We Are Only Hostage to Our Own Devices Le Len M. . Ni Nichols, - - PowerPoint PPT Presentation

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We Are Only Hostage to Our Own Devices Le Len M. . Ni Nichols, - - PowerPoint PPT Presentation

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Pharmaceutical Pricing Policy Options: We Are Only Hostage to Our Own Devices Le Len M. . Ni Nichols, Ph.D. Ge George Mas ason Univ iversity Prin rinceton Con onference Prin rinceton, NJ NJ May 26 26, , 20 2016 16 1

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SLIDE 1

Pharmaceutical Pricing Policy Options: We Are Only Hostage to Our Own Devices

Le Len M. . Ni Nichols, Ph.D. Ge George Mas ason Univ iversity Prin rinceton Con

  • nference

Prin rinceton, NJ NJ May 26 26, , 20 2016 16

www.chpre.org

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SLIDE 2

www.chpre.org

The Bargain We Have Struck

  • In the Beginning, … (1928-1940) penicillin was not patented
  • Modernity => incentives are necessary
  • SO, we grant “fixed term” monopolies to spur innovation
  • Patents = 20 years (formerly 17)
  • Exclusivities, Data and Marketing, range from 180 days to

12 years

  • And THEN we HOPE competition ensues to drive price down

and increase access, eventually

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SLIDE 3

Figure 1: Drug market dynamics P1 a b C SW1 = π + CS = P1abC + 0 P2 SW = π + CS d f g SW2 = P2dfC + P1adP2 SW3 = 0 + P1agC Q1 $/Q Q P3 = Q2 Q3

POLICY affects the total and the distribution of SW

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Competition Innovation

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SLIDE 5
  • T. Valoir and L. Paradiso,

“Patent Strategy for Medical Products,” Intellectual Property and Technology Law Journal

  • v. 23 n. 9, Sept 2011.
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Monthly and Median Costs of Cancer Drugs at the Time of FDA Approval 1965-2015

Year of FDA Approval

1970 1980 1990 2000 2010

Monthly Cost of Treatment (2014 Dollars, log scale)

$1 $10 $100 $1000 $10000 $100000 Individual Drugs Median Monthly Price (per 5 year period) Source: Peter B. Bach, MD, Memorial Sloan-Kettering Cancer Center

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SLIDE 7

DRUG SPEND / TOTAL HEALTH SPEND

[VALUE] [VALUE]

2 4 6 8 10 12 1980 2014

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SLIDE 8

SOME POLICY OPTIONS

  • Transparency
  • Require set percent of R&D spend and specific ratio of R&D/marketing (HC)
  • Require disclosure of transaction prices and profits earned overseas (BS)
  • Explain how prices are set, R&D costs, and US tax credits received (BS)
  • Outlaw “pay for delay” deals (BS, and FTC)
  • Mandate Cost-shifting
  • Cap OOP Costs (HC)
  • Price Controls/ “Pure” Regulation
  • Impose price or inflation controls; require bigger “discounts” (HC and CA)
  • Allow importation from Canada (HC and BS)
  • Market-oriented regulatory changes
  • Use reference pricing and relative efficacy determination before sales (Europe)
  • Binding arbitration for truly unique drugs in Medicare
  • Enable Medicare to negotiate (BS: part D; HC: B and D; and TRUMP!)
  • Reduce biologic exclusivity period from 12 to 7 years (HC and TPP)
  • Replace private capital with public capital OR grant prizes
  • Use fast access and diagnostics for better matches (HC, all Rs shorten FDA time)
  • Just say NO to low-value drugs; use indication specific pricing (Peter Bach, ICER)
  • Tie Exclusivity grant to launch price level
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http://drugabacus.org/drug-abacus-tool

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www.chpre.org

Conclusions

  • We are not helpless
  • But we must be Bold

ld