US Prescription Drug Prices and The Innovation Debate

The drug pricing debate over prescription drug prices in the US is not new.

What also is not new is politicizing the debate. During the 2016 Presidential election cycle, drug pricing was a major issue, compounded by then President-elect Donald Trump’s attacks on pharmaceutical drug pricing. Trump’s campaign promises called for revamping drug pricing legislation to bring down the cost of prescription drugs, a major campaign platform given the sheer volume of the 65 and over population, who take more prescriptions than any other demographic. Conversely, the Democrats positioned their campaign as pro-healthcare, focused on overall benefits rather than singling out drug pricing.

Public perception of drug pricing in the US at the top level is a humanitarian debate. From the consumer perspective, every American should have the same rights to access prescription drugs regardless of income or social class. But the reasons for high drug prices are valid given the decades-long R&D process, as well as clinical trials and FDA approval required before patients can get access. Even with expedited approval schemes such as those for rare and orphan diseases (the Orphan Drug Act), there are not enough incentives to ensure lower drug prices while maintaining a climate of discovery and innovation.  

This debate was the subject of a recent Medicine Maker article entitled “Pharma in the Firing Line” by George Chressanthis and Charlie Thompson. In the article, the authors outline their preferred approach to drug pricing policy change, including: making drug pricing more competitive across the board; making pharmacy benefit managers’ decision-making on drug rebates publicly available; ensuring drug rebates and concessions are returned to patients; increasing drug approval while maintaining safety and efficacy; fixing inadequacies in the drug supply chain; and enacting public policies that effectively work to increase R&D pipelines and productivity.

Yet, more policy-making at the government level runs the risk of clogging up drug innovation with endless bureaucracy and rhetoric. What can the pharmaceutical industry do to lower the cost of prescription drugs and improve access to healthcare? The cost of developing drugs has only increased, averaging $2.5 billion per drug, a “145% increase, correcting for inflation, over the estimate the center made in 2003” according to Scientific American, in reference to a 2014 study by Tufts Center for the Study of Drug Development (CSDD). More recently, a Washington Post article entitled “Why prescription drug prices have skyrocketed” estimates the life-cycle development cost of a single drug to be $2.9 billion.

Rising drug prices and “the eye-popping price tags of specialty drugs,” serve to fuel emotional, sometimes irrational distrust of big pharma in the drug pricing debate. And for good reason. “Current therapies for hemophilia are priced at $580,000 to $800,000 a year; Novartis plans a $475,000 price tag for its Car-T drug Kymriah, which treats non-Hodgkin’s lymphoma” as of November 2018,” according to the Washington Post article. But there are many aspects to the debate which rarely get air-time at the consumer level. For instance, if a stage-4 cancer patient could pay for a single dose drug to make them cancer-free for life, what is the value of that drug? Does the cost for developing the drug justify the cost to the consumer? Without the means to develop drugs like these, what hope is there for innovation? And what role and obligation do insurers have?

Pharma CEOs have to blend empathy for this public outcry with a dash of sober reality in their responses. Inarguably, maintaining a high standard of research and discovery, and ensuring safe, ethical and regulated drug approvals, is not up for debate. As the industry grapples with the huge cost of discovery and the trickle-down effect for consumers, policy makers grapple in kind with policy approaches such as price fixing or price controls for Medicaid recipients, among many schemes in debate. Incremental mitigating options would only be counterproductive for pharmaceutical pipelines. The drug pricing debate must change across the entire framework from bench to bedside, from research to sales, from approvals to availability. And then, the question remains, who would fund innovation? 

This topic is a featured topic at CPhI North America conference...