Will US healthcare reform kill biotech innovation?
Even as market forces have made drug development a longer and more expensive process, the reform of the American healthcare system promises to complicate that process further, creating a new world of uncertainty for biotech and pharma executives.
A panel session on ‘US Healthcare Reform’ organized for BIO-Europe 2009 by Gary Reedy, the Vice President for Biopharmaceutical Public Policy and Advocacy at Johnson & Johnson attracted a standing room only audience for a discussion that demonstrated the worldwide impact such reform poses for the industry.
Gary Reedy of Johnson & Johnson
“Innovation is the heart of our industry,” said Reedy, introducing the debate, “and the promise of biotech is understood by the public to mean our industry can deliver hope in the form of new treatments.”
“While healthcare reform in the United States is meant to create greater access to care and more affordable care, the open question is whether there is a threat to that innovation with reform,” he said.
The Director for Economic Policy with the Biotechnology Industry Organization (BIO), Ted Buckley, said he was unable to present a clear picture of the reform for the gathered executives.
“Here we are in November and I am going to hear myself say again that it is still too early to tell what the US healthcare reform is going to mean,” he said.
Ted Buckley of BIO
“We have had some significant surprises in the past couple of weeks, for example with the public option plan that was definitely not going to be part of the Senate’s proposed reform, we are now told that it is definitely fixed in the Senate’s text. What is going to be the impact of the reform on biosimilars? What is going to be the impact of comparative-effectiveness research? It is still too early to tell.”
His own concern, he said, “Is that there has been a lot of talk in the healthcare reform debate about access and availability of care and quality of care. Yet there has not been enough discussion of innovation.”
John Andrews, President and Head of R&D for NeurAxon in Toronto was unequivocal in saying US healthcare reform will impact innovation in biotech.
“It is not so much that there is going to be a change to the system as how that system is going to be implemented,” he said. “Currently the US offers the quickest access to market for companies like mine, and if there is going to be a change to reimbursement rates, and if there is going to be reimbursement at different rates, then it is certain to extend timelines for getting to the market and increase costs.”
“Placing a strong emphasis on the use of generics also poses a threat,” he said.
“Although generics do have a role, these are 20-year old drugs, and that is not good enough. It requires innovation in a system to get new drugs. And what we need is to make better drugs that are truly different, not just new and improved or me-too.
Brian Atwood with Versant Ventures offered the investor perspective saying, “To this point the industry seems more linear, making it a bit easier to look forward and project what is going to happen. Healthcare reform makes that just that much harder to read the crystal ball.”
Steve Holtzman of Infinity Pharmaceuticals
“Near term I am optimistic,” he said. “But what effect is healthcare reform going to have on the center of the universe, the big pharma companies, with the threat of price control pressures? Today between 15 percent and 20 percent of sales is devoted to R&D. Under price pressures, looking five years out, will big pharma decide it is no longer able to do that? Where is the tipping point?”
The CEO for Infinity Pharmaceuticals, Steve Holtzman, broke ranks with other biotech executives and set off a debate among panelists saying, “If your goal is to develop innovative medicines that did not exist before, addressing disease with mechanisms that did not exist before, then healthcare reform is going to be good for you.”
“Frankly to hear the idea that there is a threat in healthcare reform makes me sick. The whole intention behind healthcare reform has consistently been to get medicines to the people who need them and who are not receiving them now,” he said.
“Creating a good space in the US for generics actually creates an opportunity for premium priced drugs where there are new medications that really are differentiated,” he said. “With this reform it will become incumbent on us to make medicines that really do make that difference and it makes the pharmaceutical industry come to us for products and technologies that do make a difference.”
