What needs to happen is a better connection between drug prices and the outcomes they produce.
The EU does not have price controls on their drugs (only in limited circumstances). What the EU does (particularly the UK and DE) is evaluate drugs based on their own metrics to determine what a reasonable price is. If a drug is priced too high, they don't cover it.
Right now the system for determining how much value a drug brings is broken (understandably since it's not easy to do). The best example I can provide is Sovaldi (used to treat hepatitis C). The manufacturer priced the drugs at $84K for a course of therapy. Insurance companies in the US screamed blood murder.
The UK, which has a system to evaluate the utility offered by drugs (called QUALY - quality-adjusted life year) approved Sovaldi without any complaints. The drug is cheaper in the UK, but not by much.
To be fair, Solvaldi actually is cost effective from the perspective that chronic hep C results in liver transplants or death, and a course of Solvaldi knocks out hep C entirely. It was also developed in house by Gilead AFAIK (and they bore the risk of r&d, trials, etc).
edit: thanks for the correction refurb! I has actually looked at sofosbuvir on wikipedia prior to looking because I thought it was through an acquired company. I think it's still a different nature of acquisition & development vs Valeant or the putrid behavior described in this thread's link.
Sovaldi was acquired by Gilead when they purchased Pharmasset for ~$11B.
As for Sovaldi's cost effectiveness, it's more complicated that looking at liver transplants. Of the millions who have HCV, only a few percent will ever need a liver transplant.
That being said, if you look at what it costs to cure a patient of HCV, Gilead's drug is much more efficacious, so the "cost per cure" is much lower than with older drugs.
It makes more economic sense to cure HepC than to treat it so I would argue they made the right choice.
The american insurance companies were screaming murder because they have no way of recovering their upfront cost with people changing insurance companies all the time in the US that's not a issue for the UK and the EU.
American insurance companies were screaming blood murder not because they can't recoup the upfront costs (all insurance companies benefit if HCV is eliminated), but because the cost were all upfront, not spread out over time.
US insurance companies live and die by their yearly budgets since premiums are collected upfront. If some high cost drug comes along that they didn't plan for, they could end up in the red really quick.
The Eurpoean method only works in a single-payer system. A single-payer system effectively has price controls. At the very least the EU system is not designed to maximize profit; it's designed to maximize the benefit to the people given a fixed budget.
The biggest problem with the US' system is that consumers have to pay out of pocket for life and death decisions. How much would you pay to not die? Probably a lot; which is exactly why the US system is broken. You can't make rational market-based decisions when your health / quality of life is at stake. The value calculation is skewed, and everyone ends up paying more as a result.
I agree with your comment about how the EU system works. It's a fixed budget and the gov't tries to maximize health outcomes.
I would disagree that the problem with the US system is that consumers pay out of pocket. Singapore has a system of forced savings for healthcare expenses and they have a much lower cost per person for healthcare.
The EU does not have price controls on their drugs (only in limited circumstances). What the EU does (particularly the UK and DE) is evaluate drugs based on their own metrics to determine what a reasonable price is. If a drug is priced too high, they don't cover it.
Right now the system for determining how much value a drug brings is broken (understandably since it's not easy to do). The best example I can provide is Sovaldi (used to treat hepatitis C). The manufacturer priced the drugs at $84K for a course of therapy. Insurance companies in the US screamed blood murder.
The UK, which has a system to evaluate the utility offered by drugs (called QUALY - quality-adjusted life year) approved Sovaldi without any complaints. The drug is cheaper in the UK, but not by much.