pharmaceutical pricing · for in-class use only – northeastern law school – do not circulate or...

ForIn-ClassUseOnly–NortheasternLawSchool–DoNotCirculateorCite--@akesselheim2019

PharmaceuticalPricing

AaronS.Kesselheim,M.D.,J.D.,M.P.H.Professor,HarvardMedicalSchool

Director,ProgramOnRegulation,Therapeutics,AndLaw(PORTAL)[email protected]

September,2019

PORTAL Program On Regulation, Therapeutics, And Law



PORTAL

Program On Regulation,

Therapeutics, And Law

Disclosures•  NooneinourDivisionhaspersonalfinancialrelationshipswith

anypharmaceuticalcompany

•  CurrentresearchfundingfromArnoldVentures,Harvard-MITCenterforRegulatoryScience,AnthemPublicPolicyInstitute,OpenSocietyInstitute,EngelbergFoundation–  Pastresearchfunding(<3yrs)fromFDAOfficeofGenericDrugsandDivof

HealthComm,GreenwallFoundation,CommonwealthFund


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MOOCWeek1:TheFDA—itshistory,publichealthrole,andhowitmakestherulesaffectingtheUSprescriptiondrugmarket(specialguest:PeggyHamburg)Week2:Theprocessofdiscovering,testing,andapprovinginnovativedrugs(specialfeature:mockAdvisoryCommittee)Week3:Thecostofprescriptiondrugs,includingthefactorsaffectingadrug’smarketexclusivityperiodandtheavailabilityanduseofinexpensivegenericdrugs(specialguest:DavidMitchell)Week4:Thepromotionofprescriptiondrugsbypharmaceuticalmanufacturerstophysicians(e.g.,viasalesrepresentatives)andpatients(e.g.,viadirect-to-consumeradvertising)(specialguests:SteveWoloshinandLisaSchwartz;LeezaOsipenko,NICE;ShahramAhari)Week5:Post-approvalevaluationofprescriptiondrugs(specialguests:GeralDalPan,FDA;RichardPlatt,Sentinel)Week6:CurrentdebatesoverthescopeofFDAregulation:Dietarysupplements;stemcelltherapies;FDAregulationofemergingtechnologies(specialguest:DanCarpenter)

Click here to view trailer


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Policydilemma•  Drugsareamongthemosteffectiveandcost-effectiveinterventionsinmedicine

•  Drugindustryplaysimportantroleinbringingproductsforward,whichcanrequiresubstantialresources

HOWEVER…•  DrugpricesintheUScontinuetorise,whichcanmakebreakthroughsunaffordableformanyofourpatients–  Badclinicalconsequences– DriverofUShealthcarespending


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PrescriptionDrugSpendingintheUS•  Sales:$456billionin2017

–  22%ofhealthcarespending(IMS)–  19%ofMedicarespending(MEDPAC)–  19%ofemployer-basedinsurancebenefits(Kaiser)

•  Internationalpercapitacomparisons–  US:$858;avg19industrializedcountries:$400

-OECD(2015)Schumocketal,AJHP2018;Kesselheimetal,JAMA2017


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Brand-NameDrugs•  10%prescriptions,72%ofspending•  164%increaseinpricefrom2008-2015ofmostcommonlyusedbrand-namedrugs– 12%increaseinCPI,28%increaseinaggregatehealthcarespending


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Notlimitedtobrand-namedrugs

•  Among>21,000genericproducts(2008-2015),400(2%)increasedmorethan1,000%


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Clinicalconsequences•  MorepatientshavecoverageduetoMedicaredrugbenefitandACA,cost-containmentstrategieshaveshifteddrugexpensesontopatients’shoulders– Medicaidprogramsfacinghigherdrugcostshavehadtocutbackonotherservicesorhavetightenedeligibilityrequirements

•  25%ofpatientsin2016reportedthattheyoranotherfamilymemberdidnotfillaprescriptioninthelastyearduetocost

