AHIP 2022: Addressing drug prices requires all stakeholders at the table, experts say

LAS VEGAS—Stemming the tide of rising drug prices will require bringing all the major players to the table, experts said Tuesday.

David Holmberg, CEO of Highmark Health, said health insurers want to approve every new therapy that hits the market, but drug companies need to meet payers halfway in finding ways to address climbing expenses.

For example, he said, look at the release of a hypothetical upgrade to an MRI machine. The new device improves accuracy by 5% but costs 25% more than earlier models. This is a clear mismatch, Holmberg said.

Incentives from the healthcare system should push drugmakers to develop cutting-edge therapies, but there also must be "agreement on what the expectations are" both for the cost and outcomes related to these products, Holmberg said.

"We want to say yes," he said, "but I think it's going to take everybody at the table to deal with this."

Holmberg was joined by Scott Gottlieb, M.D., former Food and Drug Administration commissioner, on a panel at AHIP's 2022 conference.

Gottlieb said the challenge for regulators looking to address drug prices is the fact that a one-size-fits-all solution will not work in this market. He said instead that policymakers should consider pharmaceuticals in three buckets: drugs that are in an active market with significant rebate activity; drugs that currently monopolize the market but will lose that monopoly in the near future; and drugs that are likely to monopolize a market in the long term.

"I think we need to think about the market as those three segments and think about different policy solutions for each of them," Gottlieb said.

For instance, potentially curative gene therapies would likely fall into the third category. Should one of these treatments prove truly effective in curing cancer, the incentive for other drug companies to enter the market and challenge it will be far smaller, which would allow that product to keep a high price.

Common drugs like statins, by contrast, would fall in the first category. And while there are concerns about how the market functions, a therapeutic category with many choices and high rebate volumes does show the market working as intended.

In the second category, payers are unlikely to see the price concessions they'd like in the short term as the therapy maintains its monopoly, Gottlieb said.

He said areas to focus on for drug pricing efforts could be in that category, where payers lack price leverage or visibility into potential price leverage. However, addressing drug pricing does not on its own spell doom for the pharmaceutical industry, Gottlieb said.

"You're not going to throw this industry off of a cliff," he said.