President Trump, like many people, does not understand the real reasons prescription drug costs and innovative therapies are so high, says BIO president and CEO Jim Greenwood.
Greenwood, who joined BIO in 2005 after representing the eighth district of Pennsylvania in the U.S. House of Representatives for 12 years, said, “We need to help the President understand our industry. He’s made comments about pharmaceutical companies getting away with murder.”
Greenwood, in an exclusive interview with WRAL Techwire following his opening address at the CED Life Sciences Conference Wednesday, admitted the President’s viewpoint “scares us. He fell into a trap.”
The president, and many others, do not understand how risky the business is, Greenwood said, “Where 90 percent of our companies fail. The only way to continue to innovate is to attract investment.” And investors eventually want to make money.
Currently, the average cost of bringing a new drug to market is $2.6 billion and about 12 years, Greenwood noted.
So, said Greenwood, when the president says he wants pharmaceutical companies to be transparent and open their books, he has to understand that the cost of innovation has to pencil in the failures.
In reality, he adds, drug prices only rose 2.8 percent last year and hospitals, doctors, insurance companies and pharmacy benefit management companies (PBMs) that are largely responsible for rising healthcare costs. “Three quarters of health insurance premium growth is driven by hospitals and doctors,” Greenwood said.
The vast majority of drugs sold in the U.S. are generics, many of which cost $10 or less. Every year, Greenwood said, tens of thousands of drugs go generic. So pharmaceutical companies only have limited amounts of time to make money on the enormous cost of developing and marketing innovative new drugs. “Then they are dirt cheap forever,” Greenwood said.
Prescription medicines, including retail pharmacy sales and provider‑administered drugs, are only about 14 percent of overall healthcare spending—roughly the same share as in 1960, according to BIO’s new web site on drug cost factsdrug cost facts. http://www.drugcostfacts.org)
Even most prescription drugs are not considered excessively expensive. It is specialty drugs for cancer, hepatitis C, MS, and diabetes that can cost thousands or more.
Greenwood points out that few people pay the retail list price for most drugs. Drug companies made substantial discounts available on 95 percent of drugs last year.
Insurance companies charging co-pays of up to 50 percent for prescriptions are the ones “picking America’s pocket,” Greenwood said. Studies have shown that such co-pays do little to reduce healthcare insurance premiums. Research from Avalere has found that spending for hospital and healthcare provider services are the largest drivers of insurance premium growth—not prescription drugs.
Some new technologies may help shorten clinical trials, often the most expensive final round of drug development costs. Those include tools to identify biomarkers of a drug’s success such as tumor shrinkage or an increase in immune system response rather than their effect on the full course of a disease as end points.
Big data, by tracking safety and efficacy might also help reduce development costs.
As part of its effort to help people understand the cost of prescription drugs, BIO launched its drug facts web site, which includes information on every aspect of the drug industry’s point of view. www.Drugcostfacts.org.
