But at What Price: A Look at the Senate Drug Pricing Hearing
Last week, pharma heavyweights met with Senate members on one of healthcare’s hottest topics: drug pricing. The media has closely followed this topic over the past few years, monitoring the climbing prices of prescription drugs that have left some patients unable to afford life-saving treatments. In response, U.S. lawmakers on both sides of the aisle are concerned and investigating solutions.
On Tuesday, the U.S. Senate continued the discussion with the CEOs of Merck, Pfizer, AstraZeneca, Johnson & Johnson, AbbVie, Sanofi and Bristol-Myers Squibb. While the hearing might not have led to the most positive headlines, we applaud the companies that stood up and gave their thoughts on the drug pricing debate. Here’s our take on the hearing, rising drug prices and how companies should respond.
Drug list prices aren’t budging
While senators pointed out that high list prices often drive higher drug prices at the pharmacy counter, pharma CEOs claimed that lowering the list prices could hurt American consumers.
They stated that the revenue brought in through these pricing models is necessary to fund future R&D for new therapies and treatments. Instead of conceding to lower list prices, the executives redirected the discussion toward pharmacy benefit managers (PBMs) and health insurance companies — suggesting that they hold the power to give savings back to patients.
Change through government intervention
The CEOs representing the U.S. pharmaceutical market stood their ground in terms of the current pricing structure, but they also acknowledged that change is necessary — in the form of government intervention.
Pharma CEOs expressed support for a value-based pricing model, under which companies are paid based on the clinical results that their medicines produce in patients. Under this model, the price of medications could increase, but the overall cost of healthcare (nursing homes, hospitals, etc.) would decrease.
Additionally, they voiced support for banning rebates that drug manufacturers pay to insurers (that don’t always make their way back to consumers) and recommended more transparency across the pharmaceutical payment system. There was consensus among the executives, however, against government-set drug prices.
When asked by Senator Chuck Grassley (R-Iowa) if they consider negative public opinion when setting drug prices, all the CEOs responded that they do — pharma companies still seek public approval and want to defend their reputations for bringing life-saving treatments to the U.S. market.
However, in light of the public outcry that led to the Senate hearing, expect negative public opinion to continue until pharma companies and the government make concrete steps toward a solution to rising drug prices.
How the pharmaceutical industry should respond
Although there certainly is not a clear winner in this situation, the government seems to have walked away with the public’s support from this hearing. Negative publicity continues to shroud pharmaceutical executives (as well as insurance companies and PBMs) as drug prices have yet to see any drastic changes. But there are opportunities for the broader pharmaceutical industry to demonstrate their value to the public:
While it may seem obvious, it is more important now than ever for companies to increase transparency of their drug prices and the strategy behind the final numbers. Companies and executives should give a breakdown of how they arrived at a final number, and message it early and often.
For example: What are the manufacturing costs behind a drug? How many investigational treatments failed early-stage clinical trials before one succeeded? What were those costs? How long does a drug take to produce? If it’s a one-time treatment, is the cost lower than a lifetime of monthly or daily treatments?
In order to move away from the negative perception, pharmaceutical companies should also look to demonstrate patient-centricity in all the work they do. Yes, they provide life-saving drugs, but patient support goes beyond the pill bottle.
Consider offering patient assistance programs not just for the most financially disadvantaged, but also for more middle-class patients who could benefit from the treatments. These patients’ insurance may not cover a drug, and they might not be able to afford it on their own without significant burden.
Beyond pricing and discounts, pharmaceutical companies should also partner with patient advocacy groups, offer online educational resources surrounding their disease focus areas and encourage a sense of community for their patients through social media campaigns and groups.
Continue the discussion
Finally, this is an ongoing conversation — it didn’t end with the hearing this past week. Pharma companies need to continue the discussion surrounding drug pricing and proactively offer realistic solutions that can provide a win-win for companies and patients. Yes, it’s a heavily debated topic, but it will be the companies that offer up their advice, insights, research and experts, and that contribute to the discussion, that will come out ahead.
We’re in the midst of a changing landscape for the pharmaceutical industry, and it will be interesting to see how the story continues to unfold in 2019 and beyond. The opportunity is there for companies to take the lead in terms of transparency, patient support and finding a solution … so who will take it?
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