Economic Impacts of Medical Breakthroughs - 4/24/15
It is difficult to find economic phenomena that are purely beneficial. With almost all things, there is good and bad. Take medical breakthroughs as an example. One might think that increasingly effective therapies for various conditions could only be a good thing. But even medical progress can produce some undesirable outcomes.
The Wall Street Journal recently highlighted the financial impacts of a pricey pill made by Gilead Sciences Incorporated. The pill represents a highly effective therapy for hepatitis C. This therapy, known as Sovaldi, comes with a wholesale cost of eighty four thousand dollars per person over the course of treatment, or one thousand dollars per pill. State Medicaid programs around the country spent more than one point three billion dollars on hepatitis C therapies through the third quarter of last year, or nearly as much as the states spent in the previous three years combined.
Predictably, the price has sparked an outcry from insurers, policymakers and others concerned by the cost of treating roughly three million Americans with hepatitis C, which can trigger cirrhosis or cancer of the liver. Sovaldi was Medicaid’s third largest drug expenditure after Abilify, an antipsychotic medication and a generic version of Lipitor.