•  Patientsprescribedacostlybrandedproductratherthanamoreaffordablegenericalternativeadherelesswell,andhaveworsehealthoutcomes

Shranketal,ArchivesIntMed2006;Gagneetal,AnnalsofIntMed,2014;DiJulioetal.,KaiserFamilyFoundation


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Explanations•  1.“Highpricesdriveinnovation”

– …butinnovationthatleadstotransformativenewdrugproductsisoftenperformedinacademicinstitutionsandsupportedbypublicinvestmentsuchastheNationalInstitutesofHealth

– …butproportionoflargepharmaceuticalcompanyrevenuesthatgoestoR&Dis10-15%

Kesselheimetal.,HealthAffairs,2015


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Evensmallerifonlyinnovativeproductdevelopmentisconsidered“Oneofthegreatmythsoftheindustry”thatitcosts$1Btodevelopadrug

(CEOGlaxoSmithKline,2014)

Kesselheimetal.,JAMA,2016

SalesandR&Dexpendituresof10largestdrugmanufacturersin2014


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Explanations

•  1.Highpricesdriveinnovation•  2.It’stheFDA’sfault


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MeetingFDA’sever-more-tolerantefficacystandard

•  1/3newdrugsapprovedonthebasisofasinglepivotaltrial•  2/3approvedbasedonstudieslasting6mosorshorter•  1/2approvedbasedonsurrogatemeasures(vsactual

clinicalendpoints)•  Averagenumberofpatientsstudiedtobringnewdrugto

market–  1998-2001:>5,000–  2000-2010:1,377

•  1,708(IQR:968-3,195)fornon-orphan-designateddrugs•  438(IQR:132-915)fororphan-designateddrugs

Downingetal.,JAMA2015;TuftsCenterfortheStudyofDrugDevelopment,2002;Duijnhovenetal.,PLoSMedicine,2013


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Therapeutics, And Law Robertsetal.,HealthAffairs,2011,Downingetal.,NEJM,2012

FDAspeed


>2/3ofnewdrugsapprovedviaexpeditedpathwayin2017


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Explanations

•  1.“Highpricesdriveinnovation”•  2.“It’stheFDA’sfault”•  3.“Highpricesreflectvalue”


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Fixed-dosecomboscovering7therapeuticareasCardiovascularExforge=amlodipine+valsartanDiovanHCT=valsartan+HCTZBidil=isosorbidedinit+hydralazineEdarbyclor=Azilsartan+chlorthalidoneExforgeHCT=amlodipine+valsartan+HCTZMicardisHCT=telmisartan+HCTZLotrel=amlodipine+benazeprilHyzaar=losartan+HCTZTarka=trandolapril+verapamilCaduet=amlodipine+atorvastatinAvalide=irbesartan+HCTZSimcor=niacin+simvastatinAdvicor=niacin+lovastatinBenicarHCT=olmesartan+HCTZAzor=olmesartan+amlodipineTribenzor=olmesartan+amlodipine+HCTZ

PainVimovo=naproxen+esomeprazoleDuexis=ibuprofen+famotidineArthrotec75=diclofenac+misoprostolNorco=hydrocodone+acetaminophenVicodin=hydrocodone+acetaminophenVicodinES=hydrocodone+acetaminophenVicodinHP=hydrocodone+acetaminophenPercocet=oxycodone+acetaminophen

EndocrineActoplusMET=pioglitazone+metforminFosamaxPlusD=alendronate+VitD3

AntibioticPylera=bismuth+MNZ+tetracycline

GastrointestinalZegerid=omeprazole+sodiumbicarb

NeuroNuedexta=dextromethorphan+quinidineStalevo100/150=carbidopa/levodopa/entacaponeNamzaric=memantine+donepezilTreximet=sumatriptan+naproxen

