In an interview with the Financial Times, Joe Jiminez, CEO of Novartis, predicts that November’s election may “trigger a sea change in the industry.” It is his prediction that the constant pricing pressures industry is currently facing will only increase when a new administration takes over – regardless of whether that administration is headed by Hillary Clinton or Donald Trump, noting,
“We believe that, no matter which candidate wins, we will see a more difficult pricing environment in the U.S. We all have to plan for new pricing models in the US that could help us ensure the sustainability of the system as the population ages.”
Jiminez also predicted that pressure from the United States would not stop at our borders, he believes it may have a ripple effect “across the pond” to Europe and that drug makers on both continents could be in trouble if they do not adapt to the changing climate.
Some of the new pricing models include pay-for-performance deals, similar to those Novartis recently agreed to with Cigna and Aetna. The arrangements are based on clinical trials that showed Novartis’ new heart failure drug Entresto could keep patients out of the hospital. The agreement concludes that if the drug performs as promised, rebates decline; if not, rebates will increase. Sanofi, Regeneron, and Amgen have also struck results-based agreements with payers on their PCSK9 cholesterol fighters.
Jiminez has been a proponent of pegging drug prices to real-world results for some time now. He believes that approach allows pharmaceutical manufacturers to capitalize on innovative and effective drugs instead of developing drugs that only offer incremental benefits. He also believes that results-based drug payments would cut overall healthcare costs, noting, “if you move to that kind of pricing system over a period of years, you will be able to take out a lot of waste.”
Where Do the Candidates Stand?
Both presidential candidates have proposed varying measures with respect to drug pricing. Democrat Hillary Clinton, for example, has proposed reimportation of medicines (particularly those where United States prices are more than double prices in other countries). Republican Donald Trump has also said that he wants the United States to have access to imported drugs. Clinton also: backs a monthly cap on out-of-pocket prescription costs for patients; wants to stop direct-to-consumer drug company advertising subsidies and reinvest those funds in research; require drug companies that benefit from taxpayers’ support to invest in research, not marketing or profits; prohibit “pay for delay” arrangements; fully fund the FDA’s Office of Generic Drugs to clear out the generic drug backlog; and lower the exclusivity period from 12 to 7 years; among other things.
With polls continuing to tighten, and debates coming up over the next few weeks, it is hard to say which candidate will have the honor of being our next president. Not only is the presidential election uncertain, but the Congress is also up in the air, meaning we can’t be positive that certain “to do” items get done during the lame duck session, or wait until January 2017 with a new slate. One thing is for sure, though, pharmaceutical companies and their pricing of prescriptions are sure to remain at the forefront of political discussions.