Drug Pricing and Pharma Reputation: The Experts’ Views
How can pharma increase its reputation in the eyes of the public in 2016 after a difficult year of drug pricing ‘gouging’ claims?
In the summer of 2015, Turing Pharmaceuticals – run by Martin Shkreli – hiked the price of a more than half century old HIV drug by 5,000% when it bought the medicine’s rights, leading to public and political condemnation.
US pharma lobby group PhRMA has attempted to distance itself from the scandal, saying Turing “does not represent the values of PhRMA member companies”.
But the fallout continues and given that Martin Shkreli has now been arrested on fraud charges (and let go from his pharma role at Turing), is it time for pharma to take a proactive stance and improve its image in relation to pricing? Experts at the frontline of pharma and healthcare give eyeforpharma their thoughts.
The European trade group
Leslie Galloway, VP at the European Confederation of Pharmaceutical Entrepreneurs (EUCOPE) and chair of the European Medicines Group (EMIG), said: “The Turing affair was a disgusting example of an individual abusing the system. Shkreli was not 'pharma'. I have worked in the industry for 40 years and have observed people make stupid decisions - and they still do. However, Shkreli is an opportunistic investor. The issue for pricing is that the issues are manifold and different for different companies and, by the time we're explained the issues properly, everyone is asleep.
“Companies should be allowed to choose their own list price and stakeholders should stop trying to get to the bottom of how they choose their prices. In some cases, there is the need to fund an expensive medicine for small populations whilst in other cases, it may be a case of ‘what the market will bear’ with all the shades of grey in between. The focus should be on the value the medicine delivers - both clinically and organizationally - and what the stakeholders are willing/able to pay.
If we could understand why – I mean really ‘why’ – these drugs are so expensive; well, this might have an impact on the way decisions are made.”
“In terms of reputation, I once harboured hopes of improving the industry reputation because of the massive good we do. However, for every five points we improve it, someone, e.g. Shkreli, will do something to take 20 points off. It also suits governments that we are not ‘loved’ by the public because savings from the industry on medicines are more reliable and predictable than any saving sought from the NHS.”
The drug pricing regulator
Professor David Haslam, chairman of England’s drug pricing watchdog NICE, says what’s key for the industry is that it ‘shows its working’ when it comes to drug pricing. He explained that no one outside the boardroom doors currently knows how a company comes up with a price for a drug.
When it comes to NICE deciding upon the cost-effectiveness of a new medicine, he says: “If we could understand why – I mean really ‘why’ – these drugs are so expensive; well, this might have an impact on the way decisions are made.”
He added that he thought the industry is “now understanding that there is a real need to be as transparent as possible” when it comes to pricing.
When asked if drug prices are too high in general, he said he doesn’t know: “Because, again, there isn’t enough transparency as to how these prices are arrived at. I would be purely guessing if I tried to answer that. But there is no doubt that many drugs, especially cancer drugs, are extraordinarily expensive, and we have to balance that.”
The pharma critic
Dr Ben Goldacre, Bad Pharma and Bad Science author and co-founder of the AllTrials data transparency campaign, said: “The problems around drug pricing are also driven by the low quality of information we have, in general, about the effectiveness of treatments. There is lots of vague, aspirant chatter about ‘value-based pricing, but it is just hot air when the underlying data on comparative effectiveness for commonly used treatments is so weak.
“For example: new diabetes treatments are approved with only evidence on the surrogate outcome of glucose control, but nothing on real world outcomes like heart attack or death; and there are no serious structures in place to assure that such real world evidence is generated in the shortest possible timeframe. Because of these widespread shortcomings, and lack of ambition for perfection in our systems for generating evidence clinical evidence, we are hamstrung. Because if you want to calculate the value of something, you need good information on its effectiveness, as well as its price.”
The US physician
Dr Peter B. Bach, Director of the Center for Health Policy and Outcomes at the Memorial Sloan Kettering Cancer Center, said the problem is wider than Turing, with many Americans struggling to pay for their drug costs.
“Prescription drugs are the only major category of the healthcare services for which the producer is able to exercise relatively unrestrained pricing power. We know that we can determine value based prices (VBP) for drugs.”
In a recent article for JAMA, he and Steven D. Pearson, Founder and President of the Institute for Clinical and Economic Review (ICER), set out a VBP system that could incorporate the DrugAbacus system for evaluating medicines costs – an idea created by Dr Bach.
This proposed system includes using evidence-based calculations of prices for new drugs that accurately reflect the degree of improvement expected in long-term patient outcomes, while also highlighting price levels that might contribute to unaffordable short-term cost growth for the overall health care system.
“It’s time for all stakeholders to come to the table with an open mind and help develop a more rational drug pricing system in the US,” he argued, noting that many Americans are still facing bankruptcy to pay for high cost medicines that are only partially paid for by insurance firms.
The US trade group
Steve Ubl, CEO of the US industry group PhRMA, said: “The firestorm around Turing is causing some to call for change in public policies that risk slowing this progress and delaying the development of the next generation of treatments and cures for patients fighting diseases including Alzheimer’s, Parkinson’s and other rare diseases. These proposals ignore the reality of the highly competitive market for prescription drugs, where health insurance companies and pharmacy benefit managers are able to negotiate deep discounts off the list prices of medicines, including more than 50% off the price of new hepatitis C treatments.”
The five-year survival rate for all cancers is 40% higher for men and 13% higher for women in the US than in Europe.
Ubl said that he does envision a time when a NICE-based health technology assessor will be established in the US, and believes that it would in fact be detrimental to access.
“The US relies on its competitive marketplace to control costs, while encouraging the development of new therapies. Because of the ecosystem that exists in the US, patients enjoy access to innovative medicines far earlier than patients in countries with centralized price controls and leads the world in drug discovery and development. In fact, US cancer patients have higher survival rates than Europe. The five-year survival rate for all cancers is 40% higher for men and 13% higher for women in the US than in Europe.
“Researchers have attributed the higher cancer survival rates in the US to the greater availability of advanced treatment options. A study by Tufts University found that between 2000 and 2005, 73% of medicines launched in the US before becoming available in Europe – which was attributed to our nation’s market-based system.”
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