the multiple sclerosis drug natalizumab (Tysabri) based on a foreign index could create a 30 percent hit to the R&D budget of its owner Biogen (NASDAQ: [[ticker:BIIB]]). “That’s just one drug,” Schulthess said. “This is going to have a devastating impact.”
Erica Whittaker, who runs the corporate venture group at Belgian drug maker UCB, used to be the company’s head of market access. She noted that each country where UCB sells drugs has a different way of setting drug prices based on the competitive landscape, a practice known as “reference pricing.” And many countries, particularly in Eastern Europe, would revise reference pricing every six months, causing a “downward spiral” in price. As a result, Whittaker says some companies won’t launch drugs in certain countries.
KICKING REBATES TO THE CURB
The panel adopted a much more positive tone when it came to wiping out rebates. Insurers, or their intermediaries, negotiate with pharma companies for discounts. Rather than passing the savings on to patients, the companies typically pocket the difference, according to their critics. Last month, the administration unveiled a plan to let drug makers pass discounts to consumers but not to the middlemen. The proposal would apply to Medicare and Medicaid, though HHS believes private health plans would adopt the changes, too.
Panelists at today’s meeting were all in favor. “If it rolls out as intended, it will reduce the price at the pump for patients,” Pitts said, referring to lower co-pays and co-insurance payments. “If we can lower the price of drugs without restricting access at the pharmacy level, politically, it’s going to be an enormous victory.”
Democrats say the plan doesn’t go far enough, because it doesn’t challenge the list prices set by drug companies. House Speaker Nancy Pelosi (D-CA), has said Medicare premiums could go up if rebates are eradicated. On the panel, Susan Peschin, the president and CEO of the nonprofit Alliance for Aging Research, countered that even if premiums “quadrupled” they wouldn’t come close to current out-of-pocket costs. “We’re hoping that both sides of the aisle will be supportive of this proposal,” she said.
Greenwood also believes the proposal doesn’t go far enough, but for a different reason. He wants to see out-of-pocket costs drop even lower for for people on Medicare. Some 1 million people pay more than $2,000 out-of-pocket a year, and many others pay upwards of $5,000 per year, he said. That’s what patients are complaining about; for biopharma to weather the drug-pricing storm, it has to start there. Amgen (NASDAQ: [[ticker:AMGN]]) and Regeneron Pharmaceuticals (NASDAQ: [[ticker:REGN]]) recently have lowered the list price of their rival cholesterol-fighting drugs, moves meant to lower Medicare co-pays.
If biopharma can do more to lower these costs, “then these problems will get behind us and we’ll continue to innovate,” Greenwood said. “And if we can’t, we won’t.”
