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Value-Based Drug RationingJ.D. Kleinke (Jan/Feb 04) provides a healthy dose of balance and clarity to the increasingly shrill debates over how to best manage America’s pharmaceutical revolution. Prescription drug policy is problematic because it involves a for-profit industry within the field of medicine, where profits seem inappropriate. The industry’s economic structure—with high fixed costs, low marginal costs, and gross profit margins of 75–80 percent—creates complicated payment games between drug manufacturers and purchasers.1 Consequently, medical progress is not explicitly rationed according to need, as the author shows, but implicitly rationed "one sick patient and one medical claim at a time." Kleinke’s antidote is to ditch our current price-based insurance system in which patients pay less for "preferred," often generic drugs and more for costly new drugs. In its place he argues for a value-based system that requires no copayment for a life-saving drug (for example, insulin), a low copayment for a productivity-enhancing drug (Prozac), a moderate copayment for a life-prolonging drug (Lipitor), and a high copayment for a life-enhancing drug (Viagra). Individual drugs and classes of drugs would be assigned to each tier by an independent, publicly funded "pharmacoeconomic research institute." Others have made similar suggestions, but their vision has been to use this type of research to change physicians’, not patients’, behavior.2 Moreover, it is not clear how a new layer of review, beyond the Food and Drug Administration’s (FDA’s) already demanding clinical trial process, could be enacted over the intense political opposition of the Pharmaceutical Research and Manufacturers of America (PhRMA). Few industries are as politically powerful and successful at warding off regulation. Nevertheless, would we be better off as a country under this type of value-based rationing? Absolutely.
University of Richmond (Virginia) NOTES
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