As the 2020 presidential election looms, debate about the price of prescription drugs and healthcare will intensify; healthcare communication leaders share their thoughts on how their pharma clients can be a constructive part of the conversations.
The pharmaceutical industry was the target of executive and legislative action in 2019 aimed at the question of drug pricing, and expect debate about what to do about lowering costs to only intensify in 2020 as election season swings into full gear.
Several pharma companies kicked off the new year by raising prices – GoodRx reported that 639 drugs have increased by an average of 6 percent, with 619 brand drugs increasing by an average of 5.2 percent and 20 generic drugs increasing by an average of 29.4 percent. The prices of the blood thinner Eliquis (Bristol-Myers Squibb), the diabetes drug Jardiance (Boehringer Ingelheim/Eli Lilly), the COPD drug Spiriva (Boehringer Ingelheim), and the diabetes drug Tradjenta (Boehringer Ingelheim/Eli Lilly) each rose by 6 percent, while the largest increase was for the depression drug Marplan (Validus Pharmaceuticals) at 14.9 percent.
Pfizer led the way among companies with price increases of 9 percent on more than 40 products, according to The Wall Street Journal. Compared with 2018, however, the increases in 2020 were lower. Good Rx reports that in 2018, 580 brand drugs increased by an average of 8 percent. This year, the price increases were announced much later in January as well. GoodRx theorizes that the many eyes watching price hikes have cause drug manufacturers to become gun shy.
Candidates at the Democratic debate in Iowa in January certainly had their eyes on drug price increases. Senator Elizabeth Warren (D-Massachusetts) vowed that if elected, she would lower drug prices by executive order her first day on the job, targeting insulin, EpiPen and HIV/AIDS drugs. Warren also touted her plan for the government to make generic drugs to encourage more competition. Senator Bernie Sanders (D-Vermont) focused on a compulsory licensing process that would wield manufacturers’ patents and monopoly rights as negotiating leverage. And Senator Amy Klobuchar (D-Minnesota) said she would allow the importation of drugs from other countries.
It’s not only the Democrats with their eyes on drug prices, as the Trump administration continues to tout its own plan to import prescription drugs from Canada. Announced at the end of 2019, the plan contains a draft guidance that explains how manufacturers could import drugs and biological products originally intended for sale in another country.
Jeff Berg, president of health and wellness ad agency AbelsonTaylor, says when talking about drug pricing, “you’re always starting off in this negative territory. Unlike a Gucci bag or a Mercedes, something that makes you happy, here you have an illness, and you have to take a drug, and by the way, that drug has side effects that make you feel worse in a different way,” such as the annoying cough caused by ACE inhibitors for hypertension.
“It’s this weird dynamic of, ‘Why do I want to pay for something that makes me feel less bad, and in some cases worse,” Berg told Med Ad News. “So right out of the gate you have an unusual challenge with pricing pharmaceuticals.”
Drug pricing is the target of ire because it’s the most visible part of the system, Berg says. “It’s hard to attack your general practitioner, even though they have the highest salaries, and hospitals are very opaque. Hospital pricing is completely not transparent to anyone. I don’t want to defend everything that pharmaceutical companies do, there is some completely bad stuff. There is some ridiculous pricing and there has been some greed, which looks bad when you’re starting off in a bad place.”
One of the therapeutic categories manufacturers have caught a lot of flack on about pricing is oncology drugs. “I think the No. 2 or No. 3 expensive medications that are on drug formularies, particularly Medicare Part B, drugs administered in an institution, are both PD1 therapies,” says Gil Bashe, managing partner, Global Health, at Finn Partners. “I think Merck’s therapy [Keytruda] is No. 2 and Bristol-Myers’ therapy [Opdivo] is No. 3.”
Keytruda’s list price per dose is $9,724.08, according to Merck, or $13,500 per month. Opdivo’s list price per dose is $1,154, or $150,000 for a year of treatment.
“And so we look at that and we say these are very expensive medications,” Bashe told Med Ad News. But, “when you look at cancer drugs, … they do well for those companies, and they do well for those patients.”
Brian Reid, managing director of Value+Access Communications at W2O Group, agrees that oncology drugs have been at the center of a lot of conversations about financial toxicity. “But how do we improve patient access? How do we improve patient assistance? How do we really shine a spotlight on the parts of the system that need to be reformed so that it’s not the patients who are being harmed by the supply chain?” he asks.