UrologicJalyn=dutasteride+tamsulosin

Sacks,Lee,Kesselheim,Avorn,JAMA2018

>600,000Medicarebeneficiariesin2015~$825millioninexcessspendingin2015inMedicarealone


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ICERValue-BasedPricingin2017Drug ListedPrice ICERValue-

basedPriceDifference(%)

Sacubitril/valsartan(Entresto)

$4,560/yr $4,168 9%

PCSK9Inhibitors

alirocumab:$14,600/yrevolocumab:$14,100/yr

$2,177 85%

Carfilzomib(Kyprolis)

$1,862/unit $673 64%

Ixazomib(Ninlaro) $2,190/unit $181 94%


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Explanations

•  1.“Highpricesdriveinnovation”•  2.“It’stheFDA’sfault”•  3.“Highpricesreflectvalue”•  It’sbecauseweallowpharmaceuticalcompaniestochargewhateverthemarketwillbear,andatthesametimepermitstrategiesthatundercutcompetitionorhinderpayors’abilitiestoprovidecounterweightsthatmightreducehighprices


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Whatcanwedoaboutit?

•  Acombinationofdifferentissues•  4majorperiods

– Preapproval– Marketexclusivityperiod– Transitiontogenericdrugs– Multisourceproductionperiod


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Period1:Brand-namemarketexclusivity

•  Allnewdrugsguaranteed~6-7yearsofmarketexclusivity–nocompetition– Newantibioticsget11-12years– Biologicsget12years

•  Drugsprotectedbypatentslasting20years•  Medianmarketexclusivityforsmall-molecule(non-biologic)drugsis12.5years– 14.5yearsforfirst-in-classproducts

Wang,Liu,Kesselheim,JAMAIM,2015


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Limitsonpublicpayors…•  FDAdoesnotregulatedrugpricesoranyeconomicsoftheindustry•  Medicare(45M,29%ofnation’sdrugexpenditure)cannotusea

nationalformularyornegotiatedrugprices–  6protecteddrugclasses

•  Medicaid(75M)cannotexcludemostFDAapproveddrugsfromcoverage–  Getsautomaticrebate;individualstatescannegotiatesupplemental

rebates•  VAcanuseformularyexclusionstonegotiatedirectlywith

manufacturers–  Initialprices40%belowthosepaidbyMedicarePartDplans–  VApriceexcludedfromMedicaidrebatecalculation


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…andprivateinsurers,too•  ~200millionpeople•  Annualdeductibles,co-payments,co-insurance(“out-of-pocket”costs)

•  Formularies,administeredbypharmacybenefitmanagers

•  BUT…lackofcomparativeeffectivenessinformationatthetimeofapproval

•  Sampleof197drugsapproved2000-2010:51%hadCEinfoattimeofapproval,including33%ofdrugsforwhichothertreatmentoptionsexisted

–  Statelawsrequiringcoverageofcertainprotecteddrugs•  NCSL2009:36/50statesrequirecoverageofoff-labeluseofcancerdrugs


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CouponsandPatientAssistancePrograms

RossandKesselheim,NEJM,2013


PBMs… goodorbad?

•  Aggressivepricenegotiationisnotthenorm(feescanbebasedongivenpayer’sspendingondrugs)

•  Leadtoincreasesin“listprices”

•  Negotiaterebatesfrommfrs,discountsfromretailers

•  Encourageuseofgenericsandcheaperbrands

•  Patienceadherence,reducewaste


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Solutions:Medicarenegotiation•  Competitivelicensing(HR1046)

–  MedicarePartDpricenegotiation,takingintoaccount:•  Comparativeclinicalandcost-effectiveness•  Budgetaryimpactofprovidingcoverage•  Unmetneed•  Globalsalesrevenue

