- The drug industry cannot continue to do business “as usual” and ignore the concern about drug prices.
- Prices of many of the most popular brand-name drugs increased at nearly ten times the cost of inflation from 2012 to 2017.
- At least 28 million Americans have experienced a spike in the cost of their prescription medications in the past 12 months.
- 67% of drug companies increased their annual profit margins during between 2006 and 2015—with margins up to 20 percent for some companies in certain years.
Peter Pitts, who I respect as a former industry executive, blames the high drug prices on the “drug industry ecosystem” but that’s a cop-out. Our healthcare industry remains complicated with too many layers between the patient and treatment because health care is very profitable and everyone wants a piece of the profits. If we really want to disrupt and innovate healthcare we need to tear down the current infrastructure and look for ways to make it more efficient while eliminating fraud and waste. Among the key foundation is that the traditional business model, in pharma, is not working anymore.
It costs millions (or even billions) to develop a new drug, but more and more drug companies are “buying” new drugs through mergers or acquisitions. At the same time patients are taking a more important role. Instead of being the end-consumer, the pharma industry has to involve the patient, as a consumer, in discussions around policies, commercial models, regulation and innovations. To do this we need people within the industry whose first priority is patients not spreadsheets.
Every disruption strategy needs highly skilled and motivated people to implement it. That’s a challenge for most industries and it is even more acute in pharma. Nearly three-fifths of Pharma executives (59%) say finding and retaining the best talent to make innovation happen is a challenge for their organizations, compared to 53% of respondents overall. To date I have seen a lot of very good people leave the industry because of downsizing or their frustration at trying to make things happen. This can’t continue to happen.
Pharma cannot continue to ignore that change is coming . Those organizations that rely on the ecosystem are going to go down in flames while companies that are starting to experiment with change, like GSK, will be better prepared.
What we need is for industry experts to be locked in a room or off site meeting to start with a clean slate when it comes to health care. One that accepts that the drug industry is a business, but also understands that we cannot afford to let patients go without treatments because they can’t afford it . We need to eliminate fraud and waste, but also we need more focus on preventable health conditions that cost us all more.
We need, in short, to look at things as they should be and ask “why not”.