The drug industry continues to dare regulation

Pfizer expects to make as much as $22bn from its new Covid pill this year, on top of $37bn it made in 2021 from the vaccine. Pfizer’s Paxlovid currently costs about $530 for a five-day course of the treatment. Merck’s molnupiravir, now approved for use in the U.K., costs about $700. Reportedly, the cost of production for molnupiravir stands at about $17.74. Experts across the board are predicting demand for antiviral drugs will rapidly outpace supply.

Pfizer and Merck have chosen to designate a select few generic manufacturers to produce cheaper versions of their drugs through the Medicines Patent Pool (MPP). But even with these deals in place, they remain firmly in control, and access to generic versions is within reach of only half the world’s population.

The U.S., where almost two-thirds (65%) of the population is already fully vaccinated, has reportedly put up more than $10bn for Pfizer’s Paxlovid – more than twice the entire GDP of Sierra Leone, where just 9% of people have the same protections. For less wealthy nations, competition isn’t even a possibility.

At this point, one must wonder why the U.S. didn’t just offer to pay for the drug’s development cost so that the price could be set very low, but it’s about investors who penalized the company stock when they learned that COVID might be on the decline.

About those copay cards

A new study estimates the causal effects of coupons for branded drugs without bioequivalent generics using variation in coupon introductions over time and comparing differential responses across enrollees in commercial and Medicare Advantage plans.

Using data on net-of-rebate prices and quantities from a large Pharmacy Benefits Manager, they found that coupons increase the amount sold by 21-23% for the commercial segment relative to Medicare Advantage in the year after introduction, but do not differentially impact net-of-rebate prices, at least in the short-run.

To quantify the equilibrium price effects of coupons, they employed individual-level data to estimate a discrete choice model of demand for multiple sclerosis drugs. For this category of drugs, they estimated that coupons raise negotiated prices by 8% and result in just under $1 billion in increased U.S. spending annually.

The study adds further evidence to the idea that drug copay cards are a great short-term deal for patients — and especially the pharma companies that promote them — but a wrong long-term value for healthcare costs.

With over 80% of voters aligned that drug prices are too high big pharma continues to act recklessly as if to say, “we’ll do what’s best for investors and us regardless of the effects on society.” More checks from PhRMA to politicians are coming up.