During this election cycle we have been inundated with headlines and congressional investigations focusing on pharmaceutical pricing. Earlier this year it was Martin Shkreli, Turing, and Valeant, and in the fall the target focused on Mylan and the rise of EpiPen pricing.
Regardless of who wins this month’s presidential election, pricing will remain front and center in 2017. But it is important to put things in perspective. Policymakers respond to a crisis and every crisis has to have a villain. Unfortunately, today pharma is the villain.
Often though, sensational headlines miss the underlying trends. A recent Government Accountability Office report looking at the prices of generic drugs suggested outcomes that are very different than what the press and policymakers have been describing.
The GAO found that generic drug prices fell 59% from 2010 to 2015. Another report, released by the IMS Institute for Healthcare Informatics, showed that in 2015 the average net price for brands already in the market increased by a whopping 2.8%. Total spending on pharmaceuticals went up considerably because of increased utilization since the passage of the Affordable Care Act and baby boomers reaching retirement age, but that was to be expected.
So, perhaps, the sky isn’t falling, but there are bad actors. There is evidence of poor decision making in every industry, and when you put a light on it, there it is.
This focus on pricing takes away from the greater discussion around the value medicines create, combined with the risks and effort involved in bringing cures to market.
There are steps that industry can take to address this issue first hand. For example, Allergan CEO Brent Saunders staked a position not to engage in predatory pricing practices and to limit price increases. He also describes pricing his products based on their value, increasing prices based on production costs, and working with policy makers and payers to ensure that patients have access to their medicines.
These are important steps that all of us in the industry should consider and these types of steps will play a large role in the future of our industry. Keeping in mind the interest of others will in the end benefit everyone.
Tom Sullivan is president of Rockpointe.