Jay Carter, executive VP, director of business development at AbelsonTaylor, believes that something needs to happen in respect to reform. “But my fear is, if reform is forced upon the industry, that the thing that will suffer is innovation,” he says.
Carter cites the failures of antibiotic companies Achaogen, Aradigm, and Melina in 2019, “because of the fact that you can’t get a product for resistant organisms to be paid a price that will support it going through FDA review.
“And I’ll point out that the number of people who have died from resistant organisms has increased from 16,000 to 23,000 in the last couple of years,” he says. “It’s disturbing, because what happens if we get a pandemic?”
Another problem in getting the public to change perceptions about the industry, according to Berg, is people have grown accustomed to getting some very important drugs very inexpensively. For example, the antacid Tagamet was a billion dollar drug and was considered high science at the time. “Now you can go to Costco and get 100 tablets for $10,” Berg says. “I’m not sure talking about how we price them when at the end of the day, when sometimes these very important drugs are pennies or very cheap, it’s a very mixed message you’re sending people.”
Avoiding the blame game
Bashe and other experts in healthcare communication are well aware that this year will be a hot one for their clients, and are trying to offer ways for pharmaceutical manufacturers to be proactive rather than reactive.
“There’s no doubt about it in this time of campaigning, this will continue to be the hot, hot issue at the forefront of debates, and once the candidates are lined up, it will be one of those issues that both sides will rally toward,” Bashe says.
At the J.P. Morgan Healthcare Conference in January, Bashe heard concern about what kind of legislation could actually affect the industry and also the usual defenses of industry practices.
According to Bashe, the industry needs to stop being defensive and protective, and it needs to move to a far more transparent setting.
“Even the Beltway, when I’m with people in Congress, does not understand the multiplayer ecosystem of health, how drug pricing is actually set and the myriad of players that go in,” he says. “They believe that when you go in, and they say this medication per year costs this amount of money, that price is set and determined by the marketers inside the industry. And that is not the case.”
There are many players invisible to policy makers and society, such as pharmacy benefit managers and insurance companies, that actually determine access to medication and have a larger voice in the determination of price “than anyone could possibly ever imagine.”
According to Reid, the industry needs to recognize that the dilemma about pricing is an existential threat.
“If you look at the legislation that’s passed the House, it’s not hyperbole, that will keep new drugs from coming to market, that will harm innovation,” Reid says. “We can have a very fruitful debate about the degree that will happen but I don’t think there’s any debate how fundamentally it will hurt the industry. And I am not sure everyone in pharma understands the gravity of that threat.”
While the industry believes its business practices are tighter than ever before, price increases lower than they have been in a decade, and companies have been experiencing deflation, not inflation, on a per pill basis for the first time in a half century, “you can see where anger continues to grow,” Reid says. “So there has to be recognition that wherever we are, we haven’t done enough. And I am not sure that’s universally acknowledged throughout the industry.”
PhRMA has tried to counteract criticism. In March 2019, the industry organization, in sharing a report from the Pew Charitable Trust, pointed the finger at pharmacy benefit managers, saying PBMs nearly quadrupled the fees they charged biopharmaceutical companies – such as administrative and service fees – between 2014 and 2016. “Total fees charged to biopharmaceutical companies by these middlemen increased from $1.5 billion in 2014 to $2.6 billion in 2015, and then doubled to nearly $5.6 billion in 2016,” stated Robert Zirkelbach in PhRMA’s blog, The Catalyst, “Along with rebates, these fees – which are typically based on the list price of a medicine – contribute to a system of misaligned incentives where middlemen make more money when the list price of medicines increase.”
This criticism will do little to win the hearts and minds of patients and policy makers, Bashe says. “When a bully is being bullied, and they start to bully, does that really work long term?” Bashe asks.
He suggests that the best thing biopharma can do “is do what it’s been dedicated to do – providing accurate, clear information that represents the healthcare system, of which innovation is a catalyst for. Take ownership of the problem, don’t try to transfer blame.”
Reid agrees. “Ultimately, at the end of the day, every single company has a responsibility to explain what they’re doing because there are certain things that pharma can’t explain,” he says. “Pharma can’t explain why a company chose to price a drug at Price X instead of price Y. Pharma can’t, on a drug by drug basis, tell a patient how they can access patient assistance programs. So every company needs to say, ‘Look, there are things that we need to do, as a singular institution, to help address how to direct this.’”
