Comments on: BIOTECH: Value-Based Pricing In Biotechnology http://healthaffairs.org/blog/2006/10/23/biotech-value-based-pricing-in-biotechnology/ The Policy Journal of the Health Sphere Fri, 20 Nov 2009 20:04:42 -0500 hourly 1 By: James C. Robinson http://healthaffairs.org/blog/2006/10/23/biotech-value-based-pricing-in-biotechnology/comment-page-1/#comment-106 James C. Robinson Tue, 24 Oct 2006 22:59:51 +0000 http://healthaffairs.org/blog/2006/10/23/biotech-value-based-pricing-in-biotechnology/#comment-106 Yes the taxpayer is generous in supporting biomedical research through the NIH, but that is far from producing ready-to-use drugs and biologics. Unless the taxpayer wants to pay even more (his/her lust for further taxes is limited, I fear), we will continue to rely on private investors, including venture capital, licensing deals with big pharma, and the stock market, to pay for much of the lab research and clinical testing. And unfortunately, science is hard; most ideas prove to be losers. The biotech industry as a whole has been unprofitable since the beginning, in the sense that if you had invested in the whole sector and earned the profits from the profitable firms and suffered the losses with the unprofitable firms, you would still be in the red ink. For more color on this factoid, see the <a href="http://tinyurl.com/yk3b7m" rel="nofollow" rel="nofollow">Wall Street Journal</a> piece of a couple of years ago. Yes the taxpayer is generous in supporting biomedical research through the NIH, but that is far from producing ready-to-use drugs and biologics. Unless the taxpayer wants to pay even more (his/her lust for further taxes is limited, I fear), we will continue to rely on private investors, including venture capital, licensing deals with big pharma, and the stock market, to pay for much of the lab research and clinical testing. And unfortunately, science is hard; most ideas prove to be losers. The biotech industry as a whole has been unprofitable since the beginning, in the sense that if you had invested in the whole sector and earned the profits from the profitable firms and suffered the losses with the unprofitable firms, you would still be in the red ink. For more color on this factoid, see the Wall Street Journal piece of a couple of years ago.

]]> By: LFBaltrucki http://healthaffairs.org/blog/2006/10/23/biotech-value-based-pricing-in-biotechnology/comment-page-1/#comment-105 LFBaltrucki Tue, 24 Oct 2006 21:55:17 +0000 http://healthaffairs.org/blog/2006/10/23/biotech-value-based-pricing-in-biotechnology/#comment-105 Perhaps the "loud criticism" stems from the frustration of the "business as usual" approach that the entire biotechnology industry, and our government is taking towards cancer and other diseases. On the one hand, many diseases are on the brink of being defined at the molecular and cellular level, (thanks to publically-funded research). On the other hand, it's business as usual, and this is NOT going to get us to the promised land, (i.e. sustainable health care). I don't have precise figures for Neil Gardner, but it is clear that much of the research that leads ultimately to biological therapeutics and other medical breakthroughs is publically-funded, through NIH grants and other mechanisms. Strictly speaking, it is the government that actually owns the experimental data, and the researchers that created it are considered inventors. Entrepreneurial activity is the norm between government or academic laboratories and biotech companies through a variety of relationships/mechisms that in essence results in the transfer of intellectual property rights to the companies. Next the company would need to attract investors to fund a project (and this would be a high-risk high-reward situation) but I have yet to figure out how the government or the tax-payers who funded the research in the first place, actually benefit (other than getting to pay those huge medical bills for their new drugs). The reality is that there is NO OVERSIGHT concerning the decisions that are made or the process that is followed where the basic science information that is owned by the public is transformed into clinical therapeutics, which are owned by the drug companies. I am all for innovation. I would even like to think of myself as an entrepreneur, but there is definitely something wrong wiht this picture. It is time to do something different! First of all, we should have a broad as well as a focused perspective. Broadly, anything that is publically funded but not clearly acting for the public good, (i.e. the biomedical research enterprise) needs to be reviewed. This should consist largely of representatives from stakeholder groups who are not engaged in biomedical research, but have made the commitment to acquire a basic knowledge of the relevant issues. More specifically, using new expensive technology (biologicals) to treat advanced stages of cancer is clearly not an effective long-term strategy or in the best interest of patients, health plans, or our nation. Right now, less than 5% of the NCI's annual budget is allocated for clinical prevention trials. We deserve better. We deserve oversight and transparency, not business as usual. On the other hand, companies need to be profitable. (Despite the fact that drug prices are not related to development costs) there are ways to facilitate drug development that would impact those costs. We need to be creative to be competitive. We need partnerships where different components of the "health care system" are actually working together rather than against each other. Integrated delivery systems, (such as the VA or Kaiser Permanente) have something that is incredibly valuble to any drug or diagnostics company; a correlation data-base. In addition to the patient information itself, access to blood specimens (the most accessible tissue for banking) would important. Together with "computational biology", and advanced screening technologies biologicals would be developed at low cost and in record time. This would be a partnership between the health plan / agency and the company. The specifications for the desired properties of the drug would be agreed upon up front, (i.e. oral agent, few mild side effects, etc.). Utilzation of the patient specimens and data-base for other purposes other than agreed to in the original agreement would be based on the company's performance of the original contract. Perhaps the “loud criticism” stems from the frustration of the “business as usual” approach that the entire biotechnology industry, and our government is taking towards cancer and other diseases.

