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How do we pay for the new ultraexpensive drugs?

Get ready to negotiate, drugmakers: Payers are armed for drug-pricing battle 
[Via – FiercePharma]

If 2014 was the year of the emboldened U.S. payer, then 2015 promises to be the year of the pharma negotiator.

After months of promising a hard line on hepatitis C pricing, Express Scripts ($ESRX) wrapped up an exclusive with AbbVie ($ABBV) as the December holiday season began, leaving drugs from Gilead Sciences ($GILD) and Johnson & Johnson ($JNJ) off its national formulary. Analysts started scrambling to run the numbers on how the exclusive agreement might affect Gilead, AbbVie and Express Scripts finances. The pharmacy benefits manager’s CMO Steve Miller called it “a huge deal.” AbbVie wasn’t commenting. Gilead told analysts it could be an opening salvo for its own pricing talks.

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I thought $84,000 was outrageous for a drug therapy. But new drugs coming up are priced much higher. 

How high is too much?

$120,000? $174,000? $1.4 million?

Those are the costs for new drugs, ones that can change the lives of people. But how will they be paid for?

Arw we now fully entering a time when only the ultra-rich 1% can afford new drugs?

This certainly looks like a death spiral to me. The only way Big Pharma can keep their profits rising rapidly is to charge increasingly larger amounts of money for their new drugs. 

But we are now seeing pushback from insurance companies, who simply cannot sustain such an exponentially increasing pricing regime.

I think the coming age of personalized medicine and the quantified self will be the death kneel for them. It will be much easier and cheaper to keep healthy people healthy.

Image: ZaldyImg