Can We Afford Medical Miracles?

Panel held on March 9, 2006, Palm Springs, California

Summary and Excerpts

"How much money would Merck have been willing to invest in a reporting system to save the $30 billion of market cap that they lost in one afternoon?" -- Greg Simon, Panel Moderator, President, Faster Cures; former Chief Domestic Advisor to Vice President Al Gore

Do drugs cost too much? Are there other ways to pay for drugs? Can the system for developing drugs be improved and made less expensive?

At the BioAgenda summit, we had several spirited discussions on topics that excite great emotions, though few issues in health care are as difficult and contentious -- and frustrating -- as the relentless increase in the price of drugs in the U.S. and globally. Though not the fastest growing sector of health care (hospital costs are rising much faster), the price for wonder drugs is escalating, as are the costs for developing new treatments.

So on March 9, 2006 in Palm Springs, California, we assembled a remarkable and diverse panel that included a biotech CEO; a former U.S. Congressman and the current head of the main biotech industry group; a patient advocate; an author and critic of the drug industry; the former chief domestic advisor to Vice President Al Gore; and a cancer physician and head of the Genomics Institute in Singapore to give us an international perspective.

BioAgenda Drug Pricing Panel: Joshua Boger, Merrill Goozner, Edison Liu, James Greenwood, Kate Carr, and Greg Simon

Panel

Joshua Boger, PhD, Founder and CEO, Vertex Pharmaceuticals
 
Merrill Goozner, Author, The $800 Million Pill: The Truth Behind the Cost of Drugs; Director, The Center for Science in the Public Interest

Edison Liu, MD, Executive Director, Genome Institute of Singapore

James Greenwood, President, Biotechnology Industry Organization; former U.S. Representative (R-PA)

Kate Carr, President and CEO, Accelerate Brain Cancer Cure, Part of the Case Foundation

Moderator: Greg Simon, JD, President, Faster Cures; former Chief Domestic Advisor to Vice President Al Gore

Excerpts of Panel Debate

Goozner: "How much does it cost to develop a really effective Alzheimer's Drug?  Well, $800 million, $200 million, or is the answer really infinite? Well, it's infinite because we don't have a scientific understanding right now about how to develop a really effective Alzheimer's drug. And until we do, you can't even begin to ask the question or answer it. Because the denominator in that equation is zero. So any number divided by zero is infinite because we don't have a science."

Boger:  "I think what's maybe not appreciated is that the prices and the costs of pharmaceuticals are as big a concern for the companies trying to come up with them as they are to the people trying to pay for them.

"The trendline is that costs, actual direct costs are going up much faster than prices. That's been true in the pharmaceutical industry for a decade or so and has led to decreased returns in the pharmaceutical industry.

"Yes, there is a tremendous problem here. But it's a problem having to do with a real perception and a real actuality of rising costs for innovation. And innovation will not happen unless there is a return on investment. Right now, everyone in the industry is scared about that equation, not just the payers."

Simon:  "What other industry gets to say we are becoming less and less productive, give us more money? What other industry can we look at that says because of the difficulty of what we are doing you need to give us more money because we don't seem to be getting any better at it?

"Patients need to ask their doctor to take more responsibility for what they prescribe."

Greenwood:  "Those who get it, in my opinion, and realize that we are all benefiting from this, and we should all be on the same side, and we can't kill innovation the way the Europeans do are going to say, "How do we make the costs go down?" And that's all about getting research and development costs, clinical trial costs down using things like Critical Path and what BIO is trying to do is to build a collaborative relationship between our companies and our public policy makers so we can together get these process and costs down to where they should be."

Liu:  "I think the major problem we face right now in pharmaceuticals is that it's not a free market. There are no market forces. It is ludicrous to think that we are actually following true market forces on an international basis when there is 60-100 fold difference in the costs of a single drug from one nation to the next.

"The other thing about the pricing is that the pricing for drugs has been almost exclusively driven by what the US, and secondarily the EU is willing to pay. In fact all the third world developing world is suffering because the economic models, the pricing models, are based on the US market. Not on what people can actually pay.

"So as nations in Asia, particularly the giants of China and India rise, and become internal users, actually users of international pharmaceutical products, the price has to come down, it has to come down, there's no other way about it. I do think that the intelligent planners and strategists in pharmaceutical companies recognize that and are doing whatever they can… which is to distribute the research, manufacturing, and all other costs to the lowest possible cost structures."

Carr:  "We have a value and a belief that no price is too high for a human life.

"For next year perhaps BioAgenda should add to the question, "how long do we want to live"—"do we think we can afford to live that long?" as part of the question. I think most people right now would answer no and there's a broad perception that's it's the fault of pharmaceutical industry, profiteering too much, charging too high a cost, and not cost sharing. That when we look at it there are not enough regulations in place."

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