This article was reviewed by George A. Williams, MD
For ophthalmology practices, drug prices continue to be an issue for patients, and step-therapy and pre-authorization are responses to increasing drug costs, which exceed any other component of healthcare.
While inflation is less than 2% per year, name brand drug price increases reach double digits year after year, according to George A. Williams, MD, president of the American Academy of Ophthalmology.
That leaves industry leaders to wonder why.
The argument has always been that it is expensive to develop drugs, to innovate and invest in necessary research, said Dr. Williams. who also is chairman of ophthalmology at Oakland University. “Although true, the real relationship between marketing and administrative costs for pharmaceutical companies compared with what they spend on research is approximately two to one,” he said. “Worldwide and during the past decade, there has been a static relationship between research investment and sales, averaging around 15% to 18%.”
Return on investment?
The FDA approves about 200 new drugs every year, with only 15 to 50 classified as new molecular entities, or NMEs. The FDA says that NMEs contain active moieties that have not been approved by the FDA previously, either as a single ingredient drug or as part of a combination product.
“Some drugs are characterized as NMEs for administrative purposes, but nonetheless contain active moieties that are closely related to active moieties in products that have previously been approved by FDA,” according to the FDA website.
One reason for this gap could be the U.S. patent system, Dr. Williams said.
Experts have argued that drug prices keep increasing because pharmaceutical companies are running out of new agents that can command premium prices. One detailed analysis reveals that as some higher-end drugs come off-patent, manufacturers have responded by increasing the price of drugs that remain on patent.
“The system is set up to generate profits, not research and innovation,” Dr. Williams said.
The majority of the costs are attributable to a relatively small number of drugs, he explained.
“For Medicare Part B and Part D—where glaucoma patients live—the per capita growth rate for drug cost is 10% per year. Profit margins for the top 25 drug makers are robust, and these companies have consistently doubled the profit margins of all other companies in the Fortune 500,” Dr. Williams said. “There appears to be bipartisan support for addressing this issue.”
Previously by Conni Bergmann Koury: Reimbursment remains a hurdle for teleglaucoma in United States