A Delicate Balance — Pharmaceutical Innovation and Access NEJM

Perspective
A Delicate Balance — Pharmaceutical Innovation and Access

William W. Chin, M.D.

N Engl J Med 2015; 373:1799-1801November 5, 2015DOI: 10.1056/NEJMp1513227

Comments open through November 11, 2015


As an endocrinologist, a former dean at Harvard Medical School, and a one-time head of research and clinical investigation at a biopharmaceutical company, I've seen many encouraging advances in medicine, plenty of discouraging false starts, and myriad areas where answers remain unknown. But today, as chief medical officer and executive vice president of Pharmaceutical Research and Manufacturers of America (PhRMA), I am seeing a therapeutic golden age like no other in my four-plus decades in medicine.

I believe ongoing biopharmaceutical advances hold great promise for us all, and they lie at the center of a national debate over the cost and value of health care in general and new medicines in particular. This debate demands our attention, because whereas it is essential to accelerate scientific and medical progress, it's also critical to ensure that patients have affordable access to the care they need, want, and deserve. For the sake of patients, we need to strike a delicate balance in policies that achieve both biopharmaceutical innovation and access.

The study by Motzer et al. in this issue of the Journal (pages 1803–1813) provides a good example of current innovation, showcasing two important drugs that offer options to patients with renal-cell carcinoma and other cancers. More important, the study reflects a broader, deeper pattern that cuts across diseases. New therapeutic approaches such as immunooncology, for example, have helped increase the 5-year survival rate across all cancers by 42% since 1975, according to the National Cancer Institute. Hepatitis C is now curable in more than 90% of treated patients, and progress in endocrinology has expanded our arsenal of weapons against diseases such as diabetes, obesity, osteoporosis, and hypertension. Motzer and colleagues highlight just 2 of the more than 500 new medications that have been approved in the United States since 2000.

Yet even with these new options for treating or curing disease, the proportion of health care spending devoted to retail prescription medications remains about the same as it was in 1960. Moreover, despite the pipeline's promise, drug spending is projected to remain at about 14 cents out of every health care dollar between 2015 and 2024, even when nonretail medications, such as those administered by physicians, are included.1 Medications also generate benefits that cascade through our health care system, by improving patients' productivity and quality of life, extending lives, and averting more costly hospital and institutional care.

It's possible to deliver so many new medications to patients while still managing costs because the United States relies on competitive markets to set prices and encourage innovation — a system that, as I see it, is working well.

After approval by the Food and Drug Administration, a new medication enters a market that is increasingly characterized by competition from other brand-name and generic drugs in the same therapeutic class. This market then does its work. Payers demand demonstration of value and drive patients to the lowest-cost options using aggressive cost-containment strategies: tiered cost sharing, prior authorization, step therapy, and incentives for prescribers to adhere to preferred clinical pathways.

Drug purchasing is dominated by a few very large and sophisticated payers. By the end of 2015, the top four pharmacy benefit managers are expected to control more than 80% of all prescriptions.2 These payers bargain fiercely for rebates and other discounts (resulting in prices lower than a new drug's list price). The new breakthrough hepatitis C medications, with cure rates above 90%, are a good case study: within a year, competing medications entered the market, driving down prices by about half3 while broadening access to the long-term benefits these cures deliver to a heavily burdened health care system.

At the end of a brand-name medication's lifecycle, generic competitors enter the market, mostly capitalizing on innovative biopharmaceutical companies' prior work. The United States makes more efficient use of generics than other countries: nearly 90% of all U.S. prescriptions are filled with generics that are sold at a fraction of the price of the original brand-name medication, helping ensure long-term affordability. And the new biosimilars pathway is expected to deliver additional cost savings.

No other part of the health care system delivers this type of built-in savings. Our system recognizes the considerable challenges and expense of the research and development process and the need to reward innovation, and it balances these needs against access.

Recent history shows that we can find answers that bring value to our health care system. After all, in the 1980s there was no effective treatment for HIV–AIDS, and many observers warned that the disease would bankrupt the system as increasing numbers of patients began requiring acute end-of-life care. But instead of spiraling toward bankruptcy, we developed new medications, and today we can treat many more patients with HIV–AIDS, keep them out of the hospital and the costs of their care stable, and provide them with a near-normal lifespan. Rather than cutting off progress, we innovated and got more for our health care dollar and for patients.

Of course, this balanced U.S. system is by no means perfect. All of us in the health care system can do better for our patients so that they have access to affordable care while we add to our arsenal of medications. By working with other stakeholders, we can achieve both. It won't be easy. But if we can first agree that we all share a commitment to value, our next steps become clearer.

I recommend that we first close gaps in the evidence base across the continuum of care. Biopharmaceutical companies are committed to actively collaborating with government, academia, payers, physicians, and patients to fill these gaps (our participation in the Patient-Centered Outcomes Research Institute is just one example).
Second, the health care system can empower physicians and patients with the best available evidence through shared decision making, well-designed care pathways, and decision-support tools.
Third, as the Medicare Payment Advisory Commission, the National Academy of Medicine, and others have noted,4 we can refine our ability to measure care quality and performance — particularly clinical outcomes, consideration of patients' preferences, and quality of life. And we can do so in ways that are administratively feasible for physicians and that enhance, rather than impede, their interactions with patients.

We in the United States are fortunate to have biopharmaceutical product approval, lifecycle, and market-based–purchasing systems that work to balance cost and value, and our ongoing innovation benefits patients and society.
As we move forward, I believe we must recognize that what determines value is varied and individual, and any centralized government-purchasing model would probably result in drastically limited choices for physicians and patients.
In the United Kingdom, for example, use of a national cost-effectiveness standard has created barriers to patients' access to many important new cancer treatments. In fact, in 2013, the U.K.'s National Institute for Health and Care Excellence recommended against coverage of all six cancer medications it reviewed.5

As we strive to advance both innovation and access, I argue that we must also avoid creating new systems that would eliminate the very incentives that have fostered U.S. innovation for decades. After all, U.S. research and development has vastly outperformed that of former biopharmaceutical powerhouse countries such as Germany and Switzerland, which have instituted price controls that limit patient choice.

Meeting the health care challenges we face starts with a shared commitment to improving patients' lives and advancing value in a competitive health care market. I believe it requires payers, government, academia, health care providers, patients, and industry to pull in the same direction.
By doing so, we can improve the delivery of patient-centered, high-quality care, accelerate continued progress toward addressing unmet needs, and ensure continued access to affordable care. U.S. patients deserve nothing less, and industry is ready to help.