Do million-dollar medicines deliver enough bang for the buck?

Some of the priciest medications out there just hit the market recently.

Story highlights

  • U.S. is spending more on prescription drugs, largely because of cancer and hepatitis C drugs
  • The price tag on new drugs is often not in line with the level of benefit they provide
  • The federal government does not have the power to negotiate prices

(CNN)If you think prescription drugs have become way too pricey, you are not alone. About three quarters of Americans think that the cost of medications is unreasonable, according to a survey by the Kaiser Family Foundation, a nonprofit health organization.

Some of the priciest medications are ones that just hit the market -- cancer drugs such as Stivarga and drugs for the hepatitis C virus such as Sovaldi. However, costs have also been rising for tried and true drugs, such as for diabetes and multiple sclerosis.
    Although the increase in drug prices is obvious, the reasons for it are murky.
    "The prices seem more and more to many people to be decoupled from a consideration of how much value they bring to patients," said Dr. Steven D. Pearson, president of the Institute for Clinical and Economic Review, a nonprofit research organization that evaluates the use and pricing of new drugs.
    Far and away the biggest driver of prices, according to respondents in the Kaiser survey, was pharmaceutical companies and their desire to make a profit. Yet, the explanation is not that simple, Pearson said.
    A major problem is that the federal government does not have the power to negotiate prices with the pharmaceutical industry, Pearson said. This is not the case in most industrialized countries. And of course, pharmaceutical companies are "not charities" and do want to make a profit, especially to make up for the high proportion of people in the past 10 years who have switched to generic versions of their drugs, Pearson added.
    But the even bigger question is whether the prices are worth it.
    Some of the new drugs do provide important, sometimes even life-saving, benefits to patients, and "we want to pay a high price for these drugs," Pearson said. More research needs to be done on which new drugs stand out from the pack and which patient groups they help the most. This is one of the goals of Institute for Clinical and Economic Review, he said.