Introduction
Historical Context of Morbidity
From the beginning, humankind has always been accompanied by the development of infectious and hereditary diseases. Thus, prehistoric humans were often infected with bacterial and viral pathogens from wild animals or eating raw vegetables and meat, which led to suffering and fever, or even death. When Homo sapiens became conscious, it only partially affected the development of diseases — people learned to use medicinal herbal remedies and mythological rituals for treatment. However, this has not always helped, and human history knows the sad pages of bubonic plague pandemics, smallpox, or Spanish influenza. Modern medicine has moved firmly towards preventive practices to maintain public health indicators, but that is not enough.
The Development of Medicine Keeps Health
The medical scientists have learned to cope with severe forms of disease previously thought to be undoubtedly fatal. Patients with terminal cancers, psychomotor and intellectual disabilities, and immunodeficiency virus have continued to lead normal lives since the development of specific medications. In general, it can be stated with certainty that there is a clear connection between the complexity and neglect of the patient’s condition with the disease and the cost of treatment. Generally, the higher the disease’s health damage, the higher the cost to the patient or their insurance company. This practice could be justified by the high degree of responsibility for the medical service provider and the pharmaceutical manufacturer’s research projects’ high costs. Nevertheless, this situation does not suit the patient at all.
Drug Cost Dilemma
People with orphan diseases or those interested in the cost of medicines face the fact that a single injection of a drug can sometimes cost hundreds of thousands or millions of dollars. Nevertheless, drug manufacturers or prescribing doctors do not give a guarantee of positive effects. It is clear that clients are met with the question of equity and proportionality to potential risks. There is an unsatisfactory situation in which the patient is asked a considerable amount of money that they received only a hypothetical possibiMedicalositive result. As a rule, the count, in this case, is on the desire of patients to save their own lives by any option. For example, it is known that Abiraterone is designed to treat metastatic castration-resistant prostate cancer, and the cost of a course of pills exceeds 5,000 dollars a month. For this money, the patient gets an extra four months of life, as studies show. Abiraterone is just one of a hundred examples of the extreme injustice of finding a compromise between specialty drugs’ cost and the profitability of production. Every day, patients diagnosed with terminal stages of cancer, hemophilia, HIV, multiple sclerosis, or chronic hepatitis C must resolve the dilemma between buying expensive specialty drugs or leaving everything as it is with the hope of self-healing. This research paper aims to a detailed discussion of the reasons for the increased cost of specialty drugs, with an assessment of the possible effects on stakeholders.
What are Specialized Drugs
In the variety of medicines, two categories of drugs — traditional and specialized — are identified. The first cohort includes medicines commonly used by most consumers, such as fever medications, painkillers, and sorbents. As a rule, such medicines do not have a high price and are presented in the form of dozens of different options, each of which can satisfy an individual consumer’s request. Specialty drugs can be called the exact opposite of traditional ones. Their primary purpose is not to help with an ordinary problem like a headache, but to eliminate a dangerous factor or extend the patient’s life. According to Cole and Dusetzina (2018), these medicines are prescribed for people with acute diseases that may not generally have universal therapy. Moreover, such drugs have a high monthly cost, and the patient must strictly observe the rules of taking them, otherwise the risk of neutral or even negative results increases.
The need to develop specialty drugs is dictated by the urgent need for a universal and humane medical services approach. This is the demand of society, which places certain expectations on a modern clinic, not only because of the payment of taxes but also with the hope of scientific progress (Raper, 2018). Humankind expects medicine to make a qualitative difference in a person’s standard of living, and rare or severe diseases are suitable for demonstrating success. Modern pharmaceutical laboratories, for humanistic and economic reasons, seek to produce medicines that could cure seriously ill patients.
Cost of Specialty Medications
Statistical Data
One of the significant characteristics of specialty drugs is their price. On the one hand, it may seem that pharmaceutical companies consciously decide to sell drugs at high prices, as they understand the produced drugs’ demand for and uniqueness. In other words, this sector is monopolized due to low competition, especially among newly developed molecules (Conti & Berndt, 2020). Simultaneously, drug manufacturers need to justify such high expenses on research, setting up pipeline production, and patenting procedures (Conti & Berndt, 2020). The reason for covering financial costs is the most common factor justifying the high cost of specialized drugs.
In that case, patients willing to pay for expensive treatment could accept the high costs if there was a correlation with the country’s inflation rate. However, Schondelmeyer and Purvis (2019), who conducted a statistical analysis of trends in drugs’ cost, estimated that the cost of specialty drugs has increased by 7.0% since 2006. Thus, Abiraterone, the monthly use of which is now estimated at 5,390 dollars, would allow Americans in 2006 to save more than 4,000 dollars a year (Pollard et al., 2017). It is expected that inflationary costs can justify such a rise in prices, but Schondelmeyer and Purvis’s study also reports that the overall inflation rate rose by only 2.1% over the same period.
At the same time, the market for specialized drugs continues to grow. The FDA report on the number of drugs taken for sale allows to point out that more than half of the substances are aimed at rare diseases (FDA, 2017). In turn, high supply is justified by increased demand among consumers, which ultimately leads to an increase in the market. According to Seymore forecasts (2020), by 2023, the market of specialty drugs will increase to an unprecedented $505 billion, which is one and a half times more than in 2018. Moreover, it is interesting to provide data reflecting the relationship between the average annual cost of specialty drugs and Americans’ financial capacity. For ease of perception, the information will be presented in a comparative table below (Table 1).
