Misplaced fear of healthcare reform
When the specter of healthcare reform last raised its head, in 1993, the biopharmaceutical industry believed it saw the face of the enemy in Hillary Rodham Clinton. Today the former first lady is facing off the likes of Vladimir Putin as Secretary of State, and the industry is once again quaking at the prospect of price controls, comparative effectiveness studies and evidence-based medicine.
This fear is misplaced, said R. Adams Dudley, a professor of Medicine and Health Policy at the University of California at San Francisco. Addressing a panel discussion on the implications of healthcare reform for the biotech industry, Dudley pointed out that drugs actually account for a relatively small part of total healthcare spending, and typically very little of the waste.
“I don’t view the expenditures on drugs as a zero sum game, but really as a fairly small part of healthcare expenditures, and the most cost effective part of healthcare,” said Dudley. “I know you’re feeling a bit beat up, and you guys have done a few things that didn’t reflect too well on the industry. But as a whole, if you were to step back and pick an area, let’s say cardiology, and say what’s the relative contribution and the relative cost, drugs win out almost every time.”
Citing multiple studies showing that physicians and hospital staff use the wrong procedures a startling percentage of the time, or use procedures with little evidence of efficacy, like arterial stents, Dudley said comparative effectiveness studies and evidence-based medicine will reflect well on drugs. “If you’re feeling attacked it’s because the overall assessment of the healthcare system in this country is overwhelmingly negative,” he said. “The processes that we do aren’t right a lot of times, and the outcomes aren’t as good as they should be, but at least it’s really expensive.”
For a real world perspective from a country that already has enacted significant healthcare reform, Geoff Collett, Director of business development for AstraZeneca Canada described that country’s system, which he said is much less draconian than some American politicians have suggested.
“Our system’s not perfect, but despite the horror stories dished out by people like Mitch McConnell, your senator from Kentucky, we enjoy pretty good outcomes,” said Collett, citing polling data showing that 87 percent of Canadians are satisfied with their healthcare system, compared with 60 percent in the USA.
Canada has price controls for patented drugs, based on the median price charged in seven other markets: France, Germany, Italy, Sweden, Switzerland, UK and USA. The result is prices about 30 percent lower than in the USA, which has the highest drug prices in reference group, and Collett acknowledged that drug companies face a greater challenge pricing their products in Canada.
“Obtaining pricing for drug products in a cost conscious system is very difficult, the regulatory system is complex, and the onus is on the innovator to prove better outcomes,” Collett said. “The goal is to ensure that Canadians are receiving value for money and that innovators are not exploiting their exclusivity to drive prices up.”
With Max Baucus’ release of the Senate Finance Committee’s healthcare bill today, reform took one step closer to reality. But the committee still has to vote on the plan, even before it goes to the complete Senate, and whatever emerges from that body will have to be reconciled with the more aggressive plan expected from the House of Representatives. In other words, it’s still by no means clear what the reform will actually look like.
But panelists found consensus in the expectation that reform will include a requirement for comparative effectiveness studies, which was already included in the stimulus package passed by Congress. That means that in order to get reimbursement from Medicare, drugs will have to show not only efficacy, but also an improvement over the established standard of care. It will also likely incorporate evidence-based medicine, which could necessitate ongoing clinical trials, even after approval, to show that drugs really do benefit patients.
“The bill is written in English, not law, but for me that means we don’t have the details, we don’t know where the devil really is,” said Jayson Slotnik, an attorney with Hogan and Hartson in Washington DC. “Even without the big layers of price controls or single payer there are a lot of other places where death by a thousand slices can occur,” he said. For biopharmaceutical companies, “the cost of doing business will increase.”
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