As the pressures to justify drug pricing both in the U.S. and beyond increase, biopharmaceutical companies and the pharma industry at large must be prepared for open, transparent and two-way public dialogue. A recent debate hosted in New York City by the non-profit organization Intelligence Squared US (IQ2US), featured both sides of the argument – with debate participants leveling points against industry pricing and counter points on why the backlash against the industry lacks full and accurate context.
Below are key takeaways from the IQ2US debate and the speakers’ perspectives on the question: “has ‘big pharma’ delivered drugs that reduce the need for costly surgeries, which extend life and improve its quality, or do they deserve the blame that has been leveled against them?” The full debate is also available for view here.
The Motion: Blame big pharma for out-of-control health care costs
Argument FOR the Motion
Ezekiel “Zeke” Emanuel, MD, Oncologist, Bioethicist & Vice Provost, University of Pennsylvania
Neera Tanden, President and CEO, Center for American Progress
- The pharmaceutical industry is a very most lucrative business, with average annual profit growth of 15 percent.
- Despite claims that drug pricing supports R&D, companies spend far more on marketing than R&D and use price increases to build profit. For example, some drug pricing has “skyrocketed” since initial launch, despite limited research and with a minimal percent of profits funding further research.
- Companies should be held accountable for greater transparency and value-based drug pricing; this will enable more informed decisions, creating a more competitive market.
- The U.S. has the highest drug costs in the world, and is one of the only countries that has patients pay for drugs twice – through U.S. taxes and out-of-pocket co-pays.
- Increased drug competition does not lower prices.
Argument AGAINST the Motion
Lori Reilly, Executive VP for Policy, Research, and Membership, PhRMA
Paul Howard, Director of Health Policy, Manhattan Institute
- Drug spending has remained largely consistent and is expected to stay level over the next 10 years.
- Spending increases could be a positive sign that more patients are taking better medicines and avoiding more costly costs such as hospitalization and surgeries.
- The three largest pharmacy benefit managers (PBMs) that cover 75 percent of the commercially insured fail to pass their steep discounts to consumers on high deductible plans, charging them full price until the deductible is reached.
- Patients are asked to pay on average 20 percent of the cost of a prescription drug out-of-pocket as compared to 4 percent for hospital costs and less than 10 percent for physician visits.
- 90 percent of the 1,200 biopharmaceutical companies have yet to make a profit. It is a high risk industry (88 percent of drugs fail) and investors need a high return – which incentivizes investment and innovation.
- Government regulation of prices would slow innovation. Brand prices fall quickly with competition. Example: the price for Hepatitis C cures, which transformed a chronic, costly and deadly disease, fell 40 to 60 percent within two years of the first approval. However, the cost of other health services, such as surgery or physician visits, continue to rise and show no signs of declining.
- The FDA should be reformed so it can more quickly review and approve generic medicines and keep pace with scientific innovation, increasing branded competition.
- Medical innovation is worth the extra 15 percent profit because it is the only solution to diseases without a cure and helps lower other, higher costs of treatment.
The Results: The team arguing against blaming pharmaceutical companies won the debate, increasing its pre-debate poll support by 20 percentage points (28 percent to 48 percent). The “For the Motion” team increased its number by 9 percentage points (33 percent to 42 percent).
The key takeaway for the pharmaceutical industry is that there is room, and even appetite, for their voice in the ongoing public debate on pricing. Companies must join the conversation on pricing, or run the risk of being painted as villains due to lack of understanding around the industry’s contributions. Shedding light on value propositions, pricing strategies and profit margins in a way that contextualizes the complex factors behind their practices – without losing sight of the mission to improve human health – is the first step to creating a more informed public dialogue and building trust.
Caroline Hoffman, account supervisor, Health.
Kimberly Anastos, account executive, Health.