–  Ifunabletosuccessfullynegotiate…“Secretaryshallauthorizetheuseofanypatent,clinicaltrialdata,orotherexclusivitygrantedbytheFederalgovernmentwithrespecttosuchdrugastheSecretarydeterminesappropriateforpurposesofmanufacturingsuchdrugforsaleunderaprescriptiondrugplanorMA–PDplan.Anyentitymakinguseofacompetitivelicensetousepatent,clinicaltrialdata,orotherexclusivityunderthissectionshallprovidetothemanufacturerholdingsuchexclusivityreasonablecompensation

•  Mandatoryarbitration


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OtherProposals•  InternationalPricingIndex(ANPRM,fall2018)

–  PartBdrugpricescomparabletoothereconomicallysimilarcountries(2020-2025)

– Allowprivate-sectorvendorstonegotiatepricesfordrugs•  EliminatingtherequirementthatMedicarecoverallFDA-approvedproductsin6drugclasses(Blueprint)

•  EliminateMedicaidrebatecap(Blueprint)–  ~$100millioninforegonesavingsin2017

•  Eliminatecertaindrugrebatesbyrevokinganti-kickbackstatutesafeharborforrebatespaidbydrugmfrstoPBMs,PDPs,andMedicaidMCPs(Jan2019)

SeeSarpatwariandKesselheimJAMA2019;SarpatwariAvornKesselheimJAMA2018


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Otherideas

•  Inflation-basedrebatesinPartB– CBOestimate$1.5Bsavingsfrom2019-2028

•  Shiftdual-eligiblepatientsbackfromMedicaretoMedicaid– CBOestimate$150Bsavingsfrom2019-2028

•  ShiftPartBdrugstoPartD

ForIn-ClassUseOnly–NortheasternLawSchool–DoNotCirculateorCite--@akesselheim2019STRICTLY CONFIDENTIAL

Part B to Part D shift Rx prices were >46% lower in other high-income countries

See Hwang TJ, Jain N, Lauffenburger JC, et al. Analysis of Proposed Medicare Part B to Part D Shift With Associated Changes in Total Spending and Patient Cost-Sharing for Prescription Drugs. JAMA Intern Med 2019. [Epub ahead of print]

International Price Comparison for Part B Drugs

•  Foreign prices were available for 69 drugs (out of 75 total in study cohort)

•  Drug prices in high-income countries were 46-60% lower than those in Part B

•  US to foreign price ratio was 1.7-2.2x (consistent with ASPE’s est. of 1.8x based on sample of 25 drugs)

Insurers (passive) Gov’t Insurers Gov’t;

insurers Gov’t Primary negotiator

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Median Weighted Average


“Outcomes-BasedContracts”?

Advantages•  Opportunitytopayfordrugsonlyinpatientsinwhich“appeartowork”

Limitations•  Outcomesmeasurementlimitations(short-term,observableinclaimsdata,surrogates)

•  Canaccountforinprice-setting

•  Costlytoimplement•  Unclearapplicationtopatientout-of-pocketcosts

SeeleyandKesselheim,CommonwealthFundIssueBrief,2017


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Moreextremesolutions•  UsecurrentpathwaysforUSgovernmenttointerveneforessentialpatent-protectedmedicines– Ex.:Section1498“governmentpatentuse”forareasonableroyalty(ex:ciprofloxacin/anthrax)

– “March-inrights”

Kapczynski and Kesselheim, Health Affairs, 2016; Treasure, Avorn,Kesselheim,JAMA2016


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Stateinterventions•  Medicaidformulary1115waiver–triedbyMassachusetts,blockedbyCMS

•  DrugpricegouginglawinMD–blockedbyfederalcourt•  CaliforniaAB-265–preventdrugcouponusewhengenericavailable

•  Transparencylaws(VT,NV,CA,OR,CT,ME)•  NY:DOHauthorizedtoidentifyandreferhigh-costdrugstoadrugutilizationreviewboardforadeterminationofatargetrebateamount(2017)–  ImplementedinMassachusettsin2019

•  LouisianahepCdrugpurchase

SeeSommersandKesselheim,NEJM2018;Hwang,Kesselheim,Sarpatwari,JAMA2017;Greene,NEJM2017


