US Pharma and Biotech Summit 2024: Solving Drug Pricing

US Pharma and Biotech Summit 2024
New York City

Healthcare costs in the United States are a major issue for many families. At the 2024 US Pharma and Biotech Summit, Sarah Emond from the Institute for Clinical and Economic Review and John O'Brien from the National Pharmaceutical Council discussed the issue from a drug pricing perspective and how it might be solved.

Both speakers agreed that it’s an amazing moment in the pharma and biotech industry, from a science perspective.

Emond explained, “My first job in industry, was a company that was sequencing the human genome. We thought maybe in our lifetime we would see something come of that where we could see therapeutics derived from understanding the human genome. And here we are. It’s like science fiction that we have CRISPR and these gene therapies that are potentially curing some devastating diseases. And what I see is that we have not done a good job of the payment system catching up with a science. We’re really at a crossroads of amazing innovation, a lot of it being fairly priced (from a long-term value perspective), and a payment system that hasn't caught up to figuring out how to pay for a one time treatment, or chronic therapy for a large population. And so where do we look to see where there are potential solutions? How do we ensure access for patients in a sustainable way?”

The topic of value-based care often comes up in these conversations, along with the impact of the Inflation Reduction Act (IRA). O’Brien discussed how these two elements are impacting the current situation.

“Value is important,” he explained, “it's just that there are so many different definitions of value and how to measure it. You go back 30 years, we could look at statins and say, wow, for every 22 people we treat prevent a heart attack or stroke, this is the cost of that. Thank God that these drugs are going to go generic when their patent expires, and we all get the benefit of that innovation. And now, the markets a little different. You know, we're not seeing list prices decrease when drugs compete with each other, we're seeing payers say, you're going to have to pay a higher rebate than the incumbent if you want a preferred physician formulary.”

Emond also spoke about the lack of cohesion between rising costs and impact on patients’ health. She said, “Drug pricing continues to be top of mind. Eight out of 10 Americans think that drug prices are too high. The healthcare spend in general is getting bigger and bigger and we’re not seeing those commensurate changes or increases in life expectancy. So we're spending more, but we're not getting more out of the spend. That disconnect doesn't feel great.”

She continued, “The problem is the solutions are really complicated. Most people don't understand what a PBM is doing? What's your rebate? What's utilization management? Isn't someone deciding what the price is? It's not the company that benefits from a higher price, right? These questions get asked because it’s all so complicated. No matter what you feel about the inflation Reduction Act, it's a symptom of a problem. People have been worried about drug pricing and affordability. And when we don't bring solutions that are based on talking to each other and understanding how to balance innovation signals with affordability, sometimes you get like what I like to call blunt force trauma, like the IRA.”

According to O’Brien, the impact of the IRA might not be what was intended by those that wrote and signed the bill into law.

“At this time, we've gotten some research that showed that on average, if you begin a development program, after your drug is approved, it typically takes you about seven years to get that indication,” he explained. “If you go to somebody and say, ‘Hey, there's a very good chance that at nine years, the government is going to set your price, do you want to begin a development program that's going to lead to an additional indication in nine years and seven years?’ It's hard to make the case for that. So, an alternative is that you should wait until you have more indication before launching your product was, which is essentially depriving patients on access to innovation. So, in the haste to get something passed, and the political system that we had, I feel like there were a number of really important oversights.”