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Should The U.S. Government Buy A Drug Company To Save Money?

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Should The U.S. Government Buy A Drug Company To Save Money?

Health Inc.

Should The U.S. Government Buy A Drug Company To Save Money?

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AUDIE CORNISH, HOST:

President Trump says he wants to help lower the cost of prescription drugs for consumers. He hasn't given clear signals as to what he might do to make that happen, but since he's an unconventional leader, NPR's Alison Kodjak decided to take a look at some of the unconventional proposals out there to slash the prices of expensive medications. Yesterday she asked whether the government should use its patent rights to drive down prices. Today she looks at a proposal to have the government buy a drug company.

ALISON KODJAK, BYLINE: Gilead Sciences released the first of its two revolutionary hepatitis C drugs in December 2013. Both drugs cured just about everyone who gets them, but only a fraction of the millions of people who are infected have been treated. Dr. Peter Bach of Memorial Sloan Kettering Cancer Center in New York blames the price.

PETER BACH: The original list price of those treatments was $85,000 to $95,000. That's for a treatment that should go to 3.3 million people. All right, so that's $300 billion, give or take. That's about what we spend on drugs overall in the U.S.

KODJAK: Bach is Director of Health Policy and outcomes at Sloan Kettering, and he's been tracking drug price trends for years. He says the big price tag for Gilead's hepatitis C drugs and their competitors have lead insurance companies and state Medicaid programs to restrict access. So this contagious disease just keeps spreading.

President Trump has complained repeatedly about high drug prices and promised to do something to bring them down. Here's what he said last month in a speech to congress.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: We should implement legal reforms that protect patients and doctors from unnecessary cause that drive up the price of insurance and work to bring down the artificially high price of drugs and bring them down immediately.

(APPLAUSE)

KODJAK: But what can he do? Peter Bach at Sloan Kettering has an idea.

BACH: Buy the company at a market price from the shareholders.

KODJAK: That's right. Have the government buy the company. He says the government could actually save money and treat everyone with hepatitis C if it bought Gilead outright rather than buying its expensive drugs.

BACH: With the prices that Gilead wants to charge, there's really no return on a government public health investment in finding people with hepatitis C because the treatments are unaffordable.

KODJAK: But if the government bought the company on the open market, its stock is now worth about $90 billion. It could keep the rights to the hepatitis drugs, sell off the other assets and treat the millions of people with hepatitis C for about a quarter of what it costs today.

BACH: We will also reduce the number of liver transplants needed by patients with hepatitis C. And there's a queue right now for liver transplants. So it will free up those livers for other patients that we can't cure.

KODJAK: Gilead's senior vice president, Gregg Alton, called Bach's idea an interesting thought experiment. But the problem isn't the price of his drug, he says. It's the speed at which it cures people.

GREGG ALTON: The cost of the drug is concentrated in two to three months as opposed to spread out over a lifetime. And our payment systems have a real tough time with that because they're used to the sort of long-term, chronic therapies that you pay a little bit as you go but over time actually end up paying a lot more.

KODJAK: In other words, it can cost a lot more to treat diabetes over a lifetime than to cure hepatitis C in three months. Sara Fisher Ellison, an economics lecturer at MIT, says buying Gilead to cure disease isn't a terrible idea as long as the government pays the full market price.

SARA FISHER ELLISON: The reason this proposal could work is that right now the drugs are only serving a very small fraction of the potential patients. And there's a big public-health benefit to serving all of the patients. And that's something that Gilead doesn't take into account when it sets its pricing policy. But it's something that a government does take into account.

KODJAK: The idea is a long shot of course, but with Donald Trump in the Oval Office, there's always the possibility he'd be tempted by the thought of making a deal. Alison Kodjak, NPR News, Washington.

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