By Malorye Allison, ReformPlans.com, Feb. 20, 2008
Medicines are not the biggest piece of the health care costs pie (they account for approximately 10% of spending), but they are a favorite target for cost-savings efforts. That puts groups like the Biotechnology Industry Organization (BIO) on the defensive, and leaves Jim Greenwood with a lot of explaining to do.
Greenwood
is the president and CEO of Washington, D.C.-based BIO, which
represents just over 1,000 biotechnology companies and related groups
in the United States and overseas. While some of BIO's members are
involved in fields like agriculture or alternative energy, a large
number of them are working on new types of medicines, an expensive and
highly uncertain business.
Needless to say, BIO and its constituents are firm believers in
innovation. But not all new medicines today represent truly important
advances, and as the prices keep going up and up, it's been harder and
harder for many to buy BIO's arguments justifying those price tags. The
people footing the bills--insurance companies and Medicare, in
particular--are closely scrutinizing the actual value of biotech
products.
Greenwood, however, claims that there is a way for the nation to both
cut costs and remain the most innovative health care market in the
world. He points out that if legislators sawed an extreme 25% off the
cost of drugs, that step would reduce the overall health care bill by
only 2.5%--a literal drop in the bucket. Meanwhile, "seventy-five
percent of our health care budget is spent on chronic diseases," he
says. "The most effective way to make health care affordable is to
reduce the rate of those diseases, and we are well positioned to help
with that.
"We're working to understand the genetic basis of disease, and
how to prevent those genes from expressing those diseases," he
explains. "If our industry is supported and nurtured, we can reduce the
incidence of chronic disease."
Key Take-Away Points
We should innovate, not regulate, our way to expanded insurance access.
Cutting drug costs by 25% would reduce the health care budget by only 2.5%.
Chronic diseases account for 75% of health care costs.
Biotechs and pharma companies develop almost all new medicines.
The free market provides powerful incentives for that work.
One new term that has become very popular in Washington, and that works both for and against biotech, is "comparative effectiveness." Legislators and others are interested in making sure that when they pay more for treatments, there is a good reason for it. "That is a good idea if it is a way to provide good data to health care practitioners," Greenwood says, "but not if it is used to limit their decisions. We don't like the idea of the government saying 'We think that drug A is better than drug B.' It's rarely that simple."
There are inefficiencies in every system," he adds. "The question is, Who is best prepared to reduce the inefficiencies: doctors or bureaucrats?"
Greenwood points to what has happened in Europe as a red flag for the United States. European countries have stringent drug price controls in place. "They got access [to health care] and affordability," he says, "but at a cost in terms of quality and innovation. Now many patients do not have access to the best treatments, and they [the European nations] are not reimbursing sufficiently to give companies room to innovate."
The United States, meanwhile, has an access and affordability problem. "Let's not go down the European road," he says. "Let's use innovation to improve quality, fight disease, and reduce costs."
Critics charge that drug developers focus mainly on the best ways to line their pockets, not to reduce overall health care costs. But Greenwood says the two goals are in synch. According to him, large pharmaceutical companies have gone after mainly the big blockbuster markets, because of their large sales staffs and overhead, but biotechs "try to look at the unmet needs and take on those challenges: most biotechs are focused on diseases for which there haven't been significant new products in a while."
He also challenges the popular "misnomer" that much drug research and development is paid for by the National Institutes of Health. "What NIH does is important, but that is at the very beginning stages," he says. "It is overwhelmingly the small biotechs and drug companies that figure out how to make a product that can treat specific diseases safely and effectively. That has never been done by the public sector to any significant degree."
Part of the problem, however, is that the United States has long footed most of the bill for that innovative research, and that imbalance is even worse now that the Europeans are leaning heavily on price controls. Still, Greenwood hopes that Americans will see drug price controls as a short-term fix that will lead to higher costs, and lower quality of life, down the road.
He says that BIO wants to be "part of the solution" for health care reform. Once the presidential race is down to two candidates, BIO will work with other groups to develop "stakeholder consensus" behind whichever candidate's platform overlaps most with theirs.
"We hope the next president and next Congress will be successful in expanding access," Greenwood says. "But if they take a short-term view, and slash prices to cut costs, there are likely not to be enough resources available to innovate the kind of products needed to dramatically reduce chronic disease.
"The promised land is where we nurture drug discovery and employ brilliant researchers to reduce and eliminate chronic disease."
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