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Unleashing the Full Promise of Biotechnology Innovation

February 5, 2015
Last week, I attended the announcement of President Obama’s Precision Medicine Initiative at the White House. In the room were leading biotechnology executives, researchers, lawmakers from both parties, regulatory officials and patients. Seated just a few rows in front of me was a young man named Bill Elder whose life has been transformed by a cystic fibrosis drug developed by one of our member companies, Vertex. Today, Bill is a third-year medical student with an incredibly bright future ahead of him.

It was an inspiring event – one that highlighted what is possible when industry, patients and Washington come together to tackle the biggest challenges we face as a country and a society.

One thing that was abundantly clear from the President’s remarks, and from my conversations with leaders at the event from across the drug development ecosystem – from researchers to patients to regulators – is that modern biotechnology has firmly positioned itself as the driver for what the President called “a new generation of lifesaving discoveries.”

In just over 40 years our industry has transformed the medical standard of care for devastating and previously untreatable diseases. Take HIV/AIDS. A near-certain death sentence not long ago, HIV/AIDS is now a manageable chronic condition for many patients thanks to the development of highly active antiretroviral therapies.

But as the President noted, “medical breakthroughs take time.” Invent a new App for an iPhone and you can get it to market in a few months and with very little private investment. Discover a new molecule to treat a disease and you likely have a more than 10-year, $2.5 billion journey ahead of you, with private investors needing to commit their capital for that entire timeframe.

Because of these high hurdles, and the enormous failure rates inherent in scientific discovery, we need all the levers of government working together to support and foster the medical innovation ecosystem.

For that reason, we cannot afford to undermine the important goals of efforts like the Precision Medicine Initiative by reducing the periods of biologic data exclusivity and making cuts to Medicare Part D and B (both are proposed in the Administration’s recent budget). We should not disrupt these successful programs by adding unnecessary changes, which could put at risk patient access to necessary medicines.

We also need to make sure that the insurance industry can keep pace with the innovations happening in medicine. The truth is that the current debate around pricing is not really about the cost of a particular drug, it is that scientific advances have allowed us to create more effective drugs and cures (with less adverse side effects) that can help larger and larger populations of patients who want access to these innovations. Insurance companies haven’t adjusted to these innovations, but patients expect their health insurance plan to cover the best medicines based on their unique needs, at an out-of-pocket expense that makes these therapies accessible. That’s precisely why people get insurance.

And the reality is that an effort as ambitious as the Precision Medicine Initiative, which has the potential to usher in an entire new era of groundbreaking cures and therapies, needs an insurance system that can support these innovations. If the current outdated insurance model puts these breakthroughs out of reach for the people who need access to them, we will be failing as a society.

For example, an article in last week’s New York Times highlighted how insurance companies often use tiered pricing structures to prevent access to medicines. The article referenced a study in the New England Journal of Medicine which analyzed access to HIV drugs in “48 health plans in 12 states and found that a quarter of the plans showed evidence of what researchers called “adverse tiering,” or placing all of the drugs used to treat H.I.V. in a specialty tier where consumers are required to pay at least 30 percent of the cost of the drug.”

John Rother, who leads an insurance-backed coalition that is behind many of the recent attacks on our industry’s medical innovations, including new cures for diseases like Hepatitis C, recently told CNBC that we need to “establish a drug-pricing structure based on value.” We couldn’t agree more. But let’s start that conversation with the simple fact that there is no value to patients in having insurance companies preventing access to the drugs and therapies they need.

If you look across the health care industry today, drugs and biologics represent only around 10 percent of American health care costs, a figure that has remained remarkably steady over the years. This is money well spent given that they also help reduce spending in other areas of our health care system, including hospitals and nursing homes. For example, a recent study showed that Medicare Part D prescription drug coverage reduced hospitalization rates by 8 percent.

In addition there are a wide range of programs that help increase access to innovative products, including everything from subsidies and discounts in Medicare and Medicaid to manufacturer-sponsored patient assistance programs to discounts for hospitals that treat indigent patients to pharmacy benefit managers negotiating discounts because of market competition.

The system works and because of that America is a leader in innovation and drug development. But as the President noted, we should not just celebrate innovation. He said, “We have to invest in innovation. We have to nurture innovation.” All across our industry today, there is optimism for the future – because of the rapid pace of scientific discovery and the effectiveness of the drugs that are coming to market.

But we can’t just celebrate these successes, we need to continue to invest in and nurture the innovation ecosystem in a way that ensures that the next generation of lifesaving discoveries gets to the patients who need them most. We need the entire healthcare ecosystem working to foster innovation and we need the insurance industry to be a partner in this process.

We need them not to just congratulate our industry when we develop a new cure, but to have the foresight and understanding of how they will ensure access to the men and women who need these products, as well as the long-term role that these products will play in strengthening our health care system for generations to come.