Sunday, May 31, 2015

The looming precipice

There is a looming precipice here for the biotech industry. Its the pricing precipice. There is an article on this in today's Boston Globe. The three main issues for the industry are:
  1. There are no biosimilars (think generics) to help bring down the costs. And the biotech companies have been fighting them with  multiple lawsuits to prevent them.
  2. Salaries have caught up with pharmaceutical companies.
  3. Prices have started to make headlines.
'Tony Dodek, associate chief medical officer at Blue Cross Blue Shield of Massachusetts, says high-priced “specialty drugs” represent just 1 percent of the prescriptions handed to Blue Cross’ members, but 25 percent of the insurer’s spending on drugs, a share that is rising rapidly. “That’s not sustainable,” Dodek says.'

'While we are seeing a profusion of breakthrough treatments..., the price is often determined by asking, “What’s the highest price I can charge and get away with,” said Alison Taunton-Rigby, a former biotech executive who serves on several corporate and nonprofit boards. Speaking at a recent industry conference, Taunton-Rigby said, “It’s an attitude we need to talk about. I think we actually have a black mark against us as an industry.”'

'Many in the industry will complain that they need these high prices to justify the millions of dollars burned bringing a new drug to market, and attract new investment to cultivate the next generation of drugs. But the industry needs to consider ways to trade short-term “profit maximization” for its own long-term vibrancy.'

The biotech industry has been producing drugs which save lives but also cost more than the average house for a course of treatment. With a house, you can get a mortgage with a prescription, you and your insurance company will go broke. An example of the new Hepatitis C drug which costs $84,000 for a 7 month course which cures 90% of the patients. That's cheap compared to a $175,000 liver transplant.

A new drug to come out later this year for Cystic Fibrosis will cost over $300,000 per year. That would be the same as buying a new house every year. Who can afford that?

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