SUMMARY: “How big pharma takeovers destroy innovation” a report from Congresswoman Porter does make some points. Still, she is missing a lot of facts at a time when hospital and health insurance costs are soaring.

I always have pointed instances in which pharma puts Wall Street first and patients second. Ms. Porter points out that R&D seems to have been replaced with mergers and acquisitions, but she misses the big picture by focusing solely on drug costs.

Here are some of her key points from the report:

1ne: In just 10 years, the number of large, international pharmaceutical companies decreased six-fold,from60 to only 10.

2wo: The number of mergers and acquisitions(M&A) involving one of the top 25 firms in the pharmaceutical industry more than doubled from 2006 to 2016, and the practice doesn’t seem to be abating

3hree: Digging a level deeper “exposes a troubling industry-wide trend of billions of dollars of corporate resources going toward acquiring other pharmaceutical corporations with patent-protected blockbuster drugs instead of putting those resources toward” discovery of new drugs.

A Harvard Business Review study found that in mergers of companies who maybe perceived as competitors,“R&D and patenting within the merged entity decline substantially after a merger…”In other words, the less competition that exists in the pharmaceutical industry, the less likely the industry will actually focus on innovation and new cures that can save lives.

So where to start…

Congresswoman Porter may want to look at the percentage of generic drugs available virus branded (89%). I have worked with and stayed in contact with some R&D people within pharma and they have a different answer.

Most common health conditions already have medications to treat them. As Amgen found out, a new medication to treat high cholesterol was a difficult sell even though they dramatically lowered the price. PBM’s and insurers required that patients with high cholesterol first use generic versions of Lipitor and Crestor to save money.

Smaller biotechs that are developing new drugs usually don’t have the resources to take new drugs to market. The venture capitalists funding them are looking for a big payday when a pharma company acquires them. I have been recruited by these companies who promise huge payouts when they are acquired if their drug shows promise in clinical trials.

In pharma R&D returns have declined to 1.8 percent—a slight decrease of 0.1 percent from 2018. This represents an average decline of 0.83 percent per year. The cost of bringing a drug to market decreased from $2,168 million in 2018 to $1,981 in 2019.

Deloitte goes on to say “while biologics generally target smaller populations, “next-gen” therapies often target individual patients—sometimes as single treatments—resulting in truly personalized medicine. Ex vivo (where cells are genetically modified outside the body) cell and gene therapies have generated considerable excitement on their potential to cure previously incurable diseases. However, these therapies have also been subject to increasing regulatory and health technology assessment scrutiny, including significant controversy over affordability”.

Now don’t get me wrong. One of the problems big pharma faces is promoting innovation in huge, complex, matrix business environments but suggesting that pharma is not focusing on new, innovative drugs is wrong. Can you imagine the return on a potential cancer vaccine?

The other key point is that Ms Porter misses entirely is that healthcare cots are being driven by a public that is obese and doesn’t exercise. The cost is estimated to be in the billions.

Then there are ever increasing health insurance and hospital costs at a time when less people are going to the doctor’s office because of COVID-19.

Pharma is NOT blameless, but like I have said in the past, even if all prescription drugs were free, healthcare costs would still be unsustainable in this country. By the way, Ms. Porter looks like she could lose some weight too.

Click here to download the report