Pharmaceutical Pricing Issue Sets Agenda for 2017

With some drugs now costing hundreds of thousands of dollars a year, who would have guessed that the latest poster child for high drug prices would be a product that sells for $600?

That’s what a two-pack of EpiPens sells for.

What offended the political and oversight system, including Congress and the media, was not the absolute cost of the product. The issues that arose were those that typically are mentioned when a pharmaceutical company is in the headlights for high prices.

We saw this same pattern over the years. An industry that does cutting-edge medical research, that is highly innovative, that has saved or prolonged millions of lives, is viewed negatively either because of what are perceived as rapidly-escalating prices or hard-to-explain marketing practices.

This is not new. Go back to the early 1960s when Sen. Estes Kefauver (D-TN) held hearings on the industry’s pricing and marketing practices. During the hearings the story of thalidomide broke (this was a drug was used by pregnant women that caused severe birth defects; FDA never approved it but it was widely used in Europe). Congress wound up passing comprehensive legislation that strengthened the FDA’s authority considerably.

As we enter a new administration in Washington, drug prices will undoubtedly be an issue in the next year. The FDA will be on the legislative agenda because the Congress must pass the Prescription Drug User Fee Act, which sets fees for product applications to the agency. Failure to pass the legislation is not an option, as the FDA would virtually have to stop processing new product applications.

Even though the FDA has nothing to do with pricing, the legislation inevitably will bring the pricing issue to the fore. The political system sometimes has trouble distinguishing between the product approval process and the cost of the products being approved, especially in an environment in which the cost of health care and the benefits of Obamacare are top issues.

The pharmaceutical industry’s prices were mentioned during the spring debates by several presidential candidates. It remains to be seen whether the industry will again be targeted in the remaining days of the campaign; there was no mention in the first Clinton-trump debate.

The challenges for the industry are clearly shaping up for 2017. There probably will be new leadership at the FDA and NIH (regardless of who wins the White House). Congress will consider a mandatory piece of legislation (PDUFA VI). There will be a focus on drug prices in the context of overall healthcare costs, with a likely effort to permit the government to negotiate drug prices under Part D (drug benefit) of the Medicare program.

All this while the industry, largely due to the high-profile actions of just a few companies, resides toward the bottom of popularity and credibility polls.

Fortunately, the industry’s leadership has seen 2017 coming. One of the industry’s major trade associations, the Pharmaceutical Research and Manufacturers of America, has developed a program designed to explain the value and benefits of the industry to the various stakeholders. The program hopefully will go a long way in increasing understanding of how this complex industry functions, where medical progress comes from, and what policies are needed, in this changing environment, to maintain innovation.

The Biotechnology Innovation Organization, another major trade association, has launched a television ad, which, according to BIO, is “focused on biopharmaceutical innovation and its unique ability to help both save lives and save money. The new ad, along with its ‘Innovation Saves’ website, is a new chapter in BIO’s Value Campaign, which seeks to highlight the value of biopharmaceutical innovation, the importance of protecting the ecosystem that makes new cures and treatments possible and ensuring that patients have access to these important innovations.”

Both PhRMA and BIO are on the right track. Education of key audiences is critical as we approach 2017, which undoubtedly will be an interesting new year for the pharmaceutical industry! Stay tuned.


Wayne Pines is president of health care at APCO Worldwide. He is a former associate commissioner of the Food and Drug Administration.

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