Drug Prices Top of Mind as Pharma Leaders Consider Policies Under Biden

Drug Prices

In many regards, the incoming Biden Administration is expected to be a redux of the Obama Administration, likely with strong support for scientific research and a reinvigoration of the Affordable Care Act (aka Obama Care). Yet concerns of pricing controls still loom.

HR3, known as the Elijah E. Cummings Lower Drug Costs Now Act and passed in 2019 by the House of Representatives, remains troubling because it signals a strong Congressional interest in price controls. Although it saw no action in a Republican-controlled Senate, that could change now that Democrats control both houses of Congress and the executive office.

“There has been a focus on the House of Representatives on a system of price controls,” Joe Panetta, president and CEO of Biocom, told BioSpace. “If that or a similar bill is passed by the Senate, it could stifle biopharmaceutical innovation in ways that Congressional members cannot yet understand.”

For example, price controls could dissuade early-stage investors from making what are traditionally risky investments in this industry.

Within the biotech industry, “If we think a drug may work, we assume it will be paid for if it meets an unmet need,” Peter Kolchinsky, founder and managing partner, RA Capital Management, said during a Biotech Showcase panel on post-election drug policy (held virtually January 11-15, 2021). Introducing price controls could change that equation.

Yet, many Congressional representatives don’t understand the complexity of drug development or what the biotech industry is capable of, so they advocate toxic price controls. Kolchinsky called that “a psychotic break,” saying, “Surely America won’t bludgeon our creatives into the ground with a terrible policy…yet if it manifests, it will be quite tragic.”

“President-elect Biden was in charge of the cancer moonshot initiative that brought together pharma companies to collaborate and innovate, so we know he believes in the power and promise of our industry,” Panetta said in an interview. “We expect support for investment in biomedical innovation to continue.”

Biotech Showcase panelist Greg Simon, a consultant, Simonovation LLC and integral part of the Cancer Moonshot, dismissed the idea price controls unequivocally.

“President Nixon is the only one to put on price controls. People need to get over their fear that the Biden Administration will (hamper) innovation,” he said.

Simon predicted the Biden Administration will focus on insurance for all, and that affordable healthcare is this nation’s greatest healthcare challenge.

“Out-of-pocket costs must be the first problem solved, and hidden costs, insurance premiums, and costs at the drug store must be included. As individuals and as individual companies, we must determine whether we’re part of the problem or part of the solution,” Julie Gerberding, EVP and chief patient officer, Merck & Co. Inc., and former director of the Centers for Disease Control and Prevention (CDC), said during the panel discussion.

Consider this. Although the Hatch Waxman Act made drugs more affordable by allowing generics, biologics aren’t following that model.

“Biologics (including gene and cell therapies) that lend themselves to becoming biosimilars aren’t dropping off the patent cliff. They are so complex they can remain monopolies forever,” Kolchinsky said.

Therefore, unless out-of-pocket costs for therapeutics become affordable, “The U.S. will spend more and more on healthcare and patients will be taking drugs that are 20 years old, or older.” Innovative therapies won’t reach them.

To remedy that, Kolchinsky proposed a plan that automatically drops a therapeutic’s price after a set period of time.

“The companies I back subsist on money raised from investors. They would gladly commit to drug price drops in 15 years if they knew there would be no drug price controls,” Kolchinsky said.

Another approach, which Simon advocated, is “fixing the Bayh-Dole Act (for patents and trademarks, enacted in 1980).” He wants to limit the monies universities raise from tech transfer and thus promote more affordable drug prices, arguing that it is unfair for research that begun with public money to be exorbitantly priced when it finally is commercialized. “A university’s main goal should be to promote and protect basic research.”  

There is a tendency for companies to assume that approved therapeutics and diagnostics will be reimbursed by payers, the panelists agreed, yet Kolchinsky suggested a more predictive indicator would be whether denying access to those products would be unconscionable.

 “A lot of diagnostics have been held back needlessly. I don’t trust payers to recognize progress,” Kolchinsky said. “If you can show that it would be cruel and unusual to deny a patient a specific drug or diagnostic, you find American has the heart to make it available.”

Panetta and the Biotech Showcase panelists all noted that COVID-19 pandemic has changed the way people think about healthcare as well as the way the FDA responds to applications.

“We have seen a much more efficient review process that focused not on cutting corners but on making regulators more familiar with the innovative science and technologies that are being developed,” Panetta said. Such efficiency is likely to continue because, as he pointed out, “The FDA’s charter is to ensure the efficient movement of products to the marketplace as well as to ensure safety and efficacy.”

Within the industry itself, Panetta said, the pandemic has increased interest in infectious diseases. “Those products traditionally weren’t well-funded on a continuous, long-term basis.”

Moving forward, “I’d like to see more partnerships between the federal government and the private sector to encourage continuing research into new and evolving threats, the development of next generation products, and the stockpiling of certain products, like we did after 9/11,” Panetta said.

Health security is national security, the panelists agreed. “As a country, we have to understand that pharmaceutical innovation will contribute to the economy more than anything else,” Simon stressed. “Keeping people alive is the most productive use of resources.”

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