Making Medicines Affordable A National Imperative (2018) / Chapter Skim
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Appendix A: A Dissenting View - Michael Rosenblatt and Henri Termeer
Appendix A: A Dissenting View - Michael Rosenblatt and Henri Termeer
Pages 159-178
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From page 159... ...
The main text of this report underwent further revisions in response to review, but Rosenblatt made the d ecision not to further revise this dissenting viewpoint in order to retain the original spirit and authentic co-authorship of this piece. Termeer and Rosenblatt emphasized that they wrote this piece not with the intent of solely presenting an "industry perspective." Rather, their intention was to provide a balanced view derived from insights and experiences in more than one sector, and to reflect their shared commitment to always place patients first.
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From page 160... ...
It is important to note that the key AIDS therapies originated from the U.S. biopharmaceutical industry.
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From page 161... ...
Inventing a new drug is the longest, most expensive, most regulated, and most risky undertaking of any product-development process in any industry. Nine out of 10 drug candidates that enter clinical trials fail, and only 2 out of 10 recover the cost of capital.
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From page 162... ...
Two-thirds of new drugs in the past decade and more than 80 percent of the drugs in the world's biopharmaceutical pipeline today emerge from the United States. The biopharmaceutical industry is one of the few sectors of the national economy that has a favorable balance of trade.
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From page 163... ...
expenditure on Alzheimer's will balloon to $1 trillion by 2050, siphoning resources from education, social welfare, defense, roads, and other vital areas. Does anyone seriously believe that the impending crisis can be averted by building more efficient hospitals, better health care delivery systems and nursing homes, and higher-quality home care?
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From page 164... ...
In comparison, the revenues of just one cancer hospital in the United States, Memorial Sloan Kettering in New York, was $3.6 billion. Most of the current discussion on drug prices focuses selectively on the list price of a drug on the day of its introduction into the market.
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From page 165... ...
THE FINANCIAL PERFORMANCE OF THE BIOPHARMACEUTICAL INDUSTRY During our deliberations, the committee sought information on the financial performance of the biopharmaceutical industry. Graphs depicting performance over the most recent 16-year period (with comparison to a cross-section of all U.S.
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From page 166... ...
equities and includes 500 leading companies that capture approximately 80 percent of market capitalization. The S&P Pharmaceuticals Select Industry Index comprises stocks in the S&P Total Market Index that are classified in the standard pharmaceuticals sub-industry of the global industry classification.
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From page 167... ...
The notion that forcing patients to have "skin in the game" for prescription drugs will lead to better outcomes and less health expenditure is controversial at best and has been proven incorrect for some common chronic diseases (e.g., diabetes)
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From page 168... ...
Competition drives down the cost of drugs, as does the expi ration of patent protection. The research and development–driven biopharmaceutical industry is fundamentally different from the generic drug industry.
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From page 169... ...
5.00 0.00 20 0 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 0 0 0 0 0 0 0 0 0 0 20 20 20 20 20 20 20 –5.00 20 20 20 20 20 20 20 20 Year FIGURE A-1 Comparison of the operating margin trend for the S&P 500 and S&P P harmaceuticals Select Industry, 2000–2016. SOURCE: Data retrieved from Bloomberg Terminal .NetFrameworkV4 (March 2017)
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From page 170... ...
They now receive approxi mately 40 percent of the revenues of the total payment for drugs. Their research and development investment and risk over time do not compare with that of the biopharmaceutical industry, yet they enjoy almost half the revenue from the sale of prescription drugs.
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From page 171... ...
This new environment would mirror the private market, which has multiple buyers, each of which negotiates independently. However, allowing all government health plans to negotiate as a single block would establish a near monopoly that would translate into functional price controls.
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From page 172... ...
And the biopharmaceutical industry in the United States would be better able to provide drugs at or below cost to the poorer regions of the world.
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Each one of the following recommended actions listed below shares common features. If implemented, they would: • Increase uncertainty about recovering already high-risk research and development investment.
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• Decrease the ability to finance existing biotechnology companies. • Decrease investments in research and development, leading to fewer new therapies and poorer health, as well as an overall long term increase in health care costs.
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From page 175... ...
Such action would be an extraordinary precedent with implica tions for many industries, not just the biopharmaceutical industry. Marching in, if implemented, would chill for many years, perhaps for decades, the inclination to invest in research and develop ment and to create new biotechnology companies.
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From page 176... ...
We endorse or modify those recommended actions that promise to promote health while generating economic benefit, especially for patients, all the while stimulating research and development investment for the future. However, in our view, several of the report's recommended actions would produce a decline in research and development investments, ultimately leading to increases in health care costs.
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From page 177... ...
We wrote this dissent in the hope that it will be favored as a more attractive alternative to achieving the goal of ensuring patient access to affordable medicines.
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