Like Bashe, while at J.P. Morgan Reid witnessed awareness by drug manufacturers that pricing is a problem. “At J.P. Morgan, there was a lot more plain talk around the idea that it’s really the patient costs that are ballooning, and we should really be challenging the insurance industry to explain why there are co-pays at all, why there’s cost share, why is this a burden that you are going to put on the patients.”
Reid says by focusing on supply chains, pharma manufacturers are trying to understand the impact on patients. “I think everyone recognizes that there is going to be push and pull, that there is going to be negotiation, that’s the nature of a free market,” he says. “But it’s a lot harder to come up with a plausible rationale for why an asthma inhaler should be a hundred dollars out of pocket. You’re not discouraging inappropriate use with that. The more plain language the industry can use to make it more about the patient, the better we will be at coming up with solutions.”
Reid says the question the industry begins to need asking is why are these drugs priced out of reach of the average consumer. “What I pay at the pharmacy counter is not ultimately determined by the drug industry,” he says. “And I hate to fall back on the pharma talking points, because I know that’s a tired way to looking at things. But 20 years ago, no matter what your specialty drug was, the fact that you would be asked to pay some outrageous co-pay was just not part of the equation. Unfortunately now you have this arms race of coupons and copay accumulators, all of this really technical stuff that serves just to make it more complicated for the consumer and ultimately more difficult for the consumer to handle.”
Meanwhile, on a pill by pill basis or on an injection by injection basis, the patients are paying more, but the pharmaceutical companies are receiving less. “And so the question is where does all of that extra money go, and again you get back into playing the blame game,” Reid says. “But that is the fundamental question. If [pharmaceutical] net prices fell 8 percent last year, and yet patients are filling more of the out of pocket burden, there’s a fundamental missing piece in the middle that suggests someone is taking advantage of it.”
Bashe contends that the industry has not really invested enough effort in educating, whether on the provider level or the policy level or the patient level. “It’s inappropriate to point our fingers at this moment in time at any of the segments of our health ecosystem, because it’s simplifying a complex problem that has to be appreciated for its complexity, and how it all fits in to a very mix-and-match, Picasso-like puzzle.
“We’d like to blame pharma for setting high prices or PBMs for forcing prices up because they make money on the spread. But who absorbs that cost then? The provider. So what do they do? They try and charge it back to the payer. The payer pushes back with ‘normal and customary reimbursement.’ So you see, it’s not one piece of the system that’s disadvantaged for broken, it’s the entire system.
“And where pharma would be well-served is actually starting to bring experts who can objectively frame, in clear language, how this nation’s system works, or doesn’t work, for the ultimate customer – people who need access to health care.”
Berg points out that blaming PBMs will not really work to sway the public because most of them do not know what a PBM is.
“The people who are savvy to how pharmaceuticals work, yeah, this makes sense and there is some blame, but the public, they don’t know what a PBM is and they don’t really care, because the drug companies are the ones that have a high price,” Berg says. “So bashing them maybe works for legislators, you can get arguments to Congressmen and they can regulate and do things like that, but to the average public I don’t think that’s going to carry a whole lot of weight. Because the cognitive load saying here’s how this works and blaming some third party, seems to be a real challenge.”
Besides steering his clients away from fingerpointing, Bashe says the industry “must move totally away from the timeworn argument of ‘It’s a high risk business, it takes many years, and it costs us billions of dollars to develop these medications.’
“One, it may or may not be accurate but then the call on the part of society is, if that’s the business model and it’s not working for you, and it’s not working for us, we can no longer afford to subsidize that business model. That is not the sophisticated way that society and the policy makers are responding. But if that’s the cake mix, if you will, that makes the drug pricing to that level of height, then obviously people don’t buy it.”
According to Berg, “You can talk about the innovation, how it cost us so many dollars to discover this drug, but you have to build in the other 10 drugs that failed and the hundreds of millions of dollars we spent on the failed drugs so we have to charge you for that, and it’s ‘Wait, that’s your problem. That’s the cost of you doing business. We don’t care about that. You chose pharmaceuticals, you chose the risk. Don’t charge me for that, come up with a different business model.’
Imagine if you went to buy a car, Bashe says, and the dealer stated, “It took us years to develop this car, this hybrid, and you’re going to pay $200,000 for this Toyota Camry.”
“You’d walk off the lot, wouldn’t you?” Bashe says. “So the model of explaining how they got to the pricing isn’t working for the biopharmaceutical, drug development sector. And it’s not resonating with society or the Beltway. That conversation has to change.”
