy on how drug price decisions are made," said Bourdette, who also directs the OHSU Multiple Sclerosis Center. "We see that it is indeed the race to make more money that is driving up drug prices and nothing more."
The study was supported by the National Multiple Sclerosis Society, grant HC-1510-06870.

Oregon Health & Science University

Related Multiple Sclerosis Articles from Brightsurf:

New therapy improves treatment for multiple sclerosis
A new therapy that binds a cytokine to a blood protein shows potential in treating multiple sclerosis, and may even prevent it.

'Reelin' in a new treatment for multiple sclerosis
In an animal model of multiple sclerosis (MS), decreasing the amount of a protein made in the liver significantly protected against development of the disease's characteristic symptoms and promoted recovery in symptomatic animals, UTSW scientists report.

Not all multiple sclerosis-like diseases are alike
Scientists say some myelin-damaging disorders have a distinctive pathology that groups them into a unique disease entity.

New therapeutic options for multiple sclerosis in sight
Strategies for treating multiple sclerosis have so far focused primarily on T and B cells.

Diet has an impact on the multiple sclerosis disease course
The short-chain fatty acid propionic acid influences the intestine-mediated immune regulation in people with multiple sclerosis (MS).

The gut may be involved in the development of multiple sclerosis
It is incompletely understood which factors in patients with multiple sclerosis act as a trigger for the immune system to attack the brain and spinal cord.

Slowing the progression of multiple sclerosis
Over 77,000 Canadians are living with multiple sclerosis, a disease whose causes still remain unknown.

7T MRI offers new insights into multiple sclerosis
Investigators from Brigham and Women's Hospital have completed a new study using 7 Tesla (7T) MRI -- a far more powerful imaging technology -- to further examine LME in MS patients

How to improve multiple sclerosis therapy
Medications currently used to treat multiple sclerosis (MS) can merely reduce relapses during the initial relapsing-remitting phase.

Vaccinations not a risk factor for multiple sclerosis
Data from over 12,000 multiple sclerosis (MS) patients formed the basis of a study by the Technical University of Munich (TUM) which investigated the population's vaccination behavior in relation to MS.

Read More: Multiple Sclerosis News and Multiple Sclerosis Current Events is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to