Today's question: More than ever before it has become crucial for manufacturers to prove the value of drugs today. Why is it so and what does proving that value entail?
John: I think that’s the major question facing biopharmaceutical R&D today. First of all, there are tremendous pressures on healthcare systems as healthcare costs continue to go up. So, healthcare systems—and by that I mean the various payers, be they governments, insurance companies, etc.—are increasingly reluctant to pay the price—or the full price anyway—of a new drug unless the new drug offers some major advantage over existing medications.
For example, if you have a new compound that will lower LDL cholesterol—most people accept that that’s an excellent marker for heart attacks and strokes, so by lowering it you can hopefully ward those kinds of events off—if you have a new drug that can lower LDL, the payer or even a doctor or patient will say: “Well, this is nice that this is a new drug, but it costs about $3 a day and I’m taking Atorvastatin or Lipitor right now and that only costs a dime a day. Why do I care about your new drug?” Your story can’t be “Oh, it’s a new mechanism and so it should be better” because nobody is going to care. They’ll say: “Go off and prove that it’s better and when you have some data, come back and show me.”
So, that has really raised the bar. In the old days it was safety and efficacy and getting FDA approval. Now you have to start dealing with payers and physicians willing to prescribe drugs to patients and the patients themselves—depending on how much money they have to pay out of their own pocket—for these new drugs. If they are not proven to be better, nobody will bother taking them.Download the rest of John's podcast here.
John LaMattina will be the moderator for the Wall Street State of the Industry Address: Mergers
& Acquisitions in the Industry — Near Term Solution to a Long Term Problem? featuring panelists including Colin Shannon, President, CEO and Director, PRA International; Michael Martorelli,
Director, Fairmount Partners; Eric Coldwell, Managing Director, Robert W. Baird & Co.; and Douglas Tsao, MPH, U.S. Specialty Pharmaceuticals & CROs, Barclays Equity Research. Would you like to join John for this panel at Partnerships in Clinical Trials this coming March 30-April 2, 2014? As a reader of this blog, when you register to join us and mention code XP1900BLOG, you're eligible to save $100 off the current rate!