Reid believes that one of the trends in 2020 will be that the industry will become more specific about what is its social contract with society. “The industry is willing to say, ‘Let’s be willing to be explicit about constraints, whether the constraints are about pricing to value, whether it’s making sure there is timely generic entry.’ That is what the industry is going to have to do,” he says. “And seeing more companies adopt that structure in the terms they think about how they price and how they talk about it, I’m hoping starts changing the debate a little bit.
The pharma industry should start to recognize that it needs to actually address the core concern of society: Can we continue to afford innovation? “The obvious answer is yes, we must afford it,” Bashe says.
Pharma manufacturers need to put innovation in context, he says. For example, the successful monoclonal antibody cancer drugs of today, such as Keytruda and Opdivo, would never have come into being if Ortho had not created the first monoclonal antibody in 1985.
He points to a non-pharma example of innovation that took decades to actually become relevant. “The iPhone 11, or the iPod, or the iPad, originates with a company that you probably never heard of, General Magic that launched in the mid-’90s, a joint venture of Apple, Sony, AT&T and other enterprises,” Bashe says. “It established a group of people to come together and develop what decades later became the iPhone. It launched into the market, and it failed.”
What doomed the device was that there was no internet at that point, and it had poor connectivity. “But the people who were part of that venture, one person who was a 23-year-old programmer, was employed by Apple and years later, developed the iPod, and later, the first iPhone,” Bashe says.
“Another person went on to create eBay. Another person went on to create Next Software Systems. From failure came greatness.”
Society does not want to hear from pharma manufacturers that it cost them so many hundreds of millions of dollars to create a drug and that they need to recoup their investment. “What the companies are not doing is what I call elevating this up to a museum-level conversation where society understands, that which someone toiled for 30 years ago is now playing out,” Bashe says.
As another example of greatness coming out of initial failure, Bashe points to the PCSK9s that were developed by Amgen and Regeneron. “They did not succeed in the market,” he says. “However, The Medicines Company’s twice a year injection has shown great clinical progress. … We don’t see things in context of how discovery leads to discovery. The industry needs to start talking about that, how they’re essentially a massive infrastructure for continuous improvement on innovation.”
“Don’t tell me that innovation doesn’t have value,” Carter says. “Hypertension, yes, that pretty much has been licked, but not diabetes, not many rare diseases.”
Berg does believe that pharma has done “a very nice job” in helping people understand the benefits of prescription drugs. “Kaiser Family Foundation did a study and reported 59 percent of the public said prescription drugs developed over the past 20 years have made the lives of people in the U.S. better,” he says. “That’s sort of a macro level, pharmaceuticals are good and the research being done is good.”
Reid believes that there is an increasingly broad acknowledgment that the industry needs to make a more value-based argument for pricing.
“It was not that long ago that you could launch a drug, put a price on it, and then talk in really soft-focus terms about things like ‘You can’t really put a price on seeing your granddaughter’s wedding,’ or ‘You can’t put a price on watching your grandson’s graduation from high school,’” Reid says. “And while I think there’s a lot of debate the right and wrong way of putting a price on additional life, I think that there’s a real sense now that the industry can and should – and does – make those arguments for why their drug is worth it.”
The question then becomes how widely people are going to take that kind of assessment, Reid says.
If, for example, a new hemophilia drug costs $2 million but saves $25 million in healthcare costs over a lifetime, “What should you as a company be allowed to keep? I think that’s the kind of discussion industry would love to have,” Reid says.
BioMarin, which is introducing a new gene therapy, Valrox, for hemophilia A, is set to price the product at between $2 million and $3 million. The company immediately became a target for Sanders, who Tweeted, “Don’t you feel grateful? The world’s most expensive drug is coming out – $2-3 million a pop. $69 billion in annual profits were just not enough for Big Pharma. BioMarin should lose its patent monopoly for this price-gouging. Under our legislation, it will.”
“I think the battle lines here are really interesting,” Reid says. “I think the industry wants to have these conversations about value but worry that these conversations are not going to be met, that they’re going to have a hard time having a thoughtful discussion about it.”
While no one wants to look at drugs and healthcare as a for-profit business, if there is no return on investment, there will be no investment, Reid says.
“You have economists making this point more cogently and more loudly,” he says. “The dollars flowing into tomorrow’s cures, they go somewhere else – not to some other part of the healthcare system, but some other place where the returns are larger. Saying that pharmaceutical companies are not going to profit anymore and that is what the system needs, is ultimately short sighted.”
