Calm down. Take a few deep breaths, chant a few om’s, and then start thinking rationally about the drug price debate, or as I’m now calling it the #Rxpocalypse. Because, hey, we put “Rx” in front of everything and I’ve always wanted to try and start a hashtag trend.
I can hear what you are all saying, “why should we calm down… drug prices ARE ridiculously high!” I agree, they are high, but the intensity of this discussion is coming to its apex at a critical time where positive change can actually occur, and rational thought and discussion must prevail. We are at a unique junction of social outrage, economic necessity, and political posturing that has historically led to the creation of lasting policy. (see Medicare)
Let’s start with the facts.
In the U.S., drug prices are high and they continue to rise. According to a recent analysis by the Wall Street Journal, U.S. prices for 30 top-selling drugs rose nearly four times as fast as prescription volume, on average, from 2010 through 2014. That was more than eight times general inflation. Furthermore, an analysis back in May 2015 by Credit Suisse, showed that drug price increases were a “key driver” of profit growth and in many cases after-tax profits were higher than R&D expenses. Of course, these basic facts hurt the pharmaceutical industry’s argument that high drug prices are needed to fund future research. And even more obvious, the social outrage. Sick patients are being asked to subsidize pharma’s profits. And added to this already toxic reality is the megalomania and arrogance of pharma executives like Martin Shkreli which only amplifies the problem.
In addition to the seemingly unjustified pricing increases, the FDA is seemingly approving everything that comes its way. As I’ve written about in a past post, an analysis by BioMedTracker, commissioned by Forbes Magazine, found that 89% of drugs that were submitted for approval to FDA were given the green light this year. This follows an 88% approval rate in 2014. This influx of expensive drugs put both private and public payers in a real bind – as the economics just don’t work. They simply can’t be expected to pay for everything that is being approved.
Public outrage and a good old fashion budget crisis however, are not enough to power change. The real driver in this pharmaceutical end-of-days is the election cycle. The Democratic hopefuls, each with their own plan to keep drug prices at bay, are stumping on behalf of the sick calling for profit limitations and other regulation on free market. While seemingly well intended, it is also opportunistic and not necessarily well thought out. They are using the current furor to boost their poll numbers, with little chance of getting their ideas signed into law.
Again it is obvious to all, once you lay out the facts – something needs to change. However, I contend that although short-term regulatory restrictions around drug pricing and pharmaceutical profiteering may sound like easy fixes, we as nation are missing a bigger opportunity to allow for a fundamentally capitalist approach to the issue, where the value of a pharmaceutical product can dictate its price in the free market, and provide for access and affordability accordingly.
Short of overhauling the entire FDA review process to be more like the European health technology assessment (HTA) model, which has its own serious shortcomings, it is up to healthcare decision makers to determine value. The problem with this value based approach is that we do not have independent, transparent data to clearly communicate this type of evidence.
Pharmaceutical companies are spending millions of dollars on health economic and outcomes research (HEOR), but it is seen as biased. Groups such as the Institute for Clinical Economic Review (ICER), recently funded by the Laura and John Arnold Foundation to produce value assessments for all newly approved drug, are making great strides, but healthcare decision makers need access to more data, in easy-to-use, actionable formats. Large payers like Express Scripts are fighting back through sheer brute force, but their motivations toward short term profit can and should be questioned as well.
It is also important to ensure that the RIGHT data are being made available and used in all decisions. We were very disappointed to learn that ICERs models for Praulent and Repatha did not contain any discussion of the downstream medical costs associated with the drugs’ adverse events, other than one line saying that those costs could change their assumptions.
In order to facilitate informed decisions and avoid the #Rxpocalypse, here is our 3 step proposal to provide the data necessary and enable the analysis needed to make proper value based assessments.
Step one, the pharmaceutical industry must make all results of clinical trials readily available and public prior to FDA approval and there must be a system in place to easily compare results for similar drugs. Even though there have been great strides in this area over the past few years (just Google “pharmaceutical transparency” and you’ll see almost all of the top pharma companies come up with their respective transparency pages), more can be done. Healthcare decision makers need the ability to not only see the results in isolation, but also the ability to perform comparative effectiveness research. Private enterprise can create applications to make this type of comparison possible, but having access to easy to use trial results, well before approval is a must have prerequisite.
Second, real time post-approval data is needed to comprehensively track and monitor how drugs are performing in the market. Clinical trials are small, homogeneous, and powered to succeed. It is not until a drug hits the masses that its true efficacy and safety profile is known. Again, there are systems in place like the FDA Adverse Event Reporting System (FAERS) and new, active surveillance tools like Sentinel that are being tested, but these data are generally under the lock and key of FDA and big pharma. Groups like Advera Health are working to make these data actionable, but more can be done to ensure the data is released to the public in a timely, efficient matter.
Last, but certainly not least, there needs to be standardized methodologies put in place to evaluate the economic impact of new drugs to market, and ways to track how that value proposition changes over time with real world data. This can only be achieved through transparent pre- and post-market data and powerful decision support tools that can process these data in a smart way to make them actionable.
Clearly this is not an easy problem to tackle, but we urge Washington powerbrokers and administrative agencies, and those that support them to not hastily react to whatever today’s latest news cycle is, but to instead put forward a well-thought out plan that establishes wide access to independent, transparent and actionable information for healthcare decision makers.
With the right data made not only accessible, but also actionable we will avoid the #Rxpocalypse.
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Executive Vice President