Managing Biotechnology

Chapter 7Drug Pricing in Context

Introduction

Balancing patient access to therapeutics in the face of rising healthcare costs is the central challenge facing healthcare stakeholders. This issue is no longer exclusive to emerging markets, where affordability remains challenging despite government reforms and a rapidly improving economic picture. In developed markets, new waves of scientific innovation have produced breakthrough therapies for grievous diseases such as cancer and hepatitis C. These life-saving products frequently come with list prices near or above $100,000 per patient, and some must be taken chroniclly, straining the budgets of health systems after years of economic austerity. Kenneth Frazier, chief executive officer (CEO) of Merck & Co., notes, “The good news is that [biopharmas] are on the verge of incredible breakthroughs if we don't kill the innovation engine. The bad news is unless we make changes in the system, people won't be able to afford the wonderful things that are coming out of our pipelines” [1]. This comment demonstrates that biopharmaceutical companies understand that getting the patient access/drug pricing balance right is essential.

In recent years, the issue of the affordability of prescription drugs has become more urgent, playing out in the pages of high-profile scientific and medical journals, mainstream news outlets, and, increasingly, on social media sites such as Facebook and Twitter. Oncologists and infectious disease specialists, for ...