The New York Pharmaceutical Cost Transparency Act: How a Narrow View of the Prescription Drug Pricing Puzzle Renders a Well-Intentioned Bill Irrational
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The New York Pharmaceutical Cost
Transparency Act
HOW A NARROW VIEW OF THE PRESCRIPTION
DRUG PRICING PUZZLE RENDERS A WELL-
INTENTIONED BILL IRRATIONAL
INTRODUCTION
What is the cost of innovation? Is there a fixed dollar
and cents amount for each instance in which a person is able to
complete an everyday task pain-free, or with less pain than
before? Can a numerical value be assessed for reducing the
mental stress that often accompanies disease? There are no quick
answers to these questions, and many people would instinctively
answer the latter two in the negative, yet, pharmaceutical
companies constantly attach a price to innovation and therapeutic
value. Both these hypothetical figures, along with a multitude of
other relevant factors,' are included in the ultimate pricing of a
new drug. No one factor is dispositive of the overall value of a
drug, and certain aspects can be more readily quantified and
monetized than others. For instance, while patient benefit is an
inherently elusive attribute on which to fix a price, research and
development (R&D) expenditure is a far more tangible factor that
informs pricing strategy. Much like the value of a drug's efficacy,
however, a pharmaceutical company's R&D spend for a particular
drug tells merely part of a far more complex pricing story.
Despite the intricate reality of pharmaceutical pricing,
public furor has increasingly mounted over the rising cost of
prescription drugs, reaching a fever pitch in recent years as a
number of new drugs' prices per pill or treatment cycle have
received especially intense criticism from patients,2 media
1 See infra Part .
2 The feeling of helplessness by the general public is apparently such that
a ... [recent] poll shows that, overall, 87% of the public supports allowing the federal
government to negotiate prices for the Medicare Part D program. Ed Silverman, How
High? The Backlash over Rising Prescription Drug Prices Gains Steam, WALL ST. J. (July
21, 2015), http://blogs.wsj.com/pharmalot/2015/07/21/how-high-the-backlash-over-rising-
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The New York Pharmaceutical Cost Transparency Act: How a Narrow View of the Prescription Drug Pricing Puzzle Renders a Well-Intentioned Bill Irrational