Drug pricing received significant attention at this year’s Forbes Healthcare Summit, held Dec. 2 and 3 in New York. The impressive conference lineup of Merck’s Ken Frazier, Pfizer’s Ian Read, GSK’s Sir Andrew Witty, Celgene’s Bob Hugin, Regeneron’s Len Schleifer, Express Scripts’ Steve Miller and Turing brat Martin Shkreli provided a solid basis for debate on drug pricing.
Each of the CEOs strongly distanced himself from the practices of Turing’s Shkreli and emphasized the different role and attitude of the R&D-based industry. Frazier referenced George Merck’s philosophy of “focus on the needs of the patients, the profits will follow,” an approach that I find, in more general terms, applies well to any business situation. He called the Daraprim pricing situation an isolated incident where the market failed and which will be fixed. On the broader topic of drug pricing, there seemed an important consensus among participants that there is a strong need for more dialogue between payers, provider organizations, medical associations, patient advocacy groups, government and the drug industry.
Some differences of opinion started to emerge when Witty noted that the United States, as a rich country, can afford to pay more for prescription drugs than citizens of many other countries, including Europe. Whether the United States subsidizes European healthcare continues to be an important debate, albeit one where the industry has little power against monopsony government buying powers.
Miller raised the issue of the rapidly rising cost of drugs and the resulting need for control. Interestingly, though, he also disclosed that the Express Scripts cost for hepatitis C drugs is lower than in Europe, further illustrating the significant difference between frequently quoted list prices and the less well-known, often much lower, actual drug cost to health insurance companies.
How insurance companies are managing access to important drugs became a focal point of discussion when a representative of an association for patients with the genetic disorder familial hypercholesterolemia (FH) raised an example of an FH patient requiring 23 phone calls with the health insurance company to get access to a PCSK9, considered a breakthrough for this select patient group.
Frazier emphasized a distinction between innovations, such as a new and improved version of the iPhone, and much higher-risk inventions, such as for new breakthrough drugs. As examples, new immuno-oncology drugs and hepatitis C drugs provide dramatic improvements as a result of high-risk research investments over many years. Abraham Lincoln’s description of patents as “fueling the interest to the fire of genius” appropriately emphasizes the need to stimulate inventions in the large array of disease areas that cause human suffering.
In summary, the meeting yielded a lot of constructive discussion. Much more will clearly be needed. The question is whether we will be able to maintain the depth of discussion as candidates for future U.S. leadership focus on sound bites and populism.
As always, I am looking forward to your reactions and further discussion.