Harvard’s Oct. 23, 2015 forum on “Drug Pricing: Public Health Implications”

On October 23, 2015, the Harvard T.H. Chan School of Public Health hosted a forum titled “Drug Pricing: Public Health Implications,” that was moderated by Caroline Humer, a Reuters healthcare correspondent. The forum featured a panel of four individuals who work on drug pricing:

  • Steven Pearson, President of the Institute for Clinical and Economic Review and Lecturer at Harvard Medical School
  • Aaron Kesselheim, Director of the Program on Regulation, Therapeutics, and Law at Brigham and Women’s Hospital
  • Meredith Rosenthal, Professor of Health Economics and Policy at the Harvard T.H. Chan School of Public Health
  • Lowell Schnipper, Chair of the American Society of Clinical Oncology’s Value in Cancer Care Task Force

The discussion covered various issues related to drug pricing in the United States, including the drug pricing practices of other countries compared to the U.S., such as the ability of Medicare/Medicaid to negotiate; clinical trial regulations; drug reimbursement policy and practices; and transparency of R&D costs.

The initial framing of the discussion was valuable for people in the drug pricing field:

  • Aaron Kesselheim offered a concise and effective overview of drug pricing problems in the United States that covered the regulatory landscape, the lack of effective price competition in the market for branded drugs, the inability for Medicare/Medicaid to negotiate prices, and waste and inefficiencies in drug R&D.
  • Steven Pearson showed helpful slides and provided a comparative analysis of high drug prices in the United States and low drug prices elsewhere.
  • Lowell Schnipper, an experienced practicing oncologist, suggested that doctors should act as responsible stewards for their patients, and be more willing to talk about high prices and work to explore alternative, less expensive therapies with patients who cannot afford overpriced treatments.
  • Meredith Rosenthal explained that although the drug market is highly regulated in the United States, there have been numerous market failures in drug pricing. She pointed out that it’s difficult to use old economic assumptions about how markets work to set prices because many patients and physicians are insulated from drug costs through payers. Her suggestion was that policymakers need to keep in mind the distinction between what economists think of as static efficiency — do the right patients get the right drugs — and dynamic efficiency — do we get the right kind of pharmaceutical innovation at the right rate.

While this initial framing of the problem of drug pricing offered good grounds for a critical inquiry into current drug pricing practices in the United States, many of the proposed solutions offered during the course of the discussion were relatively conservative, and often endorsed imposing higher costs on patients or rationing of reimbursements. There was no discussion of ending legal monopolies when prices were excessive, or considering transformative reforms, like delinkage.

Even as he recognized that some pharmaceutical companies misuse their monopolies to charge unreasonably high prices, Steven Pearson suggested that those companies should be disciplined through fines paid to the NIH to cover new medical R&D, rather than having their monopolies revoked.

Mr. Pearson argued that if prices do not align with the determined value of a drug (who does the determining was left unclear), payers should ration drugs through restricted access, for example by lowering the tiers for overpriced drugs, or requiring complex prior authorization processes for doctors who want to prescribe them. He also noted that if a drug aligns with a value judgment on price, perhaps we should extend exclusivity and exclude generic competition.

Although Dr. Schnipper did not defend drug rationing, instead of focusing on solutions to lower the price of drugs, he suggested that doctors should work with their patients to decide what alternative drugs might be available at a less expensive cost. He did not consider what should be done in cases where there’s really only one option, such as for stage 4 HER2+ breast cancer patients that should be treated with T-DM1. He also noted that if a drug may only have modest benefits for patients, they should perhaps forgo those drugs if that money could, for example, be put towards their children’s college fund.

Instead of pushing for strong government intervention in what she herself described as a market that had failed in many ways, Professor Rosenthal seemed to be suggesting, towards the end of the forum, that the U.S. government should merely encourage pharmaceutical companies to align their drug prices with drug values.

Aaron Kesselheim suggested that there should be transparency of the costs of pharmaceutical research and development, but did not explore in concrete ways how to reform the incentive structures for research and development.

Overall, the panelists recognized that high drug prices are affecting millions of Americans, that the United States government has the obligation to act, and that something should be done to curb price increases, but the remedies were few and far between, and in general did not match the aggressiveness demonstrated by the executives running big drug companies.

It’s frustrating that a high-level discussion on drug pricing, hosted at Harvard University, did not feature any voices willing to defend alternatives to the system of granting exclusive marketing rights through patent monopolies.

A recording of the forum will be available shortly at the Harvard T.H. Chan School of Public Health website: https://theforum.sph.harvard.edu/events/drug-pricing/.