The biopharmaceutical industry has made stunning progress in discovering and developing breakthrough medications. Last year proved phenomenal with 59 FDA approvals – an all-time best. But the industry’s success is more than numbers as the quality of these drugs is impressive. The drugs approved in 2018 cover a broad range of diseases including various cancers (breast, lung, prostate, thyroid), infectious diseases (small pox, malaria, flu, HIV) and many rare diseases. Past predictions of the coming of a golden age of miraculous medicines seems finally to have been realized.
But these breakthroughs have also come with a new wave of attacks against the industry - especially around pricing. Many of these newly approved drugs are highly priced with many on the order of hundreds of thousands of dollars per year. One can debate what the price of curing a disease should be. To be frank, the price of these new drugs can often be justified based on not just their life-saving ability but also on the overall savings such drugs bring to the healthcare system. However, the whole pricing debate is muddled by other drug price issues such as large, annual price increases for drugs already established on the market, generic drugs, and outright price gouging by rogues in the industry.
The furor around drug pricing is the one issue that unites all politicians from Bernie Sanders to Donald Trump. The almost daily attacks have continued to hinder the biopharmaceutical industry and is detracting from the great things that the industry is doing. After all, what good are new breakthrough medicines if they are unaffordable?
Industry supporters have been continually frustrated by this situation and the apparent inability of Big Pharma’s trade association, the Pharmaceutical Research and Manufacturers of America (PhRMA), to take any action. Well, that apparently may be changing. As reported by Steve Usdin of Biocentury, the PhRMA board is considering a proposal that would commit members to limit price increases for drugs purchased by Medicare to a measure of consumer inflation. Usdin believes that this proposal could result in HHS Secretary Alex Azar standing down from his plan to link the price of Medicare Part B drugs (injectable and infused) to international prices. This would be consistent with Trump’s desire to have Americans pay the same price for these drugs as people in other countries do.
If PhRMA were to adopt its price cap proposal, it would be a great step in helping Big Pharma restore its reputation with the American people. However, this cap on price increases needs to extend beyond infused/injectable drugs and include ALL drugs purchased by Medicare. That makes more sense and would be an easier message to communicate. Furthermore, it is the right thing to do.
This move by PhRMA is reminiscent of the membership criteria changes it made in 2017. To distance itself from members that it considered bad actors, PhRMA required that all of its members have a ratio of three-year average global R&D spend to global sales ratio of > 10% AND a three-year average global R&D spending of at least $200 million/year. For companies like Merck, Pfizer, Novartis, etc., such criteria are laughably easy to meet. However, these new requirements resulted in 22 companies (about a third) dropping out. PhRMA sent a clear message that being one of its members means being committed to investing in timely, cutting edge research to bring new treatments and cures to patients.
PhRMA can now send another important message. By capping price increases to inflation levels, PhRMA can show it cares about patients, drug costs and accessibility of its breakthroughs. Let’s hope that the proposal is adopted.
