On high drug prices…

imagesKEY TAKEAWAY: A report released this week during the largest gathering of biotechnology executives in the world found that pharmaceutical companies are more worried than they were a year ago about their ability to prevail in drug price negotiations. If the M&A frenzy among insurers continues drug companies could find out just how bad a strategy of high drug prices really is.

The battlefield on high drug prices has now shifted to the new class of cholesterol drugs and has companies like Amgen licking their chops, but my guess is that insurers are going to have a lot to say about who qualifies for these new drugs.  A recent poll indicated that consumers blame pharma for the high cost of prescription drugs and despite the fact that we are all living longer with chronic conditions most patients are outraged at the high cost of new drugs.

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While the debate around the cost of developing new drugs rages on patients, doctors and politicians are all in an uproar  because of the high prices of all these new products pharma has pretty much continued down the path to “we’ll charge high prices because we can”.  I assure you that insurers are now thinking about how they are going to challenge new drugs with high prices.  In the case of the new cholesterol drugs they could, for example, require patients to first try generic statins and fail before approving or require the patient’s doctor to fill out a lot of extra paperwork.  For cancer drugs the choices of therapy could be based on head to head data from each drug vs. benefit to the patient.

I have been calling saying that pharma needs to look at the way they develop drugs and how their processes add direct value to patients.  However, we still have, in most cases, executives who refuse to acknowledge the future and still try to cuddle investors.  For patients, it could mean that insurers dictate therapies as opposed to physicians.

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The times are a changin’ but pharma still likes to stay in the past in both marketing and overall business.

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