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What Pharma Giant Johnson & Johnson’s CEO Has to Say About the Drug Price Debate

The Fortune Global Forum, our annual gathering of world business and government leaders, concludes tomorrow in Toronto. But there’s already been plenty of meaty conversations about the issues influencing the entire spectrum of industries—including health care. And the CEO of one of the largest pharmaceutical companies in the world had some thoughts to share on the hot-button issue of drug pricing.

My colleague Erika Fry interviewed Johnson & Johnson chief executive Alex Gorsky on Monday. It was a wide-ranging conversation that hit on issues like the state of biopharmaceutical innovation and the challenges facing the industry at large. But Gorsky’s comments about drug pricing—including about recent shifts precipitated by the Trump administration—stood out.

“We’ve never seen time where the level of innovation has been richer and more exciting than what we’re seeing today,” Gorsky told Erika. “The challenge is, how do we pay for that? How do we price it in a responsible manner?”

Those are some critical questions. And Gorsky offered up a few opinions on where things currently stand, as well as his thoughts on new movements meant to disclose drug prices in direct-to-consumer pharmaceutical ads.

“I think educated consumers and patients are in everyone’s best interest,” he said. “Transparency is also a benefit.”

Now, here comes the caveat… “But we need to be aware of not making things even more confusing. What price do we talk about? List price? The net price? The price to the government?”

It’s a fair point given America’s Sudoku-puzzle of a drug pricing landscape. List prices are set carte blanche by drug makers, and then negotiated down with various middlemen such as pharmacy benefits managers and insurers (discounts that don’t necessarily pass on to patients). According to Gorsky, all of the relevant players, including drug makers, have a part to play in fixing the mess by shifting the way we pay for drugs—for example, by paying for the health value treatments provide rather than how often they’re used.

“We absolutely do need to take the lead,” said Gorsky. “We’re going to have to work together in different ways. We need all components of the system working together… How can we get better transparency, and more outcomes-based mechanisms in place?”

Good question.

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