How will the pharmaceutical industry evolve on drug pricing?

High drug prices are a constant consumer complaint about health care. Judy Woodruff sits down with Stephen Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America, at the Spotlight Health Conference at the Aspen Institute to discuss the Senate Republican health care bill, the prospects for lowering drug prices and the connection between the opioid crisis and the industry.

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    As the battle over health care rages in Congress, one constant complaint from consumers is over drug prices.

    Judy Woodruff is in Colorado with our look at that issue — Judy?


    Thanks, Hari.

    The Pharmaceutical Research and Manufacturers association, or PhRMA, is the nation's largest group representing drug companies.

    Stephen Ubl is its president and CEO. I sat down with him here at the Aspen Spotlight Health Conference today, and began by asking about the latest Republican plan to overhaul Obamacare.

    STEPHEN UBL, President and CEO, PhRMA: Well, it's still a very fluid dynamic, as you know. We haven't taken a formal position on the bill.

    I think it's clear there is a direction towards more autonomy for states to shape their insurance markets, as well as shaping their own insurance designs. So, we will be very engaged in this discussion, and the prism with which we will look at it is making sure that patients have access to the breakthrough treatments and cures our industry is developing.


    The other major health care associations, hospitals, doctors and others have been pretty critical.

    Is the pharmaceutical industry alone in a way, or almost alone, in not being as worried, as critical of what the Republicans are doing?


    Well, I think it's fair to say that those stakeholders are focused on the same issues that we are. But, again, I think the bill is still making its way through the process. And we will be very engaged as the process unfolds.


    We heard President Trump during the campaign speak about the high cost of prescription drugs. I guess it wasn't long after the election he talked about the drug companies "getting away with murder."

    We're now hearing, though, that the administration may not be coming down as hard on the pharmaceutical industry as some thought moving to a different system. Is that your sense of what's happening, that you're going to get maybe a better treatment from this administration than some had expected?


    I don't think I want to speculate on what the administration will do in this area.

    I will say that we had a very productive discussion with the president with some of our leadership earlier in the year, and I think the president's focused on two things. One is ensuring that we continue to lead the world in developing better treatments and cures, and, two, on jobs, ensuring that we have more domestic investment in the United States.

    And I think our industry is really poised to deliver on both those fronts. Our industry spends $70 billion a year in research and development, which is more than any other industry. So, in general, we're encouraged by the direction we're heading.


    I think everybody agrees drug prices are out of control in this country. Pfizer announced it's raising the prices of 100 drugs by 20 percent, including some well-known drugs like, I guess, Viagra and Lyrica.

    Drug companies have been sued, I know, by some state attorneys general — alleged collusion and rising prices. What is going on? What do you see is the problem here?


    Well, I should start by trying to make sure that we're on the same fact basis.

    So, if you look at Express Scripts, which is a leading PBM in the industry, pharmacy benefit manager, looking at spending in 2016, drug spending went up 3.5 percent. And net prices are up 2.8 percent.

    So, if you went two or three years, prescription drug spending was actually the lowest growing or slowest growing category in health care. We did go through a spike in 2014 and 2015, I would argue, due to some anomalous factors.

    FDA approved a number of new drugs. Medicaid was expanded. And a new cure for hepatitis C was introduced, which revolutionized the treatment of that disease and will obviate the need for liver transplant, as well as reduce the incidence of liver cancer.

    We're now on the back-half of that spike, if you will. The python has sort of digested the tennis ball. And even CMS' own actuaries estimate that drug spending will be between 4 and 6 percent for the next 10 years, which is roughly in line with overall health care spending.


    At the same time, a lot of finger-pointing going on in the health care industry between the drug companies, the pharmacy benefit managers, hospitals, insurers. A lot of those fingers are being pointed, though, still at your industry.


    We think there are — we take these issues very seriously. And we think there are pragmatic, consumer-oriented solutions to address some of the issues that have been raised.

    So, for example, a lot of the media attention in the last year is focused on companies that are really nothing like our member companies. They are companies that are taking old drugs without market competition and raising the price dramatically. And we think there are policy solutions, primarily at the FDA, that would address those situations.

    Similarly, we think, as an industry, the pricing model needs to evolve. We need to move away from paying for volume to paying for the value of care.


    And I was reading that's what the administration is — among the things the administration is looking at.

    I have also read, though, that the critics look at that and say that, in the end, it may work for some people, but it's not going to work for everybody who needs prescription drugs.


    Well, again, our sector may be a little bit lagging other health care sectors in this movement towards paying based on value, as opposed to the volume of care. But it's one of the rare areas in health care policy where everyone agrees.

    Payers want to move in this direction, our members want to move in this direction, providers want to move in this direction. Again, take cancer therapy. We want to be able to offer novel discounts. But there's a number of public policy barriers that stand in the way of moving in that direction.


    One of the fundamental questions I have heard out there is: Why can't, for example, Veterans Administration folks get drug prices much lower than what ordinary people can get? Why can't there be — why can't there be some sort of movement in that direction? Why can't there be negotiations with Medicare over the price of drugs?


    I think there's been a little bit of a clinical trial on this question.

    If you look at countries that have adopted models like the V.A. on a broad scale — the U.K., for example — what you find is that patients have less access to novel therapies. And we think that would be a movement in the wrong direction.

    So the V.A., keep in mind, is a closed system — a small number, relatively small number of hospitals and consumers. If you take those price controls and expand them to the entire market, you're going to reduce patient access and we think create distortions that impact the rest of the market.

    So we believe it's much better to move in the direction of negotiations in the private sector between our members and plans, again, to try to achieve some specific metrics tied to patient outcomes and then be reimbursed on a differential basis based on whether the patient actually achieves those outcomes.


    Finally, opioids. As you know very well, I think something like 33,000 people died from opioid abuse in 2015. They expect the number to go up last year, this year, and so on.

    We know towns are overwhelmed. Critics are saying so much of this lies at the feet of drug companies that are promoting drugs that people get hooked on, and then those same companies minimizing or even trivializing the impact.

    How do you, as someone who sits in such a responsible position, look at this?


    I can assure you that — speaking personally on behalf of the industry, that no one trivializes the crisis that we're facing in this country around opioids.

    But it is a multifactorial crisis. There's a lot of stakeholders that need to come together on a solution — prescribing physicians, manufacturers, treatment facilities, state and local governments. And, for our part, we're committed to engaging with all those stakeholders to find solutions.


    And is there going to be a change, do you think?


    Well, just to give you an example, the industry is in favor of mandatory training for health care professionals to learn more about pain management, to learn more about appropriate prescribing. So we want to be part of the solution to this problem.


    Stephen Ubl, pharmaceutical manufacturers association, thank you very much.


    Thank you. It's great to be with you.

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