A report from London in today’s Daily Telegraph suggests that:
The Government is urging pharmaceutical companies to lower their initial prices for new drugs, with the promise that the [National Health Service] will pay more for them if evidence proves greater effectiveness.
Could this be the beginning of a chink in the concrete wall that has been growing on the grounds of the National Institute for Health and Clinical Excellence (NICE)?
I would suggest that we would be wise not to expect too much from this initiative. It may be appropriate for certain highly innovative new drugs that radically change the way in which we manage a range of diseases over time (examples include Avastin, Rituxan, and drugs like the TNF inhibitors). I would doubt that it will be so easy to use this model for drugs that make small improvements in the management of chronic disorders that we can already manage pretty well.
Having said that, this may represent an important acknowledgement by a major governmental payer that innovation does come at a cost. We can hardly expect the global biopharmaceutical industry to invest millions of dollars in new product development if there is minimal potential for a return on the investment. Nor can we expect investors to back companies that need to take high risk if there isn’t going to be an appropriately high return on that risk.
It will be worth watching the evolution of these discussions with care. If the British government can find an accommodation over such pricing issues, one can expect other major payers to follow suit over time. But the proof will be in the pudding. Will the payers actually make those payment promises once the data are there to justify them? Promises come cheap until the bill is due for payment. Ask anyone on Wall Street!
Filed under: Business strategy, Health and drug costs, health economics | Tagged: pharmaceuticals, pricing, UK
