I was deeply disturbed by Bloomberg’s inaccurate report this morning that attempted to examine drug costs. The article claims it “decodes [our industry’s]…pricing practices.” But, in reality, it does no such thing.
It fails to take in the full picture of biopharmaceutical successes and failures; admits its “proof” is merely guesstimates from an organization that wasn’t involved in pricing decisions; and in some cases, it just plain gets the facts wrong.
First, this article myopically focuses on the successes of our industry—and not the many, many failures or even the many approved drugs that remain unprofitable years later. We rightfully speak of breakthroughs—innovations that result in life-saving therapies. But the reality is that these successes only come after countless setbacks and failures. Only 1 out of 10 biotech companies turns a profit.
Most approved drugs don’t even makes back the average investment in development —let alone the investments into the unsuccessful research that came before it. 90 percent of clinical research goes toward projects that ultimately fail. And virtually every year, tens of billions of dollars in innovative drugs go generic—a cyclical process that has saved consumers and payer $1.5 trillion over the last decade alone.
But despite failures and uncertainty in commercial success, we continue to invest. In fact, our industry invests more into research and development than any other industry—more than 19 percent. And we do that because saving lives is what we do and who we are.
When it comes to the methodology of this analysis, it seems that for Bloomberg, the absence of evidence is evidence. Unfortunately, this is not the case. The article admits it uses data that is—at best—merely estimates without any actual knowledge of the prices at which these drugs are actually sold. This patched-together formula is not proof. In fact, it is far from proof. It is conjecture.
And lastly, the article claims that rebates aren’t keeping up with price increases. That is not true either. IMS Health found that the net prices for brand medicines increased just 2.8 percent in 2015—that’s less than inflation and lower than the year before. And that same study said, “discounts and rebates negotiated by payers continue to rise sharply – offsetting list price increases.” A recent report from PwC said that drug spending is still a “relatively small portion of overall health spending” and called the concerns of cost growth “false alarms.” Through this article, unfortunately, Bloomberg is spreading those false alarms.
I’m proud of our industry—both the successes and the failures that are so critical to advancing medicine. But it’s simply wrong to attempt to report on the most commercially successful drugs without putting that information in context of the broader industry drug research ecosystem. The biotechnology industry stands ready to help address the real concerns in our healthcare system, which too often denies patients access to the life-saving therapies they need, and we will continue to do just that—even in the face of wildly misleading articles like the one from Bloomberg today.