Biomedical innovation requires health system innovation

It’s time for drug developers to put as much energy into optimizing drug access pathways as they put into drug creation

The Inflation Reduction Act is one more attempt to bend the healthcare cost curve by reducing drug costs, but that’s the wrong goal. We should be focusing on health efficiency — capturing the full value of biomedical products to society by improving appropriate, timely and equitable access to medicines. This is the only way to balance economic sustainability and the transformative potential of biomedical innovation.

Despite the complexity of biology and high failure rates of individual candidate medicines, collectively the biopharma industry has been wildly successful at creating solutions to health problems. The past 15 years have yielded approvals of more than 600 novel drugs, including the advent of durable cell and gene therapies for cancers, hematologic conditions such as β-thalassemia and sickle cell disease, and other serious conditions. Moving forward, new medicines in the pipeline promise to change treatment paradigms both for rare diseases and some of the largest health challenges, including diabetes, obesity and metabolic dysfunction-associated steatohepatitis.

With this promise, however, has come growing concerns about rising costs. Distribution of medicines in the U.S. is channeled through a healthcare system riddled with $800 billion of waste annually, with roughly 25% of this waste ($200 billion) related to medication access and use. Potentially disruptive pharmacy budget increases are raising alarm among healthcare decision-makers. Simultaneously, the benefits of medical advances are not reaching all elements of society at the same rate, if at all, fueling additional angst about the financial investment needed to equitably improve health.

U.S. healthcare expenditures represented 17% of GDP, $4.5 trillion, in 2022, with $429 billion (9.5%) of those healthcare costs medication-related. While healthcare utilization in the U.S. has decreased since pre-COVID-19 levels, total drug spending has increased by $103 billion over the past five years, with a median annual treatment cost of new medicines rising to $250,000 in 2023. The understandable fear is that new drugs will drive costs unsustainably higher.

One policy response that has gained political support in the U.S. (as it has been used extensively in other countries) is to actively constrain drug prices and drug utilization to ensure the long-term sustainability of the system. 

That approach might make sense if our goal was to maintain the current status of health at the same or lower costs, but it won’t incentivize the innovation needed to address medical needs that are currently unmet — including the more than 7,000 known diseases for which there are no approved treatments.

That outcome may seem undesirable, even indefensible, yet the passage of the IRA made clear the political appetite and public support for price controls.

Industry leaders cannot continue the status quo of focusing nearly all their ingenuity and creativity on R&D, the upstream components of the system. Equal energy must be applied downstream, to elements of the healthcare delivery system that shape medication access pathways to patients.

In 2024, it is not enough for biopharma companies to make new medicines. If they want to build public trust and change the political tide, they must be — and be seen as — proactive partners in solving the problems preventing drugs from being used effectively, in the right patients, and in ALL the right patients — meaning, equitably.

 If the goal is to advance population health through biomedical innovation, we must take measures to improve the efficiency of medication access pathways in healthcare delivery or suffer the consequences of more and more cost containment measures.

The case for investing more in healthcare, not less, would be easier to make if we were able to demonstrate better — and more equitable — outcomes for incurred costs.

It is time to embrace health efficiency as a guiding principle for action. For drug developers, this means leaning into systemic change that would couple broad availability with judicious use.

Effecting change

Let’s face it. Care delivery, including access to and use of medicines, is not a sexy topic. It doesn’t rouse excitement like cutting-edge science and its promise of medical breakthroughs. But what’s the point of a breakthrough that doesn’t reach the patients who need it, or that is used in the wrong patients, in whom it may do more harm than good?

The problem of effective and equitable drug access is a multiheaded beast, involving many stakeholders across the healthcare ecosystem. Solutions won’t be simple, