Recently there have been numerous articles and editorials understandably scrutinizing the increases in pricing of EpiPen produced by Mylan, a generic drug company. The strong reaction to the behavior of Mylan and a few other companies is threatening to impede the ability of R&D-focused innovator companies to provide innovative, life-changing new therapies to patients.
The drug industry comprises thousands of companies broadly separated into two business segments: generics companies and about 4,000 large and small innovator pharmaceutical and biotechnology companies. The generics industry exists to provide a competitive marketplace for older drugs (whose patents and/or other exclusivity have expired) at reduced prices; the biopharmaceutical industry invests in inventing new medicines.
Our healthcare system needs both innovators and generics to operate efficiently. A strong, competitive generics industry supports drug innovation. When multiple generic versions of a medicine are available, this serves to lower the cost of medicines after innovator companies have received a fair return for the enormous risk and investment in research and development of new therapies.
As CEOs of biotechnology companies, our interests are specifically in discovering medicines to treat or cure diseases such as cancers, diabetes, Alzheimer’s, HIV, rare diseases and many other serious or life-threatening disorders. Our companies’ employees come to work every day knowing that their research is critical to the hopes of patients waiting for relief. This is the core of our values, our thoughts, our beliefs and our actions.
Virtually all new medicines today come from companies willing to try new, risky scientific avenues of research to invent better medicines. Because of our actions, the U.S. is the world’s leading drug innovator. Deadly cancers, infections and rare diseases are being cured, people with heart failure are living years longer, and HIV is now a manageable chronic condition; we are on the threshold of new therapies for intractable diseases such as Alzheimer’s, hemophilia and epilepsy. We have the world’s largest community of investors–individuals, venture capitalists and mutual funds–who are willing to invest in this high-risk work, despite the fact that only about 10% percent of drugs entering clinical studies will ultimately be approved. And, our industry invests close to 20% of its revenue in R&D, more than any other industry. Last year this equated to approximately $140 billion, or more than four times the R&D investment of the NIH.
Massively increasing the price of old generic drugs is not our business model. We are concerned that the current sense of outrage, understandable though it is, not lead to superficially easy fixes, Congressional or otherwise, that might “feel good” in the short term but in fact would have far-reaching, negative consequences.
We need fixes to the current system for getting generic competitors to market, once the innovator drug’s patent/exclusivity period has expired. The EpiPen and other similar episodes would not have occurred in the presence of robust generic competition, and there are policies that could accelerate the ability of generics companies to come to market with cheap copies of older drugs.
Drug pricing issues involve not just drug companies, but also entities such as pharmacy benefit managers, insurance companies, wholesalers, pharmacy chains and hospitals, each adding cost to its final price. To begin to deal with drug pricing issues effectively, we must insist on pricing transparency from all these entities. Only when we know where each dollar of a drug’s list price is going will we be able to begin to make constructive changes to the system.
We need all these groups at the table, along with patient groups, doctors, regulators and other segments of the healthcare industry to put in place a framework that will ensure affordable medicines, while not curtailing the extraordinary advances that we all want and urgently need.
Ron Cohen, M.D., is president and CEO of Acorda Therapeutics. Paul J. Hastings is chairman and CEO of OncoMed Pharmaceuticals. Rachel K. King is president and CEO of GlycoMimetics. Jeremy M. Levin, Ph.D., M.D., is president and CEO of Ovid Therapeutics. John M. Maraganore, Ph.D., is CEO of Alnylam Pharmaceuticals. Michael A. Narachi is president and CEO of Orexigen Therapeutics.
