This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.
Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.
Sept. 12 — Critics of drug prices are ignoring the long-term benefits pharmaceuticals bring to the health-care system, representatives from two drug firms said Sept. 12.
Gregg H. Alton, executive vice president at Gilead Sciences Inc., said, “we need to create a health system that can invest in short-term interventions that have long-term benefits.” Gilead has come under fire for the pricing of its hepatitis C drugs Sovaldi, Harvoni and most recently Epclusa. Epclusa costs $74,760 for a 12-week course of treatment.
Joshua Ofman, senior vice president of global value and access and policy at Amgen Inc., said “making decisions based on our short-term budgetary lens can lead to poor outcomes.”
The drug company representatives made their point at a forum of the American Enterprise Institute on the prices of specialty drug, which treat complex, chronic health conditions such as hepatitis C and cancer. This comes as drugmakers are under heavy scrutiny by lawmakers, consumers, medical professionals and presidential candidates on their pricing practices. Most recently, generic drugmaker Mylan Inc. came under attack for increasing the cost of its EpiPen 400 percent in nine years.
Alton said his company spent a lot of time doing market research when it set the prices for its hepatitis C drugs. Instead of setting the price based on unit cost, “we looked at what it cost to cure the disease,” he said.
Alton said the new hepatitis C drugs have 95 percent cure rates and are very tolerable.
“Value-based frameworks are important and have to be done correctly, but they don't necessarily solve the problem,” Alton said. “We need to look at incentives for innovation” as part of a value-based framework.
“The real challenge is the financing and how we budget for health care,” Alton said.
Amgen's Ofman said “it will make our health-care system unsustainable if we don't have innovation” and “biopharmaceuticals are one of the only solutions.”
Ofman said “there is no single answer to the question of value,” and “value changes over time.” He said “we have to maintain a scientific dialogue” and keep working to understand value.
Gilead is based in Foster City, Calif., and Amgen is based in Thousand Oaks, Calif.
Brand companies have been working to change the debate over drug prices. The Biotechnology Innovation Organization recently launched an ad campaign to defend drugmakers that have been under fire for their pricing practices (14 PLIR 1232, 9/9/16). The campaign, called “ Innovation Saves,” says new drugs can save both lives and costs to the health-care system.
Peter B. Bach, director of Memorial Sloan Kettering's Center for Health Policy and Outcomes, said “the fastest rising bucket of [health-care] spending has been prescription drugs.”
Bach said that “value-based pricing is a viable solution.”
Bach created the DrugAbacus, which is a draft tool that could be used to determine appropriate prices for cancer drugs based on what experts tend to list as possible components of a drug's value.
“The idea is to take multiple attributes of a drug and put them into a calculator” to determine price, Bach said.
Steven Pearson, president of the Institute for Clinical and Economic Review, said “we are all going to be continuing to wrestle with the factor that there is no one way to determine a fair price” for a drug.
Pearson said the long-term value of a drug should be recognized in its pricing, as well as affordability for patients.
Tomas J. Philipson, a professor of health economics at the University of Chicago, said “patients go bankrupt for these treatments” and “that's an enormous demonstration of value.”
“There are very few products you'd be willing to go bankrupt for,” Philipson said. “If you have value-based pricing for all of health care, my prediction is that we would be spending a lot more on” prescription drugs.
In October 2015, a group of top U.S. cancer hospitals started giving patients guidance about the cost of drugs used in their treatment (13 PLIR 1496, 10/16/15). The information supplements summaries the group has provided for 20 years on the effectiveness, side effects and evidence backing the therapies. Drugs are ranked on a scale of 1 to 5 for affordability, in the same way the group ranks other aspects of a therapy, such as toxicity or how effective it was in clinical trials.
Scott Gottlieb, a resident fellow at the American Enterprise Institute, said drug rebates are causing higher drug prices. He said rebates don't flow to consumers evenly.
The rebate system was a response to litigation in the 1990s accusing drug manufacturers of colluding when they gave drug discounts unevenly, Gottlieb said. In response, drug manufacturers moved away from discounts to rebates.
Gottlieb said drug manufacturers push up the list price of their drugs to fund the rebates, which typically go to pharmacy benefit managers.
Gottlieb suggested that Congress could legislate to allow drug manufacturers to offer different discounts to different entities. “The market would be more competitive if there were discounts negotiated up front” rather than rebates determined later, Gottlieb said.
To contact the reporter on this story: Bronwyn Mixter in Washington at bmixter@bna.com
To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to research@bna.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)