The ongoing controversy over Biogen‘s Aduhelm treatment shows that pricing scrutiny has risen to a new level.
The backlash after Biogen set the annual price for the drug at $56,000 — more than five times higher than analyst estimates — was immediate, and exacerbated criticism over the treatment’s uncertain efficacy. The FDA had granted accelerated approval to Aduhelm against the recommendation of an advisory committee. Three members of that committee resigned in protest, including one who called the approval “probably the worst drug approval decision in recent U.S. history.”
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Pharmaceutical experts warn that the controversy could reinvigorate calls for drug pricing reform, potentially impacting the entire industry.
Some members of congress are already launching an investigation into Aduhelm’s approval and pricing. Biogen and development partner Eisai, meanwhile, have taken a defensive stance, working to explain the rationale behind its pricing while also opening the door to potential price change.
In some respects, the attention on this particular drug was to be expected, as it is the first new treatment to be approved for Alzheimer’s in 20 years. However, the breadth of the criticism demonstrates the level of attention now focused on the healthcare industry generally, and pharmaceutical pricing specifically, in the wake of COVID-19.
The pandemic brought to the forefront the critical importance of healthcare in ways not seen for generations. It underscored the vital role that the pharmaceutical industry and innovative medicines have to play in ensuring global safety and security. The upshot has been a surge in support for greater healthcare system spending, which is now expected to grow by 5.8% to $8.8 trillion in 2021.
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By GlobalDataBut with many countries still struggling to bring their economies back on track, policymakers are already looking more aggressively to contain costs. Drug prices are among the main targets.
In the absence of federal legislation, several US states already have passed drug price transparency laws, while the U.S. Centers for Medicare & Medicaid Services plans to require most non-grandfathered private health plans to disclose pricing and cost-sharing information.
However, the heightened focus on pricing and pricing transparency is a global phenomenon. Japan’s National Health Insurance, for instance, recently launched its first “off-year” drug price review, which is expected to lead to price reductions for approximately 70% of major pharmaceutical treatments.
Several countries across the EMEA region, including Italy, Belgium, Kazakhstan, and Saudi Arabia, have moved forward with new or revised rules on pricing and/or transparency, while a group of European non-profit research institutes and other organizations are campaigning for lower and more transparent oncology medicine prices under the umbrella of the European Fair Pricing Network. Turkey, meanwhile, recently set the maximum annual increase to the fixed euro exchange rate used to calculate pharmaceutical pricing at a lower-than-expected 20%.
As a result, pricing backlashes like the one now facing Biogen is bound to happen again, both within the United States and elsewhere, unless pharmaceutical companies incorporate better tools and deeper intelligence into their pricing models.
Advanced analysis on price and reimbursement policy trends, in-depth market data, risk assessment scoring, and other key tools can help market access and planning professionals make informed global pricing decisions. This approach positions drug makers with data-based rationales for pricing decisions and brings greater transparency to the costs involved in the drug development pipeline.
This need for this more advanced and nuanced pricing strategy will only increase as demand for healthcare services and pharmaceutical treatments skyrockets. The healthcare system is anticipating a massive backlog of patients who delayed their care or treatments during pandemic restrictions. In addition, past crises suggest there also may be a surge of new patients requiring behavioral and mental health treatment in the months and years to come.
What’s more, the response to COVID-19 has revealed substantial opportunities for breakthroughs and new areas of growth. mRNA technology, for example, holds potential that biotech firms are just beginning to realize.
More than ever before, success will rely on an ability to spot these trends faster in order to price products more competitively and seize market opportunities sooner.
Learn more about the biggest trends impacting pharma markets and pricing in 2021 and beyond in our latest whitepaper.
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