Time for the Pharmaceutical Industry to Make its Side Heard
Time for the Pharmaceutical Industry to Make its Side Heard
Experts defend the worth of the pharmaceutical industry, arguing drug cost is not the greatest challenge to health care spending.
Skyrocketing pharmaceutical drug hikes have been a hot topic in the news for the last several months, with many presidential candidates jostling to voice their dismay. First in line was Hillary Clinton, who vowed to put an end to price spiking should she win the presidency. While a lot is being written about the topic, little has been heard from the other side of the issue—the pharmaceutical industry. This doesn’t mean that nothing has been said, just that no one has been listening.
Still firmly in the spotlight is Valeant Pharmaceuticals, which acquired the rights to sell Isuprel and Nitropress, drugs used to treat cardiac arrests, and Cuprimine, a drug used to treat Wilson’s disease. The day this transaction was finalized the price of Nitropress rose by 625%, while Isuprel’s cost rose by 820% and Cuprimine soared by 2429%.
Turing Pharmaceuticals hiked the cost of Daraprim, a 62-year-old treatment for malaria and parasitic infections in patients with weak immune systems. The price of Daraprim went from $13.50 a pill to $750 per pill.
The national media has already cast their villains in this story, leaving the pharmaceutical industry struggling to make their opposing side heard.
In a letter from the Coalition for Healthcare Communication, John Kamp, the executive director, turns the microphone back over to the pharmaceutical industry by highlighting the messaging recently shared by Pharmaceutical Research and Manufacturers of America (PhRMA). The 40-slide deck titled Prescription Medicines: Costs in Context, released by PhRMA, provides an overview of the consistently beneficial contributions to health care by the pharmaceutical industry and how drug cost is not the greatest challenge to health care spending.
When asked to comment on the price increases instituted by Valeant and Turing, Mr Kamp told First Report Managed Care, “I think it’s an anomaly, and there are not very many companies out there that do it as their business plan. The few that do, I think, are learning their lesson very quickly...Essentially mainstream pharma is distancing themselves from this kind of pricing behavior and this kind of activity.”
Holly Campbell, director of communications at PhRMA, agrees with this assertion, adding that PhRMA has separated itself from Turing and Valeant. Ms Campbell explains that in 2014, PhRMA member companies invested over $51 billion in research and development (R&D), about 20% of sales, whereas Valeant only invested 3% of their sales into R&D.
While break-neck price hikes are the work of a few pharmaceutical outliers, wholesale drug pricing seems to be accelerating and net discount prices appear to be decelerating. This may be caused in part by managed care taking an effective role in managing costs. “I have to give the payers credit. They are pushing back big time on prices. The idea that pharmaceutical companies just have sort of free reign to [set] price is clearly not the case anymore,” commented Mr Kamp.
There is no denying that short-term pricing on drugs can be expensive, but Mr Kamp clarified that a good drug will be worth the price if it provides good outcomes. “In the long run, these drugs more than pay for themselves. And it’s the [long run] value proposition that we have to keep in mind,” he said.
Ms Campbell also points out that so much of the discussion right now has been focused on the list price of a medicine, which is not representative of any discounts or other rebates that are negotiated between manufacturers and insurers and pharmacy benefit managers and others, ultimately painting an inaccurate picture. “So much of the notion that spending on medicines is driving health care costs is because it’s being based on the average wholesale price and list price, and, in reality, spending on medicines has been consistent for about 50 years because there is the marketplace that works in the US,” she says. “And as part of that marketplace there’s negotiation. We don’t have an average aggregate of negotiations across the board.” Thus, a new treatment may initially be expensive but when the marketplace has a chance to work and another medicine comes on the market, aggressive negotiation occurs and prices drop significantly.
As so many managed care professionals can attest to, the trouble comes when a patient is diagnosed and needs immediate access to a high-priced new-to-market drug. When challenged with this scenario, Mr Kamp responded, “Well, I think pharma has been doing pretty well on that score. It has patient assistance programs [that are] expanding. And so for patients that have true needs and can’t pay, the industry is stepping up and doing its part.”
All drugs—whether it is a first-of-its kind breakthrough drug or a proven formulation gone generic—are only as effective as the patient is adherent. Ms Campbell points out that a recent IMS report that found the US can save $213 billion annually if medicines are used properly. The question now is what role does the payer have in achieving this adherence? Some have already begun to institute programs that remind patients to follow the doctor’s orders, for example, by prompting patients to refill their prescriptions so that their treatment program doesn’t lapse.
Drug development continues to be costly, with no guarantee of return on investment. On average, it takes more than 10 years and billions of dollars to develop one medicine. Just 12% of medicines in clinical trials actually make it to patients, Ms Campbell says.
The Food and Drug Administration and the pharmaceutical industry have been putting strategies into place to make sure that cost and profits don’t rule every new discovery. Work on orphan drugs and the antibiotic crisis are good examples of industry merging with ethics to achieve a greater good. “Regardless of these complexities, the biopharmaceutical industry is tireless in its pursuit of developing new treatments and cures. Without new treatments and cures, cost of disease could bankrupt the health care system,” Ms Campbell says.
Once the conversation turns to the hefty cost of conducting R&D in the US, it is only a matter of time before someone points out that most pharmaceuticals cost less outside this country. “America pays for drug development because we pay more for drugs. The other countries have price controls that we don’t have, and it leads to lower prices. It is not fair, but I don’t know how to fix it,” said Mr Kamp.
Although prices may be higher, Ms Campbell points out that in the US patients have access to medicines earlier. This is often the equivalent of waiting several years for, say, hip replacement surgery, vs paying a higher price and only waiting a matter of days.
While its easy to hone in on the difference in drug prices overseas, you need to consider the entire picture Ms Campbell says. “You cannot have conversations about the price of medicines, without also having a conversation about coverage, and the barriers that patients face in accessing these medicines,” she says. “It’s really disingenuous to just have conversations on cost without also acknowledging the incredible value that these medicines provide to patients, the health care system, and the economy overall."
The biopharmaceutical industry serves as a foundation of one of the country’s most dynamic innovation and business ecosystems. In 2011, the biopharmaceutical industry supported over 3 million total jobs in the US.
The industry is also the single largest funder of business research and development in the US. “We represent 21% of all domestic R&D funded by US businesses,” Ms Campbell says. “We’re also the most research-intensive industry in the US, and we invested more than 12 times the amount of R&D per employee than manufacturing industries overall.”
The national media may continue to portray the pharmaceutical industry as the villain, but PhRMA continues to push back, defending the worth of pharmaceutical companies and their products by highlighting their contributions to health care.