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Physician/patient-levelinterventions•  Re-evaluatewidespreaduseofdrugcoupons,DTCA,freesamples– MandatedisclosureofpricesinDTCA(Blueprint)

•  Integratingvalue-basedprescribingintophysicians’professionaleducationorthroughelectronicmedicalrecordpoint-of-carereminders

•  AccountableCareOrganizationscanprovideanopportunitytopairhealthservicescostsanddrugcostssothatphysiciansbenefitfromprescribingdrugsoptimallyratherthanfromprescribingdrugsthatdonotaddvalue

•  Produceandactivelydisseminatebetterinformationabouttheclinicalandeconomicvalueofdrugs

Kesselheimetal.,JAMA,2016


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Academicdetailing•  Goal:Toclosethegapbetween:

•  thebestavailableevidence•  actualclinicalpractice

•  …sothatclinicaldecisionsarebasedonlyonthemostcurrentandaccurateevidenceon:•  Efficacy•  Safety•  Cost-effectiveness

• Oftensupportedbyapublichealthagencyoranon-profithealthcaresystemlikeKaiserthatisinterestedinimprovingclinicaloutcomes


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Period2:Brand-to-generictransition•  Genericdrugsaretheonlytypeofcompetitionthatconsistentlyandsubstantiallylowersprescriptiondrugprices–  Emergeaftermarketexclusivityperiodends(lawsuitsinitiatedbygenericdrugmanufacturer)

– AbbreviatedFDAapprovalprocess,stateDrugProductSelectionlawsfacilitateautomaticsubstitution

•  Barrierstogenericdrugentry–  Patenttermrestoration,pediatricexclusivityextension–  Pay-for-delaysettlementsoflawsuits–  “Lifecyclemanagement”

•  Secondarypatenting•  Producthopping

Kesselheimetal,JAMAIM,2017;Vokingeretal,JAMAIM,2017


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Secondarypatenting

AminandKesselheim,HealthAffairs,2013

•  Lopinavir/Ritonavir–  2patentscoveringactiveingredients–  49patentscoveringdifferentcompositions/formulations–  22patentscoveringdifferentintermediatecompounds–  4patentscoveringdifferentpolymorphs–  6patentscoveringdifferentprodrugs–  31patentscoveringdifferentmethodsoftreatmentofHIVandotherdiseases

•  Potentialtoextendmarketexclusivityby12yearsormore


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Therapeutics, And Law CapatiandKesselheim,JMCP,2015

Producthopping•  2003:FDAapprovesmemantine(Forest)•  2010:FDAapprovesmemantineXR(Forest)•  2013:ForestlaunchesmemantineXR•  Feb2014:ForestannouncesanticipatedAugustdiscontinuationofmemantine

•  July2015:Expirationofmemantinepatentterm,anticipatedgenericlaunch

•  2029:ExpirationofmemantineXRpatents


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“Tertiary”patents

Beall&Kesselheim,NatureBiotechnology,2018

•  Drugdeliverydevices–  Inhalers,injectorpens,patches

•  2000:42drug-devicecomboproducts,85associatedpatents(34%tertiary)

•  2016:127drug-devicecomboproducts,844patents(57%tertiary)

ForIn-ClassUseOnly–NortheasternLawSchool–DoNotCirculateorCite--@akesselheim2019(Provisionalapp)

Patentappfiled

YEAR

-1

Patentissues

INDapproved

NDAfiled

MarketexclusivitytermNDAapproved

MarketExclusivityPeriod

Genericentry?

