We Need a Patient-Centered Approach to Pharmaceutical Affordability

There is universal agreement in our country that lifesaving and life-strengthening treatments and therapies should be widely accessible and affordable. The question is how to achieve this objective in a way that encourages medical innovation and continues a flow of breakthrough medicines that can enable more victories over diseases that have affected generations.

In an op-ed in Politico, Genentech’s senior vice president for access and external affairs, Fritz Bittenbender explains convincingly why the Administration’s proposal to link drug prices in the Medicare Part B and Part D programs to those of foreign countries that employ government price controls will, in his words, have “enormous negative consequences for the future of scientific innovation in America.” (Genentech is a member of the Healthcare Leadership Council.)

He proposes an alternative approach that would achieve greater affordability through enhanced competition and an “indication-based pricing” that would tie price to the value of medicines in specific indications of use with varying patient populations.

This op-ed is an important contribution to the pricing discussion taking place in political and policy circles today.

Breakthrough science demands equally bold policy — and pricing — solutions

By FRITZ BITTENBENDER, SVP, ACCESS & EXTERNAL AFFAIRS, GENENTECH

09/30/2020

Earlier this month, the President followed through with his threat to issue an executive order to implement a ‘Most Favored Nations’ (MFN) pricing policy, aimed at reducing the escalating and unaffordable financial burden patients face as they seek medical treatment. The President’s aims are right but the policy is flawed, with enormous negative consequences for the future of scientific innovation in America. At Genentech, we have long advocated for, and advanced, proactive policy solutions to create a more accessible and equitable healthcare system. But the President’s proposed solution — one of importing pricing practices from countries that value healthcare and human lives differently than the United States — is unfortunately not one that will benefit the American people in the long-run. And it comes at a time when the biopharmaceutical industry is waging war against COVID-19 through an “all-hands-on-deck” campaign to develop safe, effective vaccines and treatment regimens, with approximately 1,500 active clinical trials currently in progress.¹

As someone who has spent his entire career in the healthcare space, and whose colleagues engage daily with policymakers, private sector leaders, and patient advocacy groups on potential solutions, I can tell you what will work: market-based policies that dramatically lower patient out-of-pocket costs while encouraging the continuation of robust research and development (R&D) that leads to important medical breakthroughs; more companies like Genentech that commit boldly to responsible medicine pricing; and the willingness of all parts of the healthcare ecosystem to put aside differences and work together to drive solutions for American patients.

The proposed MFN policy, which has been expanded to include pharmacy (Part D) medicines in addition to physician administered (Part B) medicines, would import arbitrary price controls from other countries into America and introduce new middlemen into the reimbursement landscape. Concerns from across the healthcare continuum are well-known, highlighting a long list of issues, including the impact on R&D investment — particularly for biotech startups — severe financial burdens on community physicians, and monetary incentives taking precedence over a clinician’s treatment recommendation for their patients.

At Roche and Genentech, we invest nearly $12 billion per year in R&D, more than any other healthcare company in the world. Let’s be clear: biopharmaceutical innovation through the U.S. private market is essential to develop safe and effective vaccines and treatments for COVID-19. It is also our only hope for the next big public health crisis, such as antimicrobial resistance (AMR), or for countless other diseases including cancer, Alzheimer’s disease, and rare disorders with no treatment options. A MFN policy threatens this medical progress for patients and contradicts the President’s May 19, 2020 executive order on regulatory relief, which called for removing “barriers” to the “innovation, initiative, and drive of the American people.” The President’s own Council of Economic Advisors released a report that indicated that international reference pricing policies like MFN will lead to 100 fewer new medicines being approved for patients in the next decade.²

Setting aside this dangerous impact on medical innovation, the MFN policy does not address any other factors that determine the actual cost of a medicine for any given patient — from no insurance or high deductibles and coinsurance to hospital mark-ups. There are other innovative ideas that could deliver much-needed savings without the impact to medical innovation or restricting patient access to new medicines. Genentech, working with other companies and our trade associations, has been actively engaged in putting forward these types of recommendations that promise to generate billions of dollars in savings, including responsible pricing actions, innovative payment models, and new free-market competition mechanisms.

In 2018, for example, Genentech put forward a market-based pricing model that would accelerate competition for Part B medicines in the commercial sector, allow Centers for Medicare & Medicaid Services to capture the benefits of negotiations between manufacturers and private payers, and reduce costs for a much larger proportion of patients than MFN.

Another potential solution is indication-based pricing, which would enable companies to price differently based on the value of each medicine in specific indications of use with varying patient populations. This would be particularly helpful in the pandemic setting, where medicines that were originally intended for disease areas with small patient populations are being researched for COVID-19 and, if approved, could end up treating millions of patients globally.

We believe these are necessary components of an effective long-term strategy to alter flawed reimbursement mechanisms because they leverage the proven free-market system that has long spurred American innovation, and they can bring real savings to patients.

It is imperative that the medicines we develop are accessible to anyone who is prescribed them. And that means it’s not just policy that should change. Companies must think differently about price increases. The existing model, which incentivizes companies to dramatically increase the prices of their medicines annually and then rebate back significantly to a middleman for preferred coverage, does not in any way benefit patients — and it perpetuates the rising cost of medicines. It is time for rebate reform that passes saving onto patients, coupled with each company taking smaller price increases based on careful consideration of factors including inflation, continued investment in research of medicines, or enhanced patient benefit proven through clinical research and real-world evidence.

At Genentech, we are committed to doing our part through a responsible approach to pricing. As an industry leader, we have taken on this responsibility, facing head-on the challenges of creating a comprehensive workable solution. Over the last several years, Genentech has launched 13 groundbreaking medicines in areas of great need, including multiple sclerosis, hemophilia, spinal muscular atrophy and different types of cancer and we’ve priced these medicines at or below (and in some cases significantly below) other available FDA-approved medicines used to treat the same disease.

Moreover, in 2019 alone, through Genentech Access Solutions we served more than 287,000 people and 50,000 eligible patients were provided free medicine by the Genentech Patient Foundation. More than ever we are committed to our mission to discover and develop innovative therapies and equally committed to ensuring patients can access them.

The most impactful breakthroughs for the toughest medical conditions of our time were not born out of siloed thinking or in service of scoring political points. They were the result of a rigorous scientific approach, built on a diverse base of knowledge acquired over time and measured on whether or not they could have a statistically significant impact on the challenges they set out to address.

At Genentech, we believe it is time to apply the same bold thinking that’s behind our life-changing science to our policy solutions and to our pricing philosophy. This means finding a solution that truly improves upon the healthcare system we have in the United States without jeopardizing it. One that values patient life, innovation, and the ability of patients to access new medicines at a price that is cost-effective. This means finding a solution that is strategic, deliberate and structured. This means ending the cycle of finger-pointing, maneuvering, and blame-shifting that has plagued the crisis of unaffordable healthcare in this country.

We call on our industry, and policymakers in Washington, to work together to bring diverse perspectives to the table, generate fresh ideas that are designed to address the challenges of our unique healthcare system, and pressure test those ideas to ensure the proposals that move forward are the ones that are most likely to succeed on behalf of the only stakeholder that really matters: patients.