Pipeline Drugs: Another Victim of Rx Price Reforms

The drug pipeline is filled with high-priced, high-impact cures. Drug price reforms might kill them – is there any cure for the cure?

Anyone who’s read a US newspaper in the last year knows the politicians are trying to tackle the very real problem of very expensive drugs. Branded drugs are quite expensive for a society already spending 17% of every dollar on healthcare; quite burdensome in out-of-pocket costs for the average patient; quite complex for healthcare administrators trying to stay afloat in a high-cost, low-margin world.

Whilst we all debate the details of drug price reform – I wrote that just so I could use the world whilst – press coverage of all the likely fallout seems to be ignoring some likely victims. Consider, for example, the pipeline full of potential new drugs now in clinical trials and hoping to become a blockbuster. When the drug began Phase I testing, there seemed to be few limits on society’s interest – lives were at stake and new drugs held promise of a cure.

But times have changed. What masquerades as price reform also puts cancer treatment into a “bundled payment” environment that incentivizes doctors to use the cheapest drug. Result: goodbye, personalized medicine and hello least-common-denominator generics. Maybe drugmakers should have known the party would be over someday, but perhaps they were expecting a little more notice.

Price reforms also confuse lower societal costs with lower patient out-of-pocket costs, often putting patient health at odds with their insurers’ interests. Efforts to rationalize these reforms by including an international price index simply turn the clueless into the dangerous – this canard has been around since the 1980s and no amount of research proof seems to kill the fiction that international price disparities are easily fixed. Sigh.

This post isn’t meant to be a full analysis of the pricing reform proposals. It’s simply meant to highlight that the victims might include some drugs some of us might want to have around, and that some investors might very, very much want to get out of the pipeline and into a profitable market.