Tuesday, April 23, 2013

Show me the data but don't charge me an arm and a leg

In the past the biotechnology industry enjoyed a cost and procurement system where drugs were provided at the cost set by the provider. Now there is change coming in the industry where the value of the drugs must be proven before being accepted. They now will be forced to sell good outcomes and at a lower cost.

While the industry stock levels are running at a long term high and the FDA has approved a record number of drugs, the winds of change are shifting on through. On Monday, there was an executive meeting at the Biotechnology Industry Organization convention in Chicago where this issue was discussed in detail. 

"The national health care overhaul, the shift toward personalized medicines targeting smaller patient populations, and tougher reimbursement standards by commercial health insurers in the United States and government payers in Europe are changing the game for biotechnology start-ups and pharmaceutical giants alike, Burrill said.

“We as a health care system are at a pivotal moment,” said David Meeker, chief executive of the Genzyme division of Sanofi SA in Cambridge. “Economic growth in the Western world is negligible to negative. Everyone’s taking a hit. That’s translating into increased pressure on health care spending. The trend is to spend less.”

Drug makers once could count on a straightforward regulatory process and automatic reimbursement for approved medicines. But the process for getting experimental drugs to market has grown longer and costlier as regulators demand more patient-specific data before granting approval. At the same time, payment regulations have become more variable and less certain.

“The payers used to just pay,” Burrill said. “Now they want proof that drugs can improve outcomes and lower costs. And the way you do that for the French versus the way you to it for the Chinese versus the way you do it for Aetna or Kaiser Permanente is all different.”

Industry executives discussed the new dynamic at a Monday session on “pay for value” in the drug business, but there was little agreement on how to define the value of new medicines."

Payers are demanding more data showing benefits before covering them. Manufacturers are creating more and more drugs for smaller populations - for the rarer ailments. Insurers are also reluctant to pay for new expensive drugs to treat common conditions such as diabetes or heart disease.

These changes are causing pharma companies to look at how they do business and partner with other companies, particularly smaller ones, to reduce their risks. I hope to see this continued change s that medications become more affordable and insurance companies are not denying new drugs  because the costs are too high. The doctors should be the one making the decisions on which medications are appropriate for their patients, not the pharmaceutical companies nor the insurance companies.

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