CEO of Turing has more on his plate today than ever before, as Martin Shkreli was arrested for securities violations. Recently, PhRMA CEO and President, Stephen J. Ubi, wrote an editorial for The Hill’s Congress Blog, where he once again reiterated that companies like Turing and Valeant do not represent the pharmaceutical industry as a whole.
Ubi opened his op-ed by stating that PhRMA actually welcomes the conversation that is starting to develop over drug pricing, because he believes “that the longer and deeper the discussion goes, the better lawmakers and the general public will understand the true, profound value these new medicines deliver to America’s patients.”
He continues on to remind readers that while many expressed outrage over companies like Turing and Valeant, PhRMA was also expressing outrage over the shameful actions taken by both companies when they purchased decades-old drugs and dramatically raised the prices. PhRMA does not believe all companies are the same and they also expressed outrage at Turing and Valeant in part because “we have a responsibility to come to the table with solutions, and in order to do that, we must first diagnose the problem correctly.”
According to Ubi, Turing and Valeant are nothing more “hedge funds masquerading as pharmaceutical companies,” citing Valeant’s CEO, who stated that Valeant’s “strategy is quite different from traditional pharmaceutical companies” and that it has “consistently pursued profitable growth through diversification, strong execution and financial discipline,” rather than the typical pharmaceutical company focus on research and development. Turing’s strategy is similar to Valeant’s, which can be evidenced by the fact that Turing’s CEO had a career as a hedge fund manage prior to becoming CEO of Turing.
When you compare the formats of Valeant and Turing to the format and values of biopharmaceutical companies, the differences are stark. For example, Valeant invests less than three percent of total revenue back into research and development. That amount seems small in and of itself, but it seems even smaller when you consider PhRMA members reinvest seven times that amount on average, amounting to an average of twenty percent of revenue being reinvested into research and development. The reinvestment of revenue is crucial to find new and innovative life-saving drugs.
In 2014 alone, PhRMA members invested over $51 billion in research and development. That amounts to more than the entire operating budget of the National Institutes of Health and is a major reason why “cancer death rates are down 22 percent since their peak, 99 percent of patients with early detected melanoma will survive, HIV/AIDS is now a chronic manageable condition, and hepatitis C is now curable in more than 90 percent of treated patients.”
The controversy over Valeant and Turing is propelling politicians and other policymakers to contemplate, and even advocate for, “sweeping change in public policies that risk slowing this progress and delaying the development of the next generation of treatments and cures for patients fighting Alzheimer’s, Parkinson’s and other rare and debilitating diseases.”
Ubi highlights the fact that the proposals being put forth by policymakers “ignore the reality of the highly competitive market for prescription drugs, where health insurance companies are able to negotiate deep discounts off the list prices of medicines.”
Ubi advocates for the government “clearing the backlog in generic drug applications at the Food and Drug Administration, which is preventing efficient market-based competition from generics manufacturers.” This suggestion was also made at a recent Senate Committee on Aging Hearing by several of the witnesses.
In any event, no single industry or government will be able to solve today’s health care challenges by themselves. The only way we can ensure success of the health care system and health of citizens around the world is for companies, industries, and governments, to work together to discuss practical solutions. The rhetoric and behavior surrounding companies like Valeant and Turing are working against the grain.