Frustrated by the lack of legislation implemented to lower soaring drug prices in the United States ? a key issue that has elicited outrage across both ends of the political spectrum ? the White House recently issued a report suggesting that US drug prices aren?t unreasonable ? it?s that developed nations aren?t paying their fair share.
?These practices abroad disproportionately cost U.S. patients and taxpayers because they prevent the United States from undertaking domestic policies to lower drug prices without slowing down the pace at which new and better products enter the market,? the researchers wrote.
?We find that if free-riding abroad was reduced and foreign relative drug prices reflected relative GDP per capita, total innovator revenues from those countries would have been $194 billion higher in 2017, raising global revenues by 42 percent. Reducing foreign price controls would increase profits and innovation, thereby leading to greater competition and lower prices for U.S. patients.?
The report largely echoes some of the criticism levied by the biopharma industry, which has long thrived in a laissez-faire US pricing ecosystem. Industry insiders have persistently argued that government intervention into pricing will stifle innovation, even as lawmakers work on a laundry list of different proposals to lower drug prices.
Endpoints News discussed the findings of the report with Ruud Dobber, who heads up the biopharmaceuticals business unit at British drugmaker AstraZeneca.
The interview has been condensed and lightly edited for clarity.
On the issue of drug pricing, a recent report suggested that Europe is not paying enough for American pharmaceutical innovation. What do you think??
I got the report last night; it was a surprise for the whole industry. What I saw this morning, was that it was issued by the White House. You can argue and ? we are quite vocal about that ? that perhaps prices in the United States are a little bit too high.
But equally, the prices in most European markets are far too low. And that?s not a very popular message to the European governments ? but it?s a fact of life. And so in that sense, I was smiling a little bit when I saw the headlines coming in. Because in all my years as a European ? as you probably hear from my accent ? I?ve worked here for a long time and have been responsible for the European business.
It is from time to time very frustrating that governments are preventing the accessibility of drugs based on just economic models and not looking at the patients.
We have seen also, in this beautiful country, the UK, a couple of examples where it is a painful exercise to get products like Tagrisso, Lynparza, and Fasenra on the market, even though the impact on patients is so incredibly huge. Now, of course, as a company, we need to show our clinical value, economic value ? but the disparity among European markets, in the willingness to pay is huge. And in some markets, prices are simply too low.
There are critics who would say that it?s less about perhaps the prices and more about the way that drugs are reimbursed in the two geographies. In Europe, there are largely single-payer systems negotiating on behalf of citizens ? and in America, of course, it?s entirely different and is much more complicated than that. Isn?t this an apples to oranges comparison?
That?s a fair point. My team, our organization in the United States, is dealing with hundreds of payers. It?s also very fundamental that the US is a free pricing market. And competition is literally in the DNA of American society. And the competition is fierce. The moment you have another product in the same class of medicines, I can tell you that those negotiations are tough. If the competition is giving more rebates, I?m almost forced to do that. Otherwise, I can get kicked out of the formulary position.
In Europe, in that sense, it?s a little bit easier if you have reimbursement, because your price is anchored, you cannot move it up. But if you have the same indication (as another product) and you?re not expanding, the price remains the same more or less. So this is not an ideal system.
Having said that I actually prefer the US system where access to medicines is at a much faster and higher level than then in Europe. Fingers crossed, if I?ve got cancer, I would rather be treated to the United States then, for example, in most of the European markets, because those products are simply not yet available.
Just to play devil?s advocate ? I clearly don?t make anywhere close to what you make. So if I were in America, I doubt I?d be able to afford treatment!
I think that?s the misconception. So, first of all, there?s a large population that is commercially insured. Like many companies, our workforce in the United States people has very decent insurance coverage. Yes, there is a little bit of what is called the deductible. But all in all, most of the indications, people can clearly afford (treatment).
Where the issue is a little bit is in Medicare and I?m first to admit that. If you are a pensioner ? over 65 years of age ? and you are confronted with a deductible of $2,000 to $3,000 before your insurance is kicking in, that?s painful. But after that, the patient is not paying anything anymore. So there is an issue ? and we have been very vocal as a company in saying that the rebate system is not sustainable. We are paying billions of dollars to the PBMs and we say give those the dollars back to the patient.
(Editors note: Drug manufacturers often argue that they raise list prices in the United States to account for higher rebates that are negotiated by PBMs ? and that net prices and what the patient on average pays in certain cases are in fact lower. But when list prices increase, that hike is eventually passed on to insured patients through co-payments and premiums. In addition, there is a large proportion of uninsured Americans ? according to data compiled by the Kaiser Family Foundation, 27.9 million non-elderly individuals were uninsured in 2018. Meanwhile, even for the insured, with newer more targeted therapies carrying sticker prices in the hundreds of thousands of dollars, out-of-pocket expenses can be rather expensive.)