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Drug pricing debate

April 17, 2017 | A version of this story appeared in Volume 95, Issue 16

Rick Mullin’s article “Behind the EpiPen,” describing the many interests that influence the price of drugs, in this case EpiPens, is telling in what it omits (C&EN, Dec. 5, 2016, page 37). There is no mention of a competitive free market, which is the only means to objectively determine a “fair” price of a product based on the law of supply and demand. As the article makes clear, the U.S. pharmaceutical market is neither free nor competitive. It is so heavily regulated with so many interests vying to set “fair” prices that it is ripe for political meddling.

For example, according to the New York Times, Mylan has “an exceptional track record at influencing government policies, both in Washington and in state capitals” (“EpiPen Maker Lobbies to Shift High Costs to Others,” Sept. 16, 2016). The Times further reports that Mylan is orchestrating a lobbying effort to add EpiPens to a federal list of preventive medical services that would require the federal government, health insurers, and employers to pay the direct costs of EpiPens. This provides Mylan political cover for charging high costs by shifting direct payments away from consumers, who will no longer protest. However, hidden from view of voters, those costs will ultimately be passed on to consumers indirectly.

As for competition, the Food & Drug Administration’s antiquated and expensive approval process inflates drug development costs and limits competitors’ entry into the U.S. market. Consumer protection is the rationale for FDA, but economists and policy-makers have been debating since the 1970s whether FDA does more harm than good.

Europe has several companies competing with EpiPen, whereas in the U.S. EpiPen has only one competitor, Adrenaclick. But competition from Adrenaclick is largely muted because, unlike most other drugs with generic alternatives, when a doctor prescribes an “EpiPen,” FDA currently forbids pharmacists from substituting it with the cheaper Adrenaclick. Oddly, since the controversy, Mylan agreed to provide both a name-brand and a generic alternative. So much for competition.

Crony capitalism cannot exist without crony government. As government bureaucratic regulation grows, so do opportunities and motivations for corruption. Without genuine free-market reforms, the problems in the pharmaceutical industry will not go away. At best they’ll be swept under the rug and hidden from view.

E. Todd Ryan
Clifton Park, N.Y.

I was puzzled by Rick Mullin’s message in his piece “Pushback” (C&EN, Feb. 27, page 30), which, unfortunately, did not give an objective or informed view of biotech/pharmaceutical R&D activities, nor a fair assessment of drug pricing or patient access to new medicines.

The message that the PhRMA organization is conveying in a new ad campaign is not “standard” in the least. In fact, it is about how the industry has evolved, and the progressive message is about informing and educating the public, our government leaders, and patients about how our research and new medicines are dramatically improving health and lives of patients. Public discontent with the industry is actually public misconception—and media and political propagation of these misconceptions. There is a lack of understanding about how new drugs are discovered.

I have visited numerous state and federal legislative offices to tell the story of the scientists, the hours, the years, the technology, the frustration, the innovation, the decision-making, the teamwork, the failures, the cross-disciplinary collaboration, and the excitement that goes into the discovery of new therapies. Key examples include the fact that cancer death rates have fallen dramatically, and the stabilization of chronic diseases with innovative drugs has dramatically reduced health care costs.

Biopharmaceutical companies are the single largest funder of R&D, reinvesting 20 to 34% of revenues to fund the next generation of treatments and cures. John LaMattina [former head of R&D at Pfizer and now a nonexecutive director at PureTech Ventures] called it straight—innovative, curative, life-saving drugs may take decades to develop, and these warrant a systematic, economic analysis for fair pricing. The pricing “mayhem,” as Mullin coins it, comes only from the greed of a few bad players—outside the R&D sector—and Mullin should not lump biotech and pharma R&D organizations into this category.

Another part of the industry did not garner much comment in Mullin’s article: the payer/insurance industry, which often limits access to innovative therapies. Limited coverage and access to prescription medicines results in poorer patient health, reduced quality of life, and higher overall health care costs. Much of the change needed for patient access to new medicines should come from scrutiny of the insurance industry.

What is certain is that patients need new drugs. The promise of future, life-saving drugs is high because biotech and pharmaceutical companies are willing to apply scientific talent, new technology, time, and money to the search. Mr. Mullin, President Trump, Hillary Clinton, and Bernie Sanders should each make an effort to learn about drug discovery and visit an R&D facility. They would meet dozens of dedicated people, scientists, and support staff, and learn about the extraordinary effort and innovative technology behind every “pill in a bottle.”

Stacie S. Canan
Executive Director, Discovery & Development, Celgene Global Health
San Diego, Calif.

Editor’s note: Celgene is a member of PhRMA.

CLARIFICATION: The views expressed in this letter are those of the writer and not necessarily those of Celgene or PhRMA.




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