There’s one endpoint that the booming biopharma industry has failed at miserably: financial toxicity
One of the big themes in R&D over the past few years has been the onslaught of spending on developing new oncology drugs. The FDA has encouraged early approvals, opening the door to smaller trials as an onslaught of investment cash made it possible for small players to go the distance.
Big Pharma, meanwhile, has enjoyed the comfort of better scientific insights and the arrival of some huge new PD-1s on the scene. Next up: A tsunami of combo therapies coming at you from the US, Europe and China — the new factor in drug hunting.
For the industry, that means a major new source of revenue from coming therapies. For US patients, that means a much better shot at longer survival and possibly even a cure. As well as bankruptcy.
Researchers just published a new study in The American Journal of Medicine highlighting that 42% of cancer patients exhaust their savings within 2 years of diagnosis. And 62% of the 9.5 million cancer patients they reviewed were in debt after therapy, with 40% to 85% quitting work due to cancer. After 4 years of therapy, 38.2% were insolvent.
You hear a lot every time a new drug is approved about what drug companies are doing to make their therapies accessible, but the simple fact is that in the US large percentages of patients are being crushed by the price of branded drugs. And while the new drugs being introduced may be more important than ever, the unvarnished truth is that basic pricing strategies are more about maximizing revenue than accommodating patients.
The resulting financial toxicity is enormous.
Let’s remember that one of the reasons we’re seeing all the investment cash pouring in is that Wall Street has embraced a big wave of biotech IPOs. And that’s where execs are focused when they price new drugs.
That’s not a wild guess, either.
This is the bottom line researchers totted up after discussing pricing strategies on new drugs for multiple sclerosis with 4 biotech execs, published in Neurology this week.
Participants consistently stated that initial price decisions were dictated by the price of existing competitors in the market. Revenue maximization and corporate growth were drivers of price escalations in the absence of continued market penetration. Lower revenue predictions outside the United States also informed pricing strategies. The growing complexity and clout of drug distribution and supply channels were also cited as contributing factors. Although decisions to raise prices were motivated by the need to attract investment for future innovation, recouping drug-specific research and development costs as a justification was not strongly endorsed as having a significant influence on pricing decisions.
So while the industry likes to talk a lot about the pricing levels needed to back innovation, it’s just not an accurate reflection of reality.
In just a few weeks, we’re going to wake up to a new year that will be dominated by drug pricing discussions. We’re going to be doing some of this ourselves at JP Morgan.
The industry still has a shot at coming up with some kind of workable reform on drug prices. Barring a market solution, though, you can expect plenty of unworkable and destructive suggestions on drug importation and compulsory licensing and more. And someday, lawmakers will do something about it.