Carter believes that healthcare communicators need to share their own stories. “Over the years I have worked on products that literally, honestly saved lives,” he told Med Ad News. “It’s hard to put a value on that but then we do. But it’s impossible for me to view the work that’s being done by the pharmaceutical industry to help people get better and pay an appropriate price for that.”
He is especially proud about the work he and AbelsonTaylor did on the neutropenia drug Neupogen in the ’90s “where essentially we created the science” that committed physicians to the idea of administering Neupogen to chemotherapy patients to prevent febrile neutropenia.
“I believe that millions of women ended up surviving rather than dying because their clinicians did that,” Carter says. “And my other point, simple but true is, if every person, at least in the agency side, can find a story like that in their history…it starts with a group of people who are unashamed of what they do and are willing to talk about it.
According to Berg, “The pharmaceutical companies need to focus in and talk about individual patients and help tell compelling stories. Which, again, is really difficult. Stalin had a quote, one death is a tragedy, a thousand is a statistic. If a thousand patients are helped it’s great, but that one patient, I can identify with.
“If pharma, with our help as well, can start to tell that story to the public, in a way that’s still compliant with all of the regulations, that might start to help move the needle and get people starting to say, ‘OK, what’s the value of the drug that I’m taking?’”
Pharma manufacturers need to keep reinforcing the importance of the science behind their products, Berg says. “Physicians can be an ally,” he explains. “Helping physicians understand the pricing or the value of drugs could be an avenue because they communicate directly with the patients. I don’t know if that’s been tried, we don’t really do that for our clients. We talk about affordability with a copay.
“But maybe educating the audience that has the most direct contact with a drug, and the ones that actually decide it, might be an avenue to be tried and might help a little, and take away some of the adversarial nature of that relationship. There’s always going to be a little, but that would be an avenue I might want to explore.”
Single payer: Fears for impact on innovation
Besides pricing legislation, the pharma industry during 2020 is also being haunted by the specter of single-payer health insurance.
“It’s not a sustainable model,” says Ray Johnson, senior VP of market access strategy at Ogilvy Health. “At some point there is going to be a tipping point and I think we’re hearing it more and more in the political arena in the debate about the healthcare system and how it is, or is not, functioning for our population.”
As policymakers continue to compare the U.S. healthcare system to others such as Canada and Europe, “There is going to become a point where the government intercedes, and approaches taken by bodies such as Medicare or Medicaid, are going to grow in influence,” Johnson states. “Because at the end of the day, as drugs continue to escalate in price and biologics continue to grow and become more pervasive as therapies, efficiencies are going to have to be identified and implemented.”
While the industry that would get hit hardest is the insurance industry, in a world where the government is setting prices, whether through legislation specifically targeting the drug industry, or as a natural extension of the nationalizing of the insurance system, “you’re going to have an impact on innovation,” according to Reid.
“There’s going to be tradeoff there, you’re going to see fewer drugs,” Reid says. “You’re going to see every company developing an Alzheimer’s treatment go under. Yes, we may get lower prices for drugs today, but remember that today’s blockbuster innovation is tomorrow’s generic drug. That whole conveyor belt just stops.”
While he believes that the creation of a single payer system in the United States is a “relatively low odds event,” Reid points out that today’s environment would have been unthinkable 20 years ago.
But by and large, he says the American people are very uncomfortable making that tradeoff. “Everyone wants Medicare to negotiate with drug makers. The moment you tell them it’s going to impact innovation, support for that proposition falls [by 60 percentage points],” he says.
There also have been proposals to regulate pharmaceuticals like a utility. Berg disagrees with that.
“The difference is the utility market is pretty stable, there’s not a lot of innovation,” Berg says. “In Chicago, we have Commonwealth Edison. I live in the suburbs, and our power lines are still above ground and they run across the top of the back fence in the back yard. They still have to come and cut trees so the power lines are not impacted. I do not see a lot of innovation. And yes, there are infrastructure investments, but it’s nowhere near the gamble you have to take when you’re trying to discover a pharmaceutical. You can spend hundreds of millions of dollars in discovery and come away with nothing.”
Carter says he fears the loss of innovation from a single-payer healthcare system. “Talk to the Brits, it’s a fascinating conversation,” he says. “Uniformly, they decided that they are going to support that there are some things that they can’t afford and other things that they are going to pay for them. And it’s codified and crystal clear, and golly that’s great, unless you’re the one that has this dread illness, and the human part of me just wants to reject that.”
While he is not advocating a Canadian model or a European model of healthcare, Berg says the U.S. model as it stands is extremely difficult to navigate.
