On May 19, Paul Howard highlighted the promise of immunotherapy for the treatment and possible eventual cure of cancer but emphasized that it is critical to focus on the long-term perspective.
Key points raised in the article:
- ‘Reducing incentives for innovation (and drug development returns are roughly comparable to those in the software industry) and you would encourage investors to park more of their capital in more lucrative investments (think: Snapchat), and less into research for new cancer cures. While [some] argue that innovation is far less expensive and risky than companies claim, the fact remains that the entire biotechnology industry, launched in the early 1980s, didn’t reach profitability until just a few years ago. That means far fewer drugs in the long run.’
- ‘This isn’t to say that coinsurance and copays aren’t useful – they can encourage more efficient use of care, particularly when effective generics or less expensive close therapeutic substitutes are available. But they shouldn’t be used as a form of outright cost-shifting of what can amount to catastrophic costs.’
- ‘Dr. Kantarjian has diagnosed a real problem, but he has focused on the wrong solution. The enormous sunk costs incurred in creation of new drugs, and the ease with which copy-cat versions of new drugs can be launched once the hard work of unraveling the underlying biology has been worked out by the innovator company requires strong IP protection to get innovator companies to sustain the difficult work of piecing together the data and clinical trials required for FDA approval.’
- ‘The imposition of a number of drug price controls or their functional equivalents in the E.U. – reference pricing, capped drug budgets, health technology assessments, and the like – have all helped shift the epicenter of drug innovation from the E.U. to the U.S. (the world’s largest single pharmaceutical market) from the 1980s to today. (Obviously, there are many other factors at work as well – like government funded basic science research through the NIH.)’
- ‘There is a large and growing literature that suggests that drug treatment offsets other health care costs. The CBO recently estimated that for every 1 percent increase in prescription usage, other health care costs are reduced by .2 percent. Economists at the University of Chicago suggest that over the past 20 years, lifespan increases partly due to medical innovations have led to an increase in wellbeing half the size of total GDP each year – and that a one percent decline in cancer deaths would generate $500 billion in social value.’
The full story can be accessed here.