It is rare for me to print things anymore; limited access to a giant corporate printer cuts down on the urge. But today I got the printer going, grabbed the highlighter and dug in. The paper? “Is the price right? Paying for value today to get more value tomorrow.” If I were a health policy professor (and I’d love to be one someday), this would be required reading.

Let’s get this out of the way — it is written from a pharmaceutical manufacturer perspective. I mean it starts with debunking arguments that say drugs are overpriced. There are risks of research and development and, if society wants innovation, then there needs to be a reward to investment in research and development. Patient affordability is a function of benefit design. And if drugs are less expensive outside the United States, maybe other countries aren’t paying enough (freeriding.) There is a nice little diagram on per capita drug and health spending comparison between the United States and ten other countries. Surprise – the United States has a big delta between the drug and health spending per capita in real purchasing power parity. And drug expenditures are about 15% of total healthcare expenditures across a set of major markets including Germany, Australia, Canada and the United Kingdom.

But here’s the thing, we can complain about drug pricing in the United States but then the question is – what is the right price? What is the value to patients/caregivers and society in terms of productivity, reduced spending elsewhere and scientific spillover?

Traditional cost effectiveness with its quality adjusted life years (QALY) doesn’t capture the true benefit of the drug for patients, family members and society. Unfortunately, the societal perspective is not usually the purview of the stakeholders making the decisions. Which makes sense. Why does a Blues plan care if a grandparent can go back to caretaking of a grandchild? Avoid the hospital, sure. Drive to a soccer game, not a concern.

And if you look at Alzheimer’s, as a society, we will be paying to manage the disease in many ways over the coming decades – wouldn’t it be a better value to incentivize research and development to find a way to avoid the disease?

The thing about medicines is that they do go generic. So, for example, treatments for Alzheimer’s would be expensive at first but eventually they would be generic/biosimilar. There is enormous value in the bigger picture. The cost effectiveness of a treatment, its value, is beyond the price at launch, price changes over a life cycle. Looking to justify paying less because other countries do ignores that maybe the United States is paying the right price, is paying for value. Trying to push price controls could squash innovation; if there is a lot of uncertainty in terms of return on investment – why not put the dollars somewhere else?

It’s academic and a bit Pollyanna, but it nicely sums up another view on value and why we’re a little stuck right now.