A version of this article was first published on September 30, 2020 on Politico.com.
In December, the Department of Health and Human Services (HHS) followed through with then-President Trump’s Executive Order threat by issuing a rushed order to implement a ‘Most Favored Nations’ (MFN) pricing policy, aimed at reducing the financial burden patients face as they seek treatment. The former President’s aims were right but the policy is flawed, with enormous negative consequences for the future of scientific innovation in America. Not surprisingly, the MFN policy was not implemented as a result of a federal injunction halting implementation of the proposal until HHS completed notice and comment rulemaking. As these cases work their way through the courts, it is imperative that stakeholders in Washington – including the new Congress and President Biden’s Administration – come together to pursue market-based solutions to lower out-of-pocket costs for patients.
We at Genentech have long advocated for, and advanced, proactive policy solutions to create a more accessible and equitable healthcare system. But the proposed MFN solution — one of importing pricing practices from countries that value healthcare and human lives differently than the United States — is unfortunately not one that will benefit the American people in the long-run. And it comes at a time when the biopharmaceutical industry is waging war against COVID-19 through an “all-hands-on-deck” campaign to develop and deliver safe, effective vaccines and treatment regimens, with more than 1,600 active clinical trials currently in progress.1
As someone who has spent his entire career in the healthcare space, and whose colleagues engage daily with policymakers, private sector leaders, and patient advocacy groups on potential solutions, I can tell you what will work: market-based policies that dramatically lower patient out-of-pocket costs while encouraging the continuation of robust research and development (R&D) that leads to important medical breakthroughs; more companies like Genentech that commit boldly to responsible medicine pricing; and the willingness of all parts of the healthcare ecosystem to put aside differences and work together to drive solutions for American patients.
The proposed MFN policy, which was expanded to include pharmacy (Part D) medicines in addition to physician-administered (Part B) medicines, would import arbitrary price controls from other countries into America. Concerns from across the healthcare continuum are well-known, highlighting a long list of issues, including the impact on R&D investment — particularly for biotech startups — severe financial burdens on community physicians, and monetary incentives taking precedence over a clinician’s treatment recommendation for their patients.
At Roche and Genentech, we invest more than $12 billion per year in R&D, more than any other healthcare company in the world. Let’s be clear: biopharmaceutical innovation through the U.S. private market is essential to develop safe and effective vaccines and treatments for COVID-19. It is also our only hope for the next big public health crisis, such as antimicrobial resistance (AMR), or for countless other diseases including cancer, Alzheimer’s disease, and rare disorders with no treatment options. President Trump’s own Council of Economic Advisors released a report that indicated that international reference pricing policies like MFN will lead to 100 fewer new medicines being approved for patients in the next decade.2
We believe it is time to apply the same bold thinking that’s behind our life-changing science to our policy solutions and to our pricing philosophy. This means finding a solution that truly improves upon the healthcare system we have in the United States without jeopardizing it.
Setting aside this dangerous impact on medical innovation, the MFN policy does not address any other factors that determine the actual cost of a medicine for any given patient — from no insurance or high deductibles and coinsurance to hospital mark-ups. There are other innovative ideas that could deliver much-needed savings without the impact to medical innovation or restricting patient access to new medicines. Genentech, working with other companies and our trade associations, has been actively engaged in putting forward these types of recommendations that promise to generate billions of dollars in savings, including responsible pricing actions, innovative payment models, and new free-market competition mechanisms.
In 2018, for example, Genentech put forward a market-based pricing model that would accelerate competition for Part B medicines in the commercial sector, allow Centers for Medicare & Medicaid Services to capture the benefits of negotiations between manufacturers and private payers, and reduce costs for a much larger proportion of patients than MFN.
Another potential solution is indication-based pricing, which would enable companies to price differently based on the value of each medicine in specific indications of use with varying patient populations. This would be particularly helpful in the pandemic setting, where medicines that were originally intended for disease areas with small patient populations are being researched for COVID-19 and, if approved, could end up treating millions of patients globally.
We believe these are necessary components of an effective long-term strategy to alter flawed reimbursement mechanisms because they leverage the proven free-market system that has long spurred American innovation, and they can bring real savings to patients.
It is imperative that the medicines we develop are accessible to anyone who is prescribed them. And that means it’s not just policy that should change. Companies must think differently about price increases. The existing model, which incentivized companies to dramatically increase the prices of their medicines annually and then rebate back significantly to a middleman for preferred coverage, does not in any way benefit patients — and it perpetuates the rising cost of medicines. It is time for rebate reform that passes saving onto patients, coupled with each company taking smaller price increases based on careful consideration of factors including inflation, continued investment in research of medicines, or enhanced patient benefit proven through clinical research and real-world evidence.
At Genentech, we are committed to doing our part through a responsible approach to pricing. As an industry leader, we have taken on this responsibility, facing head-on the challenges of creating a comprehensive workable solution. Over the last several years, Genentech has launched 13 groundbreaking medicines in areas of great need, including multiple sclerosis, hemophilia, spinal muscular atrophy and different types of cancer and we’ve priced these medicines at or below (and in some cases significantly below) other available FDA-approved medicines used to treat the same disease.
Moreover, in 2020 alone, through Genentech Access Solutions we served more than 287,000 people and 60,000 eligible patients were provided free medicine by the Genentech Patient Foundation. And we will continue our mission to discover and develop innovative therapies and ensure patients can access them.
The most impactful breakthroughs for the toughest medical conditions of our time were not born out of siloed thinking or in service of scoring political points. They were the result of a rigorous scientific approach, built on a diverse base of knowledge acquired over time and measured on whether or not they could have a statistically significant impact on the challenges they set out to address.
At Genentech, we believe it is time to apply the same bold thinking that’s behind our life-changing science to our policy solutions and to our pricing philosophy. This means finding a solution that truly improves upon the healthcare system we have in the United States without jeopardizing it. One that values patient life, innovation, and the ability of patients to access new medicines at a price that is cost-effective. This means finding a solution that is strategic, deliberate and structured. This means ending the cycle of finger-pointing, maneuvering, and blame-shifting that has plagued the crisis of unaffordable healthcare in this country.
We stand ready to work with the new administration, our industry colleagues, and policymakers in Washington to bring diverse perspectives to the table, generate fresh ideas that are designed to address the challenges of our unique healthcare system, and pressure test those ideas to ensure the proposals that move forward are the ones that are most likely to succeed on behalf of the only stakeholder that really matters: patients.
Fritz Bittenbender is Senior Vice President, Access & External Affairs, for Genentech. In this capacity, he has oversight of Genentech’s pricing, contracting, and distribution strategies; external partnerships with associations and patient advocacy groups; and federal, state, and local government affairs teams.