market, especially for drugs that have received FDA’s breakthrough and fast-track designations to get to market faster.
And last year, Forbes reporter Matthew Herper compiled data to show the FDA was “basically providing a rubber stamp” for companies asking for drug approvals.
One caveat: We only know a drug has been submitted for approval, and rejected, when a company wants us to know about it. BIO’s Cohen seized upon that caveat when I asked about the soaring approval numbers. He didn’t have data at hand but suspected that more drugs are coming through the clinical pipeline than ever before—meaning more approvals and more rejections. An FDA report on 2014 approvals, however, notes that applications from drug companies—the final step before FDA gives a thumbs-up or thumbs-down—“over time has remained relatively stable.”
I submit that either way, the larger point remains, and that most biopharma people would agree: The FDA is now a help, not a hindrance, to the drug industry.
All in all, I would say biopharma’s wheels have been well greased the last several years. The industry should be able to bear the current scrutiny of its pricing practices without circling the wagons. Even more, I’d love to see the industry talk about solutions to the drug pricing problem instead of finding new ways to fight rhetorical battles.
Creative pricing ideas have in fact been circulating for a while, and a few executives have talked about changing practices. Most recently, Alnylam Pharmaceuticals (NASDAQ: [[ticker:ALNY]]) CEO John Maraganore told Xconomy last week that his company won’t simply raise prices as the calendar turns over, a common practice, if Alnylam brings a drug to market. (What he will do, however, he’s not ready to say.)
Novartis (NYSE: [[ticker:NVS]]), meanwhile, wanted to try a pay-for-performance scheme with its heart failure drug Entresto, which showed in big clinical trials a marked improvement over generic alternatives in reducing deaths. At launch last year, the company said it would ask insurers to agree to pay a bonus if patients fared better on the drug and stayed out of hospitals.
But in November, Novartis CEO Joseph Jimenez told Reuters that insurers balked at the idea. Jimenez and Roche CEO Severin Schwan also said medical data infrastructure wasn’t yet up to the task of tracking patients’ outcomes well enough to use for complex pricing deals.
Developers of gene therapies that could offer one-shot cures or long-term treatments for diseases such as hemophilia have also discussed pay-for-performance to help spread the upfront cost—potentially hundreds of thousands of dollars per treatment—over years.
Emory University professor David Howard, who studies healthcare and drug costs, agrees that price schemes that rely on tracking patient outcomes will be tough to put in place. And even if they come to fruition, he’s skeptical that overall prices will come down. “For new drugs, companies will just adjust to charge even higher prices” for the patients who respond to the treatments, he said.
Creative price schemes will likely require buy-in from insurers, regulators, and lawmakers, as Ron Cohen stressed to me. He also cautioned that agreement on the meaning of “value” when negotiating pay-for-performance schemes with insurers and others won’t be easy.
On the pricing panel last week, attorney and industry lobbyist Beth Roberts of Hogan Lovells said, “There are many legal restraints. Lots of things are impeding biopharma’s ability to be part of the solution.”
Drug companies are not the underdog. It would serve them well to spend more time acknowledging that they are part of the problem as well.
