Price competition for New drugs doesn’t exisit

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I was in the Netherlands at a science meeting (Yep ProfG let’s me out occasionally) and a pharma (marketing) person gave a presentation.

They were there for the people with MS and it wasn’t all about the money. Now the Dutch are not known for their tact and tend to say it how it is, from their prospective, and “mushroom food” was uttered.

I think Jeffery J in the audience said

“It’s all about the money, money, money
We just need your money, money, money
Let’s help the MS world dance,
But It’s all about the price tag
It’s about the (uh) ch-ch-ching ch-ching
It’s about the (yeah) bl-bling-bl-bling
Let’s help the MS world dance,
But it’s all about the price tag (OK)”

There is no doubt that pharma involvement has made a big difference to the MS World, indeed there are the treatments but there are MS nurses that have come into being because of pharma.

However, they are a business and profit margins are part of the deal.

To be fair to the speaker in the NL they are correct that the media headlines seldom says good things about them. But profit is indeed part of the motive.

From personal experience, developing new symptomatic treatments is not going to be easy as their price tag is too low to get the juices of CEO’s going. Our attempt to get a new drug failed in part because of this.

So remember if academics get there first with a cheap neurorptoective and/or repair agent, in the long-term it is not going to be good news as pharma will disengage and go where the grass is greener or is that where the cash is greener.

Yep Pharma is most interested in the Greenback and there (USA) it is evident that there is no true price competition in the pharma world. This particulalrly evident with MS drugs.

Competition and price among brand-name drugs in the same class: A systematic review of the evidence. Sarpatwari A, DiBello J, Zakarian M, Najafzadeh M, Kesselheim AS. PLoS Med. 2019 Jul 30;16(7):e1002872.

BACKGROUND:Some experts have proposed combating rising drug prices by promoting brand-brand competition, a situation that is supposed to arise when multiple US Food and Drug Administration (FDA)-approved brand-name products in the same class are indicated for the same condition. However, numerous reports exist of price increases following the introduction of brand-name competition, suggesting that it may not be effective. We performed a systematic literature review of the peer-reviewed health policy and economics literature to better understand the interplay between new drug entry and intraclass drug prices.

METHODS AND FINDINGS:We searched PubMed and EconLit for original studies on brand-brand competition in the US market published in English between January 1990 and April 2019. We performed a qualitative synthesis of each study’s data, recording its primary objective, methodology, and results. We found 10 empirical investigations, with 1 study each on antihypertensives, anti-infectives, central nervous system stimulants for attention deficit/hyperactivity disorder, disease-modifying therapies for multiple sclerosis, histamine-2 (H2) blockers, and tumor necrosis factor (TNF) inhibitors; 2 studies on cancer medications; and 2 studies on all marketed or new drugs. None of the studies reported that brand-brand competition lowers list prices of existing drugs within a class. The findings of 2 studies suggest that such competition may help restrain how new drug prices are set. Other studies found evidence that brand-brand competition was mediated by the relative quality of competing drugs and the extent to which they are marketed, with safer or more effective new drugs and greater marketing associated with higher intraclass list prices. Our investigation was limited by the studies’ use of list rather than net prices and the age of some of the data.

CONCLUSIONS: Our findings suggest that policies to promote brand-brand competition in the US pharmaceutical market, such as accelerating approval of non-first-in-class drugs, will likely not result in lower drug list prices absent additional structural reforms.

Tony Fonda or perhaps some other reader, will chip in here but academics (myself-included) are really naive when it comes to the world of businesss, drug pricing, and development of treatments.

It’s about the money, money, money Yeah the Money Money, Money loop

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MouseDoctor

7 comments

  • Dear MD,

    Simply put: real price competition doesn’t exist for either 1 of 2 reasons: the market is not really free (and nor do I think that is a ‘good thing’ for a variety of reasons) regarding the concept of absolute freedom that an Adam Smith advocate may support, or the market is not well regulated enough.

    Regulation involves the State and the State likes to pretend that in areas like drugs they are as hands-off as possible. After all, those previously naughty Pharma companies have developed robust moral compasses these days and the Thalidomide issue can never ever occur again. *Coughs*

    The v v expensive lobbyists employed by the drug companies repeat this dogmatic view of ‘all for the best’ and ‘patients first at all times’ in order that they are not subject to excessive – in their view – controls.

    Apparently, unfettered Private Enterprise is the only way to have real freedom and innovation and without a light touch then innovation would be stifled and patients would suffer. *Coughs again*

    Citing successful models in other parts of the world where there is greater government support of independent science and research merely shows your naivety about the nuances of our world-beating British superiority because, for some reason, we are not like those damn colonials. *Dissolves into a coughing fit*

    The US is a great example of where the power of the companies allows unchallenged monopolies and price-fixing. The share prices depend on drug pipeline (the real fishing around for a novel compound research and hopefully being first to market with it), market growth (identifying new forms of a disease, lowering the entry criteria for classification – think asthma in the 90’s), the margins on currently marketed compounds, the competitive landscape (think how many ACE inhibitors there are now but MSD? cleaned up with Enalapril for some time as they had the first-mover advantage), the promotional costs , the regulatory and/or commercial environment (how malleable is the FDA and how much can the insurance companies afford?) and most importantly of all the time left under patent protection before generic competition destroys margins and how likely it is to transition to OTC (Over The Counter) in pharmacies (think Ranitidine) where the profitability can be extended.

    A company share price is a reflection of all of the above plus the belief in the firm, as well as any M&A activity. What the market believes is key (think Boeing and the 737 Max 8 debacle).

    The firms may make nice with scientists, medics and the government but they are a slave to the share price when it comes down to it. If I own shares then I didn’t buy them for charity, I bought them for income and expect the company to operate within the law, as creatively and thoughtfully as possible, to maximise growth in the share price.

    What happens is a version of the Tragedy of the Commons. Alternatively…

    Look at a fully socialist system and try and recall how many novel compounds came out of the USSR during the days of the Cold War. I can’t see people or investors rushing to that model, especially the BIG money investors the companies need.

    The trick is striking the right balance of regulation that allows confidence to invest yet throttles the manipulative practices (rituximab/ocrelizumab I’m told) while support independent research too.

    I am told that it is like riding a unicycle whilst balancing a ball on a knife-edge. Once you have the bugger stable(ish) you are loathe to mess with new inputs.

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