Powerful investors urge pharma execs to justify their pricing

pricing

Pharma CEOs and trade groups have been scrambling to draw a bold line between “bad actors” on drug pricing--with Valeant Pharmaceuticals and Turing Pharmaceuticals as exhibits A and B--and their own pricing decisions. But some top industry investors think they haven’t done enough.

A group of top U.S. funds met with lobbyists and biopharma execs to spur more action, Bloomberg reports. Drugmakers need to wrest the pricing narrative away from politicians and rescue biopharma stock values along the way, the investors contend.

The biotech trade group BIO and pharma’s PhRMA have each launched feel-good campaigns to win consumers over. BIO’s effort, begun in February, focuses on pharmaceuticals’ life-sustaining benefits, using patient stories to back up the case. PhRMA said the same month that it would spend several million dollars this year on digital, radio and print ads that focus on pharma’s scientists and success stories. The organization has also touted the cancer “moonshot” as an example of pharma’s efforts to combat the disease.

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Fidelity Investments, T. Rowe Price and other healthcare-heavy funds aren’t sure these ads and awareness campaigns can turn the tide of public opinion. Since the pricing issue broke wide open last August with Turing Pharmaceuticals’ much-publicized 5,000% hike on the toxoplasmosis drug Daraprim, politicians and media reports have added more evidence of enormous-and-immediate price hikes on newly acquired, older meds--a la Valeant and Horizon Pharmaceuticals--and slow-but-steady-and-sizable increases on commonly used brands marketed across the industry. The latter include cancer drugs and insulins, whose prices have ratcheted upward year after year, despite--or even, in some cases, because of--new competition for patients.

The issue has been so prominent that a group of Wall Street Journal reporters were finalists for a 2016 Pulitzer Prize for their ongoing coverage of drug prices.

BIO Chairman Ron Cohen told Bloomberg that a half-dozen or so funds were present at the meeting, and biopharma executives and at least one VC fund also attended. Biopharma stock prices have plummeted since last July--by 27%, in the case of the Nasdaq Biotechnology Index--and as big shareholders in the healthcare sector, these investors have a major vested interest in public opinion about the industry and its pricing. They worry that politicians will act on the outcry and take some kind of legislative action to overhaul the U.S. pricing and reimbursement system.

Presidential candidates Hillary Clinton and Donald Trump have both hit the issue: Clinton issued an infamous tweet about Turing’s price hike, and has run ads targeting Valeant’s “predatory” pricing. Donald Trump broke with longstanding Republican opposition to recommend Medicare be granted the power to directly negotiate drug prices.

Meanwhile, in Congress, two prominent committees are investigating drug pricing, the Senate Special Committee on Aging and the House Committee on Oversight and Government Reform. Both have held highly publicized hearings featuring pharma executives and their pricing moves.

Analysts have said they doubt lawmakers will take substantial action against pharma’s pricing power. Medicare price negotiation, re-importation of drugs from lower-cost countries, and other proposals have come up before, only to be shot down. But these investors apparently worry that this time will be different.

- see the Bloomberg story
- check out BIO's "Time is Precious" campaign

Related Articles:
Why pricing critics are winning--and how pharma can argue back
Aiming for redemption, Valeant reveals new drug pricing committee
Can the cancer moonshot help cure Big Pharma's big bad reputation?
Can BIO's heartfelt image campaign win hearts and minds? Pharma skeptics aren't convinced
PhRMA kicks off new ad campaign to doctor pharma's tarred image
Turing Pharma price hike debacle tars entire pharma industry's reputation

Image courtesy of Penn Medicine.

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