Daily Management Review

Drug Pricing Increases Debated by Pharma Company Executive


01/13/2017




Drug Pricing Increases Debated by Pharma Company Executive
More pharmaceutical companies are pledging to limit annual increases to under 10 percent, as they are grappling with a backlash against high U.S. prescription drug prices. However critics have not been salved which includes President-elect Donald Trump, who on Wednesday said drugmakers are "getting away with murder."
 
Due to a combination of market fragmentation and free market policies, U.S. drug prices are generally the highest in the world and the pharmaceutical industry is typically reluctant to talk about the prices. But the ire of consumers and lawmakers have been risen recently by high-profile price hikes by Mylan NV, Turing Pharmaceuticals and Valeant Pharmaceuticals International Inc.
 
Following earlier pledges by Allergan Plc and Novo Nordisk A/S, AbbVie Inc on Wednesday became the third global drugmaker to publicly promise to cap annual price increases at under 10 percent.
 
Last week, prices of its two dozen of its drgugs were raised by between 7 percent and 9.5 percent by Allergan.
 
"I do think that the industry is off to a good start in terms of good behavior," Allergan Chief Executive Officer Brent Saunders told investors here this week during J.P. Morgan's annual healthcare conference, the largest industry meeting of the year.

Last year, in the heated debate, Mylan was put at front and center due to its six-fold increase in the price of the EpiPen allergy treatment over less than a decade. Reports show that since 2011, prices for four of the nation's top 10 drugs increased more than 100 percent.
 
Noting that raising prices by 9 percent still adds a whopping $33 billion to the nation's annual prescription drug bill, Mylan Chief Executive Officer Heather Bresch, answering questions at the conference, said capping price increases for brand-name drugs below 10 percent "is not the right solution."
 
"The pricing model has got to change," she said. "If anybody is walking away from this conference thinking it's business as usual, that's a mistake."
 
evidence that a particular drug is cost effective would most likely be the hinge for future pricing power, other executives said.
 
Referring to studies showing how a drug can improve patient lives while cutting costs, Joseph Jimenez, chief executive officer at Novartis AG, said "I think we will see a bigger trend of outcomes-based pricing."
 
A deal where payments are calculated based on any proven reduction patient admissions to the hospital, not on the number of pills consumed, was struck by the Swiss drugmaker recently with two U.S. insurers for its heart failure drug Entresto.
 
Demonstration of the cost effectiveness of new therapies is already required according to European regulators.
 
"We already design studies to incorporate health economics for ex-U.S. regulators," Perry Sternberg head of U.S. commercial operations at Shire Plc said in an interview. "It is data that is going to become more and more important."
 
While drugmakers acknowledge that advances in technology are offering new ways to solve some of those issues, the also claim that since results depend on patients following doctors orders, it can be difficult to measure how patients fare on specific drugs.
 
The drugmaker is "trying to find creative solutions", said Derica Rice, chief financial officer at Eli Lilly & Co, in an interview.
 
Drugmakers say other aspects of the healthcare system should be targeted for savings and point out that prescription drugs account for only around 15 percent of U.S. healthcare costs.
 
(Source:www.reuters.com) 






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