Placeholder Banner

How Can We Control Drug Costs While Supporting Innovation?

July 10, 2019

As the debate on drug pricing continues, our elected leaders will almost certainly adopt policies that will significantly impact—for better or for worse—the lives of many patients. With that in mind, how we do we ensure patients are at the center of this discussion?

It starts by recognizing some basic facts. Right now, roughly 90% of drugs dispensed in the United States are for lower-cost generic medicines. These inexpensive copycat medicines would not have been possible without the innovation ecosystem that fueled the development of their once-novel counterparts. Of the remaining small portion of brand-name prescriptions, the vast majority are generally not considered expensive.

What’s being debated now are the costs for drugs that treat serious chronic or life-threatening diseases such as cancer, multiple sclerosis, and rheumatoid arthritis, as well as those targeting rare or genetic conditions. Less than 5% of patients take such medicines, but these medicines account for about one-third of total drug spending.

Why are these treatments expensive? For starters, research and development, which has always been costly and time consuming, is becoming more complex. More new therapies are targeting even smaller patient populations, as the era of precision medicines takes hold. Many of these advances are truly transformational in terms of the value provided, sometimes in just a single, curative dose.

Additionally, funding cures and medical innovations is a risky business, given that 90% of all clinical trials fail. The current failure rate for Alzheimer’s treatments is even higher. This means the few successful medicines must sustain the continuing innovation ecosystem.

While much of the debate focuses on ‘big pharma,’ the fact is small biotech startups account for 70% of innovative clinical programs currently underway. Modern biotechnology is an industry made up of entrepreneurs, scientists, and researchers working to transform the way we treat, manage, and even cure, once-devastating diseases.

In addition to saving and improving lives, innovative biopharmaceuticals provide enormous value in other ways. Covering the costs of these medicines can result in greater savings elsewhere in the healthcare system. The creation of Medicare prescription drug coverage for seniors, for example, has resulted in annual hospitalization savings of an estimated $1.5 billion.

Overall, the costs of innovation must be seen in the proper perspective: the patients’ perspective. The value of innovative biopharmaceuticals to patients and their loved ones often can’t be measured in dollars. For many, it’s a matter of life and death.

That’s why it’s critical for patient-centered solutions that promote progress and improve access to new medicines while reducing out-of-pocket costs for Americans. It’s also why the current state of the debate is so troubling. The intense focus on price controls, weakened intellectual property protections, and restricted access to medicines will not only stifle innovation for future patients, but will do very little to make medicines more affordable for today’s patients.

Patients need a better, more holistic approach. More questions need to be asked about the value extracted by pharmacy benefit managers and why our insurance system increasingly punishes the most vulnerable Americans by imposing costs that are unaffordable. The price of medicines is one piece of a broader system that must be evaluated in its entirety if we want to make a true difference for patients.

There are numerous ways to address these challenges in a manner that supports—rather than discourages—continued innovation. Those ideas include removing regulatory barriers to value-based pricing and pay-for-performance agreements, imposing reasonable limits on out-of-pocket expenses, and eliminating distortions in the system that incentivize higher prices and spending.

As we tackle this issue, we need to recognize and protect what’s necessary to sustain the innovation patients urgently need: A robust public-private partnership; strong intellectual property (IP) protections and a reliable system for IP transfer, licensing, and collaboration; a science- and risk-based regulatory system for the development of new medicines; and a market-based payment system that rewards innovation and promotes competition.

These pillars are all critical to sustaining biomedical innovation, and we can’t take any one of them for granted. It’s why the United States discovers more new drugs than the rest of the world combined. It’s why so many patients have hope that one day their disease will be cured. And it’s why, as they tackle the issue of prescription drug costs, policymakers must get it right.


The following was first published by The Hill newspaper on July 9, 2019