Drug pricing drives debates at BIO convention

PHILADELPHIA: Philadelphia this week welcomed 15,000 healthcare professionals from more than 70 countries to the annual BiO International Convention, the largest global event for the biotechnology industry.

Some 1,700 exhibitors filled the halls of the Pennsylvania Convention Center, and dozens of presentations and panel discussions explored the promises of life-sciences innovation and the challenges the industry faces.

A number of sessions on Tuesday tackled the thorny issues of a drug’s value, patient access and commercialization of a therapy. The sessions brought together speakers from the worlds of pharma, payer, government, nonprofit, academia and medicine. The good news is that a lot of people are highly optimistic about the progress being made in pharma, particularly in gene therapy.

A Novartis-sponsored panel discussion called “Ensuring Patient Access to Innovative Medicine” was moderated by Christi Shaw, Novartis’s US country head and president of Novartis Pharmaceuticals. She referenced some significant clinical advances and asked the panel how to ensure that patients can take advantage of them.

Scott Gottlieb, resident fellow of think tank American Enterprise Institute, offered a timeline on scientific discovery. While it took the world 300 years to grasp how germs cause disease, now the “breakneck speed” of discoveries is measured in months. The biggest impediment to innovation, in Gottlieb’s mind, is the policy obstacles that prevent experimentation with how drugs are priced and contracted.

Dana Goldman, director of University of Southern California’s Schaeffer Center for Health Policy and Economics, offered another take by bringing up the tradeoff between low prices and innovation. Even though malaria afflicts so many people around the world, he said, because it’s not a problem in the US, no one here wants to invest in finding new ways to treat it. “It’s sad that a philanthropist—Bill Gates—had to step in to help eradicate the disease,” he added.

Arthur Caplan, director of the division of medical ethics at NYU Langone Medical Center, thinks it’s legitimate to shift the high cost of a drug to the person who needs it. “If you want early access to the latest drug, you have to pay for it,” he said. “The good thing is that the rich will serve as guinea pigs for effectiveness. Experimenting on those who pay to be experimented on seems like a fair tradeoff. And I do expect this to be greeted with resistance.”

Another angle came from panelist Richard Pops, CEO of Alkermes. “Our job is to develop evidence sooner in clinical trials,” he insisted. “The best thing we can do is make medicines that are that much better than what came before them.”

Patient engagement was mentioned by John Clymer, executive director of the National Forum for Heart Disease and Stroke Prevention, who feels “It’s absolutely having an impact.” Clymer mentioned being swayed by patient advocates who gave “compelling stories from the heart—but whose recommendations were also very fact-based.”

Ending the session, Novartis’s Shaw said: “There’s no one fix to the issue, so we all—payers, government, the industry—need to work together. We need a collaborative dialogue.”

Collaboration was also seen as a key strategy during another Tuesday session called “Putting a Price on a Cure.” Panelists discussed the “inappropriate” pricing of Gilead Sciences’ effective but costly hepatitis-C drug, the difficulties caused by the US lack of a single payer system and the idea of paying for high-priced drugs by annuity—that is, spacing out payments.

Moderator Brian Halak, partner at healthcare venture capital firm Domain Associates, echoed the sentiment that there’s “great news about our industry—we’re starting to see some incredibly powerful medicines that can legitimately be called cures.” The problem, he added, is “figuring out how to put a price on those cures.”

Amber Salzman, president and CEO at AAVLife, a gene therapy company, pointed out that “there’s only so much the public and taxpayers will be willing to absorb.” But she suggested that pharma is getting smarter about placing drugs on the market. “Sometimes they’re starting with a very narrow application, and then later expanding it—so the price can come down,” she said. “That’s something everybody benefits from.”

A quick rebuttal came from Roger Longman, CEO of Real Endpoints, who said, “I haven’t seen prices going down. For example, Humira isn’t cheaper today than when it was introduced, even though it has many more applications.”

In terms of government spending, AAVLife’s Salzman brought up the national space problem. “People used to ask, ‘How do you justify that expense?’ But look at all the innovation that came from that program, look at the trickledown. Sometimes we have to be aspirational, and figure out how to cure people, and then put the policies in place to make it work.”

A third Tuesday session, called “Paying for the 21st Century Cure,” covered much of the same ground regarding costly biopharmaceuticals. Moderator Dan Mendelson, CEO of consulting firm Avalere Health, gave a similar message. “The future of biotech depends on fashioning collaborative decisions,” he said.

Dan Durham, EVP of policy and regulatory affairs at America’s Health Insurance Plans, agreed that “shared risk is where we’re headed. If the patient doesn’t have the appropriate outcome, there should be some kind of compensation—that’s where we have to move in this society.”

While these panelists also talked about amortizing costs, the American Enterprise Institute’s Gottlieb expressed surprise that “the sophisticated finance tools around credit have not migrated into healthcare—it could be like the way you don’t have to pay up front for a car,” while Mendelson returned several times to the idea that pricing could be affected by expediting second and third drugs to market, thus bringing in more competition.

To end the session, Mendelson emphasized the need for “free and open channels between pharma and healthcare. Unless we put those in place, we’re facing problems.”