Table 1. Comparison of economic indicators:
Such data are impressive, but do not give hope for a correction of the situation — it means that over time the gap between the real cost of drugs and consumer expectations will only increase. Given that a significant proportion of patients today are elderly members of the baby-boomer generation, there is a real threat of a health crisis.
Why Drugs are Expensive
Traditionally, the high cost of specialized drugs is characterized by the legal costs of production. It is known that any drug, even the most expensive, consists of an active substance — a molecule that has a direct or indirect effect on the human body. At the stage of development of new drugs, a pharmaceutical company conducts parallel work on a dozen such active substances and their analogs, as there is a possibility of uselessness or even harm to the health of the substance. Although the cost of production of the molecule that has reached the market is incredibly low, the drug’s stated cost is surprising.
The parallel development phase is replaced by clinical trials, whose primary purpose is to prove or disprove medicines’ efficacy and safety. According to international standards, this procedure consists of four consecutive stages. The first is research on a small group of healthy volunteers. The second phase includes an assessment of efficacy and safety. Typically, the number of people tested is higher, so at this stage, people with the disease for which the drug is targeted are involved in the study. The third phase is the most protracted and most expensive: the drug is tested on many people. Tens of thousands of people in different countries and research centers may participate in the research, which is why the high cost of the research is dictated. If this part of the study is successful, the drug is registered. Finally, the fourth phase, post-marketing, consists of comparing the drug’s efficacy with its analogs, demonstrating the benefits, identifying side effects, and risk factors that did not appear during the previous phases.
Searching for Reasons for High Costs
From the paragraph above, it becomes clear that the procedure of drug development itself is expensive. Pharmaceutical companies need significant investments to cover the costs of molecular research, testing, and mass-market launch. The manufacturer has a unique patent right for this drug, after the expiration of which other companies produce analogs of this drug. This leads to a situation where the supply market becomes redundant, which reduces the price of goods. It should be recognized that this model is fair for ordinary and non-specialized drugs. In the case of expensive drugs, whose action is aimed at rare disease or a severe disease stage, there are not many specific offers in the world. In addition to the fact that the U.S. has not developed a legislative practice to regulate the price of medicines, pharmaceutical companies unreasonably increase medicines’ costs (Hoffman, 2020). Predicting the near future, it is easy to guess that price increases will continue to be used, which is not good news for patients, especially from low-income countries.
It is fair to say that other factors increase the cost of specialty medicine. In particular, such drugs often have a unique method of action — for example, the most expensive medicine in the world, Zolgensma, has a chemotherapeutic nature. The mutated or missing gene SMN1 is replaced by a functionally complete gene, which causes the return of motor activity of the skeletal muscles. It is considered that Zolgensma is the ideal solution for a patient with spinal muscular atrophy because it can return the ability to breathe independently, swallow, and move without assistance. However, thoughts about the treatment available to all patients fall apart when considering the cost of Zolgensma — for injection, although a one-time, the manufacturer requires $2.1 million (Rosenmayr-Templeton, 2019). One can conclude that the cost of drugs is so high because it is a new experimental technology.
Simultaneously, one should admit that specialty drugs are not aimed at a large segment of the consumer audience, but only at those whose diseases are rare and complex. Orphanet (2020) found that from 2014 to 2020, the number of known cases of rare diseases practically did not exceed five hundred, and most often amounted to several dozens. Thus, the developed medical product has a narrow focus on a small number of patients, allowing manufacturers to make it expensive.
Effect on Stakeholders
It is expected that patients facing a serious diagnosis will seek treatment. This approach is one of the levers to increase the cost: on patients’ desire to get cured at any cost play manufacturers. As a result, a system of cause-effect relationships is created, when the demand for drugs still exists, and manufacturers increase the price tag. However, many patients are not satisfied with this cost, which makes companies create alternative options for drugs, the development of which also requires investment. It is clear that patients lose out under this model — looking at the high price of drugs, getting into debt, taking out loans, or mortgaging a house to get a chance of recovery.
Taking Refusal
Despite the significant economic gap, statistics show that patients still tend to follow a doctor’s directions and take medication. According to Hamm (2019), 42% of Americans continue to fight the disease even under the pressure of high prices. However, many of them often despair and make serious mistakes — refuse to take another dose. The justification for skipping a monthly dose of medication is a desire to save some money and a lack of medical literacy. As a result, skipping out affects the overall effectiveness of therapy, making a full course of treatment useless.
Support for Insurance Companies
The American healthcare system allows patients even with orphan diseases to save money with a health insurance policy. It is assumed that a specific share of treatment costs is covered by the employer’s regular employee insurance contributions, resulting in savings on the patient’s part. However, in practice, the situation is different: non-state insurance companies have entirely different, sometimes conflicting plans to cover specialty drugs. In addition, even if the insurance covers treatment, several severe limitations can lead to non-payment of compensation. In the case of the national Medicare and Medicaid insurance programs, it is necessary to have the medicine from an approved form for compensation, but if it is not in, the payment will be denied (Freeman, 2018). The beneficiary has the right to request an appeal, but the patient will have to wait for the next reporting period to try again if it is not granted. Sometimes the time difference can exceed several months, which becomes critical for a seriously ill patient.
Conclusion
Summing up the above, it should be noted that the issue of the cost of specialty drugs is a critical problem for patients with rare or acute chronic diseases. The price of such medications exceeds Americans’ financial capacity, which makes the crisis in the healthcare sector. The solution to this problem could be to reduce the cost of drugs, but often the overpriced drugs result from expensive development procedures. Ultimately, if current trends continue, there is a risk of increased mortality among patients due to a lack of medication access.
References
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