Week in DC: Additional insight into pharma/biotech industries

Garrett GilesOur guest speaker from Breakaway Policy Strategies provided additional insight into the pharma/biotech industries and how drug costs, marketing efforts, and FDA activities are impacting the bio-pharma/med device landscape.  Some areas of interest included:

Although prescription drug costs get a lot of coverage in the media and even though prescription drug costs are growing, they are growing at a low rate of ~.5% and only make up ~10% of total healthcare costs. It is important to keep an eye on drug costs, but also wise to keep in context with overall healthcare spend and the areas where we can make the greatest dent.

Decision making power at hospitals and healthcare systems are being performed more and more by formulary and procurement officers and less and less by individual physicians. This is due to the consolidation of hospitals and acquisition activity in the space as well as more scrutiny of costs and prices of medications. From a marketing standpoint, this change impacts how effective DTC and sales force efforts are moving forward. The drugs that are able to find a place on the drug formularies are the ones that will benefit while those that aren’t as fortunate might find better use of marketing dollars elsewhere. For these not so lucky products, DTC marketing will be good for increasing patient awareness of a disease state and/or product, but won’t bear much fruit from an increased prescribing standpoint. Getting on the formulary has become king when it comes to doctors’ putting pen to pad.

FDA is beaten up a lot from all sides because it is either too rigid or too lenient, but at the end of the day, FDA officials are trying to do the right thing for both industry and patients. It is important to keep in mind the delicate balance between encouraging innovation and patient safety, both of which are incredibly important for our healthcare system.