On the one hand, many diseases are on the brink of being defined at the molecular and cellular level, (thanks to publically-funded research). On the other hand, it’s business as usual, and this is NOT going to get us to the promised land, (i.e. sustainable health care).

I don’t have precise figures for Neil Gardner, but it is clear that much of the research that leads ultimately to biological therapeutics and other medical breakthroughs is publically-funded, through NIH grants and other mechanisms. Strictly speaking, it is the government that actually owns the experimental data, and the researchers that created it are considered inventors.

Entrepreneurial activity is the norm between government or academic laboratories and biotech companies through a variety of relationships/mechisms that in essence results in the transfer of intellectual property rights to the companies. Next the company would need to attract investors to fund a project (and this would be a high-risk high-reward situation) but I have yet to figure out how the government or the tax-payers who funded the research in the first place, actually benefit (other than getting to pay those huge medical bills for their new drugs).

The reality is that there is NO OVERSIGHT concerning the decisions that are made or the process that is followed where the basic science information that is owned by the public is transformed into clinical therapeutics, which are owned by the drug companies.

I am all for innovation. I would even like to think of myself as an entrepreneur, but there is definitely something wrong wiht this picture. It is time to do something different!

First of all, we should have a broad as well as a focused perspective. Broadly, anything that is publically funded but not clearly acting for the public good, (i.e. the biomedical research enterprise) needs to be reviewed. This should consist largely of representatives from stakeholder groups who are not engaged in biomedical research, but have made the commitment to acquire a basic knowledge of the relevant issues.

More specifically, using new expensive technology (biologicals) to treat advanced stages of cancer is clearly not an effective long-term strategy or in the best interest of patients, health plans, or our nation. Right now, less than 5% of the NCI’s annual budget is allocated for clinical prevention trials. We deserve better. We deserve oversight and transparency, not business as usual.

On the other hand, companies need to be profitable. (Despite the fact that drug prices are not related to development costs) there are ways to facilitate drug development that would impact those costs. We need to be creative to be competitive. We need partnerships where different components of the “health care system” are actually working together rather than against each other.

Integrated delivery systems, (such as the VA or Kaiser Permanente) have something that is incredibly valuble to any drug or diagnostics company; a correlation data-base. In addition to the patient information itself, access to blood specimens (the most accessible tissue for banking) would important. Together with “computational biology”, and advanced screening technologies biologicals would be developed at low cost and in record time.

This would be a partnership between the health plan / agency and the company. The specifications for the desired properties of the drug would be agreed upon up front, (i.e. oral agent, few mild side effects, etc.). Utilzation of the patient specimens and data-base for other purposes other than agreed to in the original agreement would be based on the company’s performance of the original contract.

]]> By: Neil Gardner http://healthaffairs.org/blog/2006/10/23/biotech-value-based-pricing-in-biotechnology/comment-page-1/#comment-104 Neil Gardner Tue, 24 Oct 2006 17:02:45 +0000 http://healthaffairs.org/blog/2006/10/23/biotech-value-based-pricing-in-biotechnology/#comment-104 How much of this research is already supported by taxpayers through grants for research from government sources. If much of the legwork IS already funded by taxpayers, what's up with these huge later prices? Check the below NIH news release out. Who will eventually make the big bucks on this taxpayer funded reseach?? http://www.nih.gov/news/pr/oct2006/nidcr-23.htm How much of this research is already supported by taxpayers through grants for research from government sources. If much of the legwork IS already funded by taxpayers, what’s up with these huge later prices?

Check the below NIH news release out. Who will eventually make the big bucks on this taxpayer funded reseach??

http://www.nih.gov/news/pr/oct2006/nidcr-23.htm

]]>