0 3 6 9 12 15 18 21 24 27

HWAExcl PTR

OrphanDrugAct

“Later-issued”(OrangeBook-listed)patents

ForIn-ClassUseOnly–NortheasternLawSchool–DoNotCirculateorCite--@akesselheim2019(Provisionalapp)

Patentappfiled

YEAR

-1

Patentissues

INDapproved

NDAfiled

MarketexclusivitytermNDAapproved

MarketExclusivityPeriod

0 3 6 9 12 15 18 21 24 27

HWAExcl PTR

OrphanDrugAct

“Later-issued”(OrangeBook-listed)patents

Genericentry!

ParaIVchallenge


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Otherstrategies•  Restrictionsondrugdistribution

– 150inquiriestoFDAfromgenericmanufacturersunabletoobtainsamples

•  Citizenspetitions– 2011-2015:124CPsrelatingtogenericapplications,87%frombrand-namemanufacturers(92%ultimatelydenied)

•  Vancocintablets:24CPsfrom2006-2012


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Solutions•  CREATESAct


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CREATES(HR965)•  AneligibleproductdevelopermaybringacivilactionagainstthelicenseholderforacoveredproductseekingreliefunderthissubsectioninanappropriatedistrictcourtoftheUnitedStatesallegingthatthelicenseholderhasdeclinedtoprovidesufficientquantitiesofthecoveredproducttotheeligibleproductdeveloperoncommerciallyreasonable,market-basedterms–  IfsubjecttoREMS/ETASUthenneedsformalcoveredproductauthorityfromSecretaryofHHS

– Defenseifnotmanufacturingornoinventory–  Courtwillawardfines


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•  PatentTrialandAppealsBoardtore-examinegrantedpatentsbeforelitigation


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PatentTrialandAppealsBoard•  2011AmericaInventsAct

–  Thereis“agrowingsensethatquestionablepatentsaretooeasilyobtainedandaretoodifficulttochallenge.”

•  Administrativebodyallowinganypartytochallengevalidityofpatentedclaims–  Patentrelatingtotheanestheticagentpropofol(Diprivan),butonethatcoverstherubberstopperusedinthedrug’sholdingcontainer,notthedrugitself

•  Advantages:1.  StartswithPTAB,notexaminer2.  PTABmustdecidewithin12months3.  Allowsforlimited“discovery”(esp.depositions)4.  BothpartiescanappealtoFed.Cir.5.  Lesscostly($500Kvs$5.5M)

Source: H.R. Rep. No. 112-98(I) (2011) (House of Representatives Report).


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Therapeutics, And Law 47

DisappointingApplicationtoDrugPatents

Darrow,Beall,Kesselheim,AppliedHealthEconomicsandHealthPolicy,2018

•  274(76%)filedbygenericdrugmanufacturers•  Among89FWDs,38(43%)hadallpetitionedclaimsinvalidated,44

(49%)hadnoneinvalidated,and7(8%)hadsomeinvalidated–  Relatedto25OB-listedpatents:2activeingredient,7formulation,and16other(inclmethodsofuse)

•  38decisionswithallinvalidatedassociatedwith18drugs,9ofwhichhadothernon-institutedpetitionsand7hadotherOB-listedpatents


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•  PatentTrialandAppealsBoardtore-examinegrantedpatentsbeforelitigation

•  ChangerulesrelatedtoCPs

•  Blockpay-for-delaydeals


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ProtectingConsumerAccesstoGenerics(HR1499)

•  UnlawfulforanNDAorBLAholderandasubsequentfilertoenterinto,orcarryout,anagreementresolvingorsettlingacoveredpatentinfringementclaimonafinalorinterimbasisifundersuchagreement—(1)asubsequentfilerdirectlyorindirectlyreceivesfromsuchholderanythingofvalue,includinganexclusivelicense;and(2)thesubsequentfileragreestolimitorforegoresearchon,ordevelopment,manufacturing,marketing,orsales,foranyperiodoftime–  Exceptifthevalueiscompensationforothergoods/servicesthatthesubsequentfilerhaspromisedtoprovide


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Moreideas•  OrangeBookreform

