Thursday, December 10, 2009

Recent Press on Drug Prices May Negatively Impact Pharma in Final Senate Reform Legislation

Morning all.

I've been following with great interest the recent negative press regarding high drug price increases as well as this week's House hearing on the same topic. The timing couldn't be worse for pharma. The Senate is still in the process of finalizing it's healthcare reform legislation. There appears to be increasing interest to extract more concessions from pharma as the legislation is finalized.

Waxman, in his opening statements to the House's Hearing on recent drug price increases by the Energy and Commerce sub committee said "It is hard to escape the conclusion that the industry is positioning the pricing of its products for enactment of the new health reform legislation." and "we cannot write the pharmaceutical industry a blank check as we reform the health care system". Finally, "To date, the Senate has so far not gone as far as the House with their drug-related provisions. When we do sit down with the Senate, I think the pharmaceutical industry’s recent price increases will be exhibit A"

By the way... the widely quoted AARP number based, upon Schondelmeyer's work , for last year's price hikes of 9% includes strictly a select group of brand name drugs and wholesale level.   Vernon in his testimony  suggests a broader measure is appropriate and it's closer to 3%.


  1. Last week I spent the week in Charleston, SC attending The Southeastern BIO Investor Forum. This annual meeting is the premier regional life sciences venture capital conference in the southeast spanning from Louisiana - VIrginia. John Martin, CEO of Gilead Sciences was a guest speaker and a number of prominant VC firms were represented as well as early stage start up ventures. During one of the VC panel discussions there was significant emphasis put on the importance of entrepreneurs understanding the business implacations of healthcare reform. It was stated that this is a new criteria VC firms use to evaluate opportunities and assess managements strategic thinking. I'm happy to see someone blogging about healthcare reform and what it will mean to the pharm/biotech industry.

  2. Interesting. Money is smart after all. There is no question that elements of healthcare reform will in many ways accelerate the changes occurring today in which technologies are brought to market and the design of clinical trials and their endpoints. Look for more investment in innovative technology. Look for more comparative clinical trials. And of course... heightened R&D risk!