Big pharma won’t stay silent in drug pricing debate for long
Lately pharma execs have been taking yet another volley of criticism over drug-pricing practices from Hillary Clinton and Marco Rubio—and plenty of others—without offering much in the way of a defense. Now two CEOs say the industry—whose stocks tumbled on a Clinton tweet about ‘price gouging’ and whose share prices have been ailing since July—is quietly formulating its response plan.
When Biogen (BIIB) CEO George Scangos was asked on a third quarter earnings call Tuesday about the industry’s relative silence on the subject of late, he predicted drug companies would soon weigh in. “Obviously, there has been a lot of rhetoric recently,” Scangos said. “The industry is preparing a thoughtful presentation of a different perspective on drug prices and the value that we bring to patients and the medical community.” (Scangos is chairman-elect of the industry’s trade association, the Pharmaceutical Research and Manufacturers of America.)
Eli Lilly (LLY) CEO John Lechleiter offered a similar response when asked about the subject by an analyst this morning, on an earnings call: “You can expect to see more coming from the industry,” he said, noting that the response needs to be well-calibrated. “We have to be careful and thoughtful here. I don’t think there is a way you can spend enough money to all of a sudden change people’s mind.”
That said, Lechleiter believes it can be done. “We have a great story to tell,” he said. “If you look at the hepatitis space, the cancer space, diabetes—there are huge advances in recent years…I’ve never been as optimistic about our chance to make a difference.” He added that the media focuses on examples of individual drug price hikes, it has overlooked the fact that expense of drugs as a proportion of healthcare spending has remained “remarkably constant” over the years. Moreover, drug companies, Lechleiter says, are mandated by the government to provide “deep discounts”, and are increasingly under pressure to do so to get their medicines on formularies and to be able to compete for business. “We have more work to do, and you can expect to see more.”
Scangos also doubts the debate will die down anytime soon, particularly in the midst of the presidential campaign, he is confident medicines will be “priced according to the value they bring patients.”
“If we bring forward innovative drugs that make a difference in the lives of patients, they’ll continue to get attractive pricing,” he says, noting Biogen’s work on potential breakthrough Alzheimer’s and (additional) multiple sclerosis meds. Biogen is among companies that have been singled out for criticism in recent months; the Wall Street Journal called out the company for hiking the price of MS drug Avonex—21 times, and at an annual average rate of 16%—over the past decade.
For more coverage of the pharmaceutical industry, see this Fortune video: