Magazine Article | July 1, 2016

What Is At The Heart Of Biopharma Backlash?

Source: Life Science Leader

By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL

I’m dismayed by the ongoing negativity that dominates much of the mainstream media’s coverage of our industry. I admit there are significant opportunities for improvement and that mistakes have been made, but what about solutions? Sure, I understand we are all wired to pay more attention to controversy and wrongdoings, but how much worse can it get? I mean in a few keystrokes anyone could probably find a number of polls and studies that show a rising sentiment against (i.e., unpopular) the pharma industry. I get it — the industry is seriously under fire, but I started to wonder about some of the underlying issues that have led to this current dilemma.

I came across an interesting 2014 NY Times article titled “The Rise of Anti-Capitalism” that posited something I feel is at the heart of the pharma industry backlash. According to the article, “The inherent dynamism of competitive markets is bringing costs so far down that many goods and services are becoming nearly free, abundant, and no longer subject to market forces.”

In a free market society, the opportunity to make money creates competition, and noncollusive competition typically creates lower prices. Competition and lower prices are usually good for consumers — that is until the ability to make a reasonable profit gets squeezed to the point at which competition decides to leave the space. A good example of this concept is Merck’s bladder cancer therapy, TICE BCG. Being 30 years old, the drug lost its patent exclusivity long ago but is still in short supply (Merck still makes it). So if other companies could make a reasonable profit in the manufacture and sale of BCG, in a free market wouldn’t competition naturally enter to fill the void? If so, then why hasn’t this happened? Of course my fear is that without some reasonable profits, pharma companies won’t be able to invest in R&D for new drugs, and other existing therapeutics may soon be short in supply.

Another issue tarnishing biopharma’s reputation is the industry’s lack of price transparency. The industry’s current WAC (wholesale acquisition cost) pricing scheme (see our April 2016 article on Suresh Kumar, EVP of external affairs for Sanofi) not only inhibits a patient’s ability to determine how much they should be willing to pay for a drug but impedes biopharma from providing true drug price transparency. As a former drug rep we used to give away pens. I remember a doctor once asking me, “Why don’t you stop giving away these pens and just lower your drug prices?” Unfortunately, such silver bullet type solutions applied to complex problems usually don’t work. After all, you wouldn’t prescribe a Band-Aid to a skin cancer patient, so why then do we take similar approaches in tackling today’s current drugpricing issues?

I believe that to move forward, we need to truly treat patients as partners and start living up to those proclamations of being “patient-centric.” But how we do that, and all the other steps associated with a solution to the industry’s current pricing and reputation woes, isn’t going to be easy, and it’s going to take a long time. (For more info, see the article on our recent pricing panel on p. 16.) The question is: Are we up for the challenge?