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Drug Pricing Debate: Same Story, Different Day...Any Bets on the Outcome?

Drug pricing is making headlines once again, this time thanks to Allos Therapeutics' (ALTH) $30,000 per month price tag on recently approved peripheral T-cell lymphoma drug Folotyn (pralatrexate).

The New York Times quoted an insurance exec who called Folotyn's price "unconscionable," while a patient advocate said he "can't imagine there not being a backlash against the pricing."

BNET's David Phillips outed Allos execs for claiming that every dollar earned on the drug goes toward cancer research, noting that much more of Allos' money goes toward corporate and administrative expenses (including salaries) than toward drug development. Meanwhile BNET's Jim Edwards noted that the House Commerce subcommittee is holding hearings into why drug prices keep rising, about which he argued:

The idea that companies should simply take what the market will pay is fair if the market is selling apples or cars. Consumers have alternatives to those products -- oranges and buses -- and can go elsewhere if the price is too much. A person with cancer who will die without treatment is not in a position to negotiate price. When the alternative is death, companies can charge whatever they want.
Between high profile cases like Allos' Folotyn and the ongoing healthcare reform debate, it seems drug pricing is poised for a makeover. But is it really?

Drug pricing was in the spotlight about a year and a half ago, too. The Joint Economic Committee was after specialty pharmas for jacking up prices on recently in-licensed drugs, folks wanted the government to invalidate Abbott's patents on AIDS drug Norvir because of price hikes, high Medicare prices were in the congressional crosshairs, and oncologists were up in arms about cancer drugs with high prices and questionable efficacy.

At the time, BNET's David Hamilton wrote:

So while unhappiness over high drug prices isn't exactly new, the possibility that the issue might finally have real political momentum certainly is.
But that momentum has yet to gain critical mass, because every time the pricing discussion is broached, drug companies threaten to stop innovating. No high prices, no high-risk investors to fund innovation. End of story.

The thing is, no innovation means no drug industry. That outcome seems at least as bad for the folks making the threat as it is for the folks they are trying to threaten.

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