Dispatches From the Inquisition

What the best advice for a bevy of Big Pharma execs as they prepare for a congressional cross-examination? Be part of the solution.  

Recently, the New York Times ran an editorial titled, “It’s Time for Pharmaceutical Companies to Have Their Tobacco Moment.” Does industry need a roadmap to know where this is going? Medicines save lives. Tobacco kills. While the headline is off-base and objectionable, the prose makes a number of important points that can be summed up in one statement: Pharma has a lot of explaining to do.

This isn’t new and shouldn’t be considered as a revelation. In 2014, then-Pfizer Inc. CEO Ian Read wrote, “I recognize that there are differing views when it comes to society’s perception of the pharmaceutical industry. Many believe we are more focused on making profits rather than finding cures for patients, even though the industry has a long-standing commitment to providing patients access to needed medicines through many different programs globally. There is also a perception that we do not operate in an open and transparent manner when it comes to our clinical data and financial relationships with health care providers.”

Plus ça change. Today, more than ever it’s time to put up or shut up.Here’s the good news – the recent Senate Finance Committee hearing provided a terrific opportunity to speak truth to power. Here’s what Sen. Charles Grassley (R-Iowa) had to say on the day before the hearing:
 
“I hope that the drug CEOs testifying tomorrow don’t try to blame everyone but themselves/take no responsibility for their role in fixing the problem. We already understand there are other factors to consider. Tomorrow is about the part drug companies can do to lower costs for patients and taxpayers.”
 
Wise words from a wise man, and Merck & Co.’s CEO, Ken Frazier, shared Grassley’s perspective during the hearing when he said, “Our industry has a duty to be responsible in our pricing practices and contribute to solutions that address the affordability problems facing patients.”

But, not surprisingly, the hearing wasn’t just an opportunity to pose smart questions and seek sage advice. After all, we are in an election cycle and there was certainly the expected fair share of “I am Torquemada” moments with accusatory “Please answer yes or no” questions  (that’s like asking Albert Einstein to explain the Theory of Relativity in a tweet) and repeating silly shibboleths such as that the National Institutes of Health invents almost every important new drug and that pharmaceutical companies spend more on marketing than R&D (both proven patently false).

But there were many smart and probing questions that lead to important discussions — the most relevant being that every single CEO promised they would pass along rebates to lower patient co-pays if the Safe Harbor for Prescription Benefit Managers was eliminated. That’s precisely what President Donald Trump and Health and Human Services Secretary Alex Azar have proposed – which makes it tough for many politicians to embrace.

There were some public fumbles, traps and obfuscation, but there were also solid policy proposals that should be followed up and developed via collaboration of industry, Congress, government officials, patients, physicians and a broad swath of the health care community.

Pfizer CEO Albert Bourla set the tone when he said that, “There are two indisputable truths that make this the exact right moment for change: 1) Medicines alleviate human suffering and reduce overall system costs. 2) The horribly misaligned incentives within our health care system often prevent medicines from getting into the hands of patients. Our health care system is broken, and we need to fix it.”

Bourla’s first recommendation was to pass along all rebates to patients: “Pfizer supports reforms that would create a system in which transparent, upfront discounts benefit patients at the pharmacy counter, rather than a system driven by rebates that are swallowed up by companies in the supply chain.”

He also put the concept of “value” into a collaborative perspective: “Imagine a system in which hospitals are rewarded for keeping patients from being readmitted; where physicians get paid more to prevent disease than they do to simply treat it; and where companies like Pfizer get paid based on the number of strokes we prevent or the number of cancer patients who go into full remission, rather than the number of pills we sell.”

Frazier offered a few recommendations of his own, including:

1) We can significantly reduce spending on pharmaceuticals, especially for patients, by ensuring that we have a viable market for biosimilars in the United States.

2) We support efforts to encourage generic competition. A version of Grassley’s CREATES Act could make some needed reforms to encourage generic competition, and there are likely other policies we should consider as well to ensure there is no inappropriate gaming of the system.

3)We support the idea of eliminating the use of drug company coupons in cases where a brand name drug now has generic competition. This slows the use of generics and violates the spirit of the Hatch-Waxman drug price competition law.

4) We would also like to work with the committee to find ways to end the price gouging pursued by those who jack up the prices of off-patent drugs that have no competition. These high prices hurt patients and do not create incentives for the kind of cutting-edge research we pursue.

Frazier also had the hearing’s most memorable sound bite when he called for a health care ecosystem based on competitive, predictable, free market principles and not “outrageous solutions,” specifically foreign price controls. Zany ideas don’t solve complicated public health problems. There are no simple solutions to complex obstacles – and politicians hate that.

At the heart of the debate is whether we are going to improve our health care system through the use of smart and evolving free market principles (i.e., more focused regulation that addresses the exclusionary contracting that locks out savings from biosimilars) or go down the sound bite-laden path of “Medicare for All.” Can facts win out over fiction? All of this is contingent on senators and representatives being honest brokers and not hucksters on the hustings. As the great health care philosopher Frank Douglas reminds us, “It’s not what you control, it’s what you contribute.”

Peter J. Pitts, a former Food and Drug Administration associate commissioner, is president of the Center for Medicine in the Public Interest.

Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.