Time For Big To Pharma Step Up Before The Drug Price Debate Rises Again
In today’s social and political climate, public opinion and public action can galvanize and turn on an issue in an instant. We’re seeing it right now as the personal misconduct of public figures eviscerates careers and upends personal lives. We saw something similar on the political front happen not too long ago in healthcare when the Affordable Care Act (Obamacare) was up for repeal earlier in the year and congressional town halls were flooded with agitated constituents flogging their GOP representatives. During the 2016 election cycle, the cost of drugs took center stage repeatedly between Martin Shkreli, Mylan Pharmaceuticals and the EpiPen price hikes, and Hillary Clinton’s Tweet that rattled the markets.
With that context, over the last several weeks, two forums quietly deliberated the crisis facing U.S. healthcare. They were configured differently – private vs. public, televised vs. not – but in the end, they both came to the same indisputable conclusion: Reform of healthcare is necessary and transparency would be key to any meaningful reform.
The first was a panel held at an annual conference that assembles industry and government leaders in healthcare at the Forbes Healthcare Summit. The second was the Senate HELP Committee that debated a report (coincidentally released the second day of the Forbes Summit on November 30th) by the National Academy of Sciences, Engineering and Medicine (NAS) titled: Making Medicines Affordable: A National Imperative. The Forbes Summit was an example of industry attempting to frame a conversation on how to lower drug prices and the general cost of healthcare, while the NAS report is a policy document that has led to slightly more attention by the government on the issue through yet another Congressional hearing on the subject of controlling healthcare cost.
The volume of dialogue these past two weeks concerning patient dissatisfaction, rising prices, and lack of incentives to provide better outcomes rather than more procedures have displayed evidence that we don’t know how to quantify or deliver healthcare without achieving transparency. Now, with the close of the third Senate HELP Committee hearing on drug prices, the drumbeats for transparency through legislation are getting louder. The days that big pharma and their lobbyists can keep legislation at bay may be numbered if discussions like the one I witnessed at the Forbes Summit don’t lead to some form of self-regulation, with concrete and long-lasting ways for at least one part of the industry to help address some of the cost issues.
The Forbes Summit was succinct and direct in its call that healthcare is fraught with obscurity while the NAS report’s content, by its sheer depth and detail, instilled urgency with its closing call for action – any material action. It worked, too. The Senate subsequently decided to hold a hearing regarding the content of the report within the month. Not only that, but an unusual sense of urgency was sparked at the outset of the hearing by the President and Founder of Patients for Affordable Drugs, David Mitchell, whose opening remarks regarded his personal experience with high drug prices. Mr. Mitchell, who has been diagnosed with blood cancer and had been prescribed Celgene’s Revlimid for five years, detailed how during that time the drug’s price had gone up by 34% and his co-payment had increased by 600%. In fact, he pointed out that Revlimid became the most expensive out of pocket drug on Medicare Part D with a median out of pocket cost for beneficiaries of $11,500 a year. He also discussed his current treatment, an infusion therapy which he takes in order “to live as long as he hopes to” that has a price tag of $450,000 per year. His personal struggle opened the floor to many committee members and witnesses recalling their own (or constituent’s) personal experiences of being faced with burden of ridiculous drug prices, twice citing Restasis (an ophthalmic emulsion only produced through Allergan), insulin strips and alluding to several other drugs and pharmaceutical companies.
The debate around transparency was first picked up at the Forbes Summit in a session moderated by Steve Forbes entitled “What the Heck Does ‘Value’ Mean?” In it Steve Nelson, the CEO of UnitedHealthcare, a division of UnitedHealth Group (UNH), said, “The definition of value must be determined by the consumer.” He added that value is not measured solely by cost, but whether the patient had a good outcome and a positive experience. Later in conversation, Nelson said, “…to solve the issue we must go outside the system to find answers for the issues facing healthcare today.” As a vivid example, two days earlier UNH had launched a $250 million fund named Optum Ventures, the goal of which is to fund innovation that drives data, pricing and reporting.
Mr. Forbes proceeded to give stark reminders of how opaque the healthcare continuum really is. He started with how most patient costs are paid by third parties, the evil middlemen of healthcare’s underbelly. What this has brought are extremes where doubling up guests in rooms with curtain dividers wouldn’t be tolerated in the worst motel, yet it is standard practice for patients in hospitals. Mr. Forbes continued with a life and death example of the disconnect describing how between 75,000 to 100,000 patients die each year of infections contracted after they are admitted to a hospital and few people grasp its meaning.
Correspondingly, the lack of transparency was raised several times in the NAS report when its contributors detailed the inefficiencies within the diverse aspects of our country’s healthcare system, including drug prices, formulary design, treatment regimen selection, and others. Back in August of 2016 I wrote how Mylan Inc.’s EpiPen fiasco could begin a public backlash against big pharma and biotech. Mylan was excoriated publicly when its EpiPen price hike from $164 in 2011 to $600 five years later hit the mainstream. The just released NAS report did not shy away from pointing this out about Mylan, citing the EpiPen directly. What they did not mention was the $465 million fine that Mylan paid this August in a U.S. Justice department settlement on overcharges to Medicaid for the EpiPen.
Despite the very important discussions occurring within healthcare at forums like the Forbes Summit, a lack of meaningful action after them has only allowed for the complexities and opaqueness of the healthcare system to grow. This is not to say there hasn’t been any action. Just a year ago a few big pharma CEOs became cognizant of the rising likelihood of drug controls and began to issue statements promising to cap price increases on certain drugs. Brent Saunders, the CEO of Allergan, was at the vanguard of the movement, but then this year squandered any goodwill he had accumulated when his company tried to transfer valuable intellectual property to a Native American tribe to extend the life of expiring patents. Unless there’s serious commitment and a demonstration of real outcomes, self-imposed price caps are half measures baked into PR stunts. Big pharma and other healthcare players need to take the issue of rising healthcare costs much more seriously.