A Cheat Sheet for Today’s Drug Price Hearing

BIOtech Now
Brian Newell

The debate over drug pricing is heating up in various states across the country. But today, this important debate will take center stage right here in the nation’s capital. The Senate Committee on Health, Education, Labor, and Pensions will hold a hearing entitled, “The Cost of Prescription Drugs: How the Drug Delivery System Affects What Patients Pay.”

The hearing provides an important opportunity to share key facts about America’s biotechnology industry, facts that are too often ignored in the current back and forth over drug pricing. To help kick off the discussion, here are the top five facts members of the United States Senate — and the American people — should know heading into today’s hearing.

Fact #1: Patients need all the facts about our complex drug cost ecosystem.  Drug costs reflect years of research and development, and the price of a drug is not an arbitrary decision made solely by drug makers. Reports on drug costs often focus on a drug’s list price, but that price reflects neither what patients (and insurers) pay nor what drug companies are paid. If you ‘follow the pill’ from drug maker to patient, you will see that insurance companies, pharmacy benefit managers, and other middlemen have a lot to say about what patients pay out of pocket.

Fact #2: Drug costs continue to be remarkably steady. Drug spending is roughly 14 percent of all health care spending — the same percentage as in 1960. In 2016, the average net price for branded drugs increased just 3.5 percent, and overall spending on prescriptions increased less than 5 percent.

Fact #3. Biomedical research is a high-risk endeavor. Approximately 90 percent of drug development programs fail, and 90 percent of biotech companies are unprofitable. Fortunately, the right policies are in place to encourage drug makers to take the risk, and when the risk pays off, to safely bring new treatments to market and refuel the search for new cures. Not only is the discovery and development of new medicines exceedingly risky for scientific reasons, but threats of punitive policies, like new federal price controls, only add more challenges that would negatively impact the ability to deliver new cures to patients.

Fact #4. Funding for research and development far outpaces advertising. In 2014, biopharmaceutical companies spent 35 times more on R&D than advertising. What does this mean in real terms? It means global private-sector R&D spending hit $150 billion, while advertising reached a little more than $4 billion. No other industry invests a greater share of its revenue back into R&D than the biotech industry.

Fact #5. There are responsible solutions that will promote greater access to affordable medicines. The Council for Affordable Health Coverage — a coalition of insurers, drug manufacturers, consumers, patients, and more — recently revealed a set of commonsense, free-market solutions that would help promote greater access to affordable prescription medicines and lower health care costs by increasing competition, speeding the delivery of generic drugs, and empowering patients.

To learn more about the cost & value of innovative pharmaceuticals, visit DrugCostFacts.org.

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