news from the intersection of branding & technology

Healthcare Reform, as Pharma sees it

In Healthcare, Shopper Marketing on May 12, 2010 at 10:56 pm
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by Jeff Sandgren

An esteemed panel of pharmacy industry experts, including Matthew Hudes (Principal, Deloitte’s Life Sciences), John Engle (Managing Partner, Engel& Novitt, a ‘science-based law firm’), and Mike Mawby (Chief Government Affairs Officer, Novo Nordisk) recently convened at the annual INTERPHEX gathering to consider the future of Pharma after the tumultuous passage of Healthcare Reform.

All panelists felt that the package was, on the whole, good for the American public, with each panelist ranking it as a 7 or 8 on a scale of 1 to 10.  All agreed that it was definitely better than doing nothing, “an unsustainable course … you can’t spend 100% of GDP on healthcare, and that’s where we were headed.”

The biggest plus, they felt, was enabling 30 million previously uninsured Americans access to health insurance.  Doing that took money, and the Pharma industry famously pitched in a commitment of $80 billion dollars over the next several years to help make that happen.  That sounds like a lot of money to average folks like you and me.  So how did the executive panelists feel about such a steep price tag?  The consensus of the panel, and certainly the general buzz at the show, was that the industry had “negotiated well”.    Specifically, the self-congratulation centered on three provisions: 1) no price controls explicit in the legislation; 2) no re-importation of drugs; and 3) a rough road for “biosimilars”. Biotech drugs are produced by biological rather than purely chemical processes.  For example, think about the concern this past winter as we waited for anti-flu vaccines being produced through some mysterious process involving chicken eggs.  For these, the term “generic” doesn’t apply, any more than it would to say that a human twin was the “generic” version of its sibling.  Instead, they speak of “biosimilarity”, and this delicate distinction is the reason that we see so many “chemical” drugs with cheaper equivalents, and so few “biological” drugs with the same. The new legislation, according to Engle, makes the approval process no easier – and arguably much harder—bad news for those hoping for lower costs in the short term on medicines for diseases like multiple sclerosis.

“Patent provisions for Biotech are unlike any other industry,” stated Engle, referring to a provision that requires nine months lead time after disturbingly full disclosure, “you essentially have to turn over your trade secrets to your worst enemy.  It’s a procedural bridge to nowhere.”

“Biosimilars were the big missed opportunity,” Novo’s Mawby noted. “Companies don’t innovate without competition.”

“At least we didn’t come across like the insurance industry,” observed Mawby, “next to them we looked like the good guys.”

Healthcare is a 2.6 trillion dollar industry, noted Deloitte’s Hudes, but Pharma is only 5 – 10% of that.  “Still, there are big numbers at stake. $14 billion is at risk by 2013, and another $7 billion 2 years after that.”

The volume will be going up, panelists noted, with 30 million more on board, the “donut hole” of Medicare closing, and lifestyle disorders like diabetes soaring.  It’s time for the industry to focus on ways to reduce costs without endangering safety and efficacy – something that’s never been a real priority in the past.

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