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Perspectives on Specialty Drug Pricing

Posted by Matt Breese on Sep 23, 2015

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As Tracy Station from Fierce Pharma puts it in a recent article, “this could go down in pharma history as the week that drug pricing met pop culture.” News has been buzzing with phrases like “drug pricing” and “price reform” in a few different contexts.

Earlier this week, the story of Turing Pharmaceuticals and its overnight increase in the pricing of their drug from about $13 to $750 per tablet illuminates one of the key reasons why this is such a hot topic. While the company describes this action as an attempt to stay in business by driving more revenue for R&D from a low volume product, others believe this is an extreme example of the absolute power that pharma wields over drug pricing.

Politicians like Hilary Clinton are taking strong stances on stories like these and laying out plans for managing swelling drug prices. Sanders also proposes legislation that would enforce more disclosure from pharmaceutical manufacturers on manufacturing costs and profits to shed light on the derivatives of the sticker price that patients see.

Allergan’s CEO Brent Saunders points out that this is nothing new; pharma constantly deals with issue around rising drug prices and will continue to have close involvement in any movement that could affect the way pharmaceuticals are priced. The industry will weather “storms of criticism” with a powerful presence in Washington, putting the focus on the life-saving medications they churn out at a rapid pace. Drugmakers attribute a great portion of this pricing pressure to positive forces like increasing pharma revenues and aggressive innovation.

When it comes to the average citizen, a recent survey from Kaiser Family Foundation indicates that ¾ of Americans consider medication costs unreasonable. According to the survey, most Americans believe that pharma is simply looking to make a buck, but more in-depth analysis reveals underlying factors and highlights the huge percentage of patients switching to generic products in the past decade. CNN’s article titled “Do million-dollar medicines deliver enough bang for the buck?” digs into some of the pricing drivers for 5 of the costliest therapeutic areas.

Reactions to PCSK9 inhibitor pricing serve to highlight the payer and PBM perspective on increasing drug prices. PBMs, like Express Scripts, are in fierce negotiations with pharma and fighting back on proposed pricing. Many believe that the current payer sentiment tracks back to the Sovaldi pricing case study, changing the way that price negotiations occur and resulting in PBMs becoming more aggressive with decisions on how to cover medications. Come October, Express Scripts’ decision on how PCSK9 inhibitors will be covered on or off of formulary could have massive impacts on future specialty launches.

Reach out to us on Twitter to discuss your thoughts on the factors on drug pricing and stay tuned for more updates on the specialty pharma “price reform” (or lack-there-of)

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Topics: Specialty, Industry Trends