– Nodevices– Removalofpatentrelatingtoolderformulations

•  PurpleBookreform– Listpatentinformation

•  180-dayexclusivitychanges(FAIRAct,BLOCKINGAct)

SeeSommersandKesselheim,NEJM2018;Hwang,Kesselheim,Sarpatwari,JAMA2017;Greene,NEJM2017


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Period3:GenericCompetition

Dave,Hartzema,Kesselheim,NEJM,2017


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Lackofvibrantgenericdrugmarket

Gupta,Kesselheim,etal.,JAMAIM,2016


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Solutions•  Importgenericsfromwell-regulatedmarkets

– Whenpricespikesareequivalentto‘shortages’

Fralick,Avorn,Kesselheim,NEJM2017


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Importation?•  FDAalreadyexercisesenforcementdiscretiontorespondtoshortages

•  2003MedicareModernizationActauthorizedimportfromCanadaifHHSSecretarycertifieddrugsassafe

•  2012FDASafetyandInnovationActgavetheFDAauthoritytoenterintoagreementstorecognizedruginspectionsconductedbyforeignregulatoryauthoritiesiftheFDAdeterminedthoseauthoritiesarecapableofconductinginspectionsthatmetUSrequirements

EngelbergAvornKesselheim,HealthAffBlog,2016


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AffordableandSafePrescriptionDrugImportationAct

•  Canadianpharmaciesandwholesaledistributorscanbecome“certifiedforeign”sellersbypayingauserfeeand:

–  BeinginCanada–  Beingadistributorofprescriptiondrugsofferedforimportation–  Beingestablishedfor5yearsormore–  Providingmedicationsonlyifthereisavalidprescription–  BeingincompliancewithapplicableCanadianlawsandregulations–  Conductingregularqualityassurance–  Allowingregularlaboratorytesting–  Notifyingallpartiesofproductrecalls–  Havingaprocessforresolvingruleviolations–  NotsellingproductsthatareillegalinCanada–  MeetingadditionalcriteriaimplementedbytheHealthandHumanServicessecretary

•  GAOstudyofoutcomesafter18mos,expandtoincludeotherOECDcountriesafter2years

Fralick,Avorn,Kesselheim,NEJM,2017


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Practical?

BollykyandKesselheim,BrookingsInstitution,2017


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Solutions•  Importgenericsfromwell-regulatedmarkets

– Whenpricespikesareequivalentto‘shortages’

•  Applyregulatoryattention– FundgenericdrugscienceandFDAOfficeofGenericDrugs

– Expeditereviewofgenericapplicationswhenthreeorfewerdrugsinthemarket

•  Follow-onbiologics


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Commonperceptions•  Betterpricingmechanismswillundercutinnovation–  Innovationisoftenperformedinacademicinstitutionsandsupported

bypublicinvestmentsuchastheNationalInstitutesofHealth–  Lossofmarketexclusivityprotectionwasthe“mostimportant

predictor”ofthearrivalofanewproductandthenumberofnewproductintroductions

–  Brand-namepharmaceuticalmanufacturers~22%profitsin2015;restofFortune500~7%

•  Betterpricingispoliticallyimpossible–  72%ofAmericansfeelthatdrugcostsareunreasonableand74%feel

drugcompaniesputprofitsbeforepeople(Aug2015KFFpoll)

Kesselheimetal.,HealthAffairs,2015;GrahamandHiggins,SSRN,2007;Carrier,WiscLawRev,2012;Stiglitz,DukeLawJ,2008


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Summarypoints

•  Prescriptiondrugscanbetransformativeandtakesubstantialtimeandresourcestodevelop,butincreasingcostsforpatientsandsystem

•  Drugspricessetbymanufacturerathighlevelsduetolackofeffective“competition”inmarketduetomarketexclusivities,restrictionsonpayors

•  Justbecauseadrugisgenericdoesnotmeanit’sinexpensive

pharmaceutical pricing · for in-class use only – northeastern law school – do not circulate or...

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