“If you’re the 1 percent, it’s not a problem, but for everyone else, it’s a real stressful thing, and to be able to navigate the system, nobody should have that level of anxiety,” he says. “That stress, that anxiety, can actually worsen the prognosis for a patient, when at the time they should be getting healthier and have less worry.”
Innovations in contracting
One way pharmaceutical manufacturers can tackle the pricing problem is through innovative contracts with PBMs and payers, Reid says.
‘“It’s not happening on a widespread basis, and not a lot of the details are necessarily public, but I think there is a lot of effort being made in saying ‘In return for higher rebates we want you to guarantee access, with minimal copayments, we want you to guarantee some adherence,’” Reid says. “I think these are all ways we can get at the fundamental issue of are there ways we can structure the system so far as patients are not needlessly paying the price.”
These more innovative contracts are win-wins, Reid says. “The patient gets what they need, the pharmaceutical company gets what it needs – rewards for innovation – and the insurance company is able to manage their risk appropriately,” Reid told Med Ad News. “It’s not about pointing fingers, everyone should come out ahead. So anything we can do to encourage that kind of thinking is really important. There are just a lot of issues with talking loudly about it. Some of them are structural and we can’t change them, and some of them need more volume and more courage.”
Berg says if the pharma industry does nothing, legislation will happen. “I don’t think this a Democratic or Republican or Independent issue, it is a societal issue. I think there will slowly be changes, and the legislators will do something if there aren’t some creative models.”
According to Johnson, while every year manufacturers are taking price increases, there are certain ways they could take lower or less frequent price increases, but a lot of the complication comes from contracting discounts or rebates in the system.
“Because it is so complicated, the old saying goes, ‘How do you eat an elephant? One bite at a time,’” Johnson says.
One way manufacturers can tackle the problem is by looking at it by therapeutic area or by disease state, and doing some tests and pilots.
“I know some of our clients have started doing that, are looking at certain therapeutic areas where there is a mix of branded agents, and maybe more of them are going to move toward the generic end, and [figure out] how to maybe transition those brands more efficiently and more effectively in terms of affordability,” according to Johnson. “And at the end of the day that’s one of the things we’re talking about, what really rises to the top is affordability for the patients. Because at the end of the day, these patients are facing terrible, terrible conditions and so how can drugs and therapies be made more affordable for the patient?”
Pharmaceutical companies should also start to draw more attention to their affordability programs.
“We’ve started to see a little bit of that in manufacturing, and we’ve started to see in DTC ads, towards the end of the legalese, ‘Contact your manufacturer for affordability options,’” Johnson says. “In terms of customer support programs and things of that nature, and affordability programs, making those more prevalent and available, and making the specifics of them more simple to understand, is one way we’ve started to help our clients understand and be more of a partner in addressing the situation, in terms of the cost within the system.”
More innovative solutions to the pricing problem would need pharma coming together with the payers and PBMs to talk with the government.
“Everyone within the system is looking for their piece of the pie,” Johnson told Med Ad News. “But at the end of the day, by putting the patient first, and having the ultimate delivery of value, quality, health outcomes for the patient, and putting the patient first, maybe that will bring everyone together and become a guiding light or beacon for coming up with solutions.
“Maybe the manufacturers don’t have to take semi-annual price increases, maybe they can be annual.
Maybe there are other ways in terms of rebating and contracting, not just within Medicare or Medicaid – the government does a fair jobs of rebating and contracting there – but maybe the industry can start to find ways to self-regulate because that’s where a lot of the price in the system comes into play.”
Technology also could help streamline some costs within the system, Johnson says. He highlights partnerships such as the one started in 2018 by Amazon, J.P. Morgan and Berkshire Hathaway to deliver more affordable quality healthcare for their employees. “I think there are going to be learnings from incubator models like that and things of that nature that are perhaps going to provide a blueprint for a broader application within the healthcare system,” Johnson says.
Another factor that could impact the way contracts are negotiated are post-marketing assessments of real-world evidence.
“Perhaps there is more governance by or influence of that real world evidence as to what the market will bear,” Johnson says. “Thinking within the therapeutic categories, if there are four or five brands, revisiting what the actual clinical outcomes would dictate in terms of value and translating to price or cost, as opposed to the contract or the rebates that are going to be given, that would dictate the cost. Not having that be the end all or be all, but it is another level or layer of intelligence that can help and inform those decisions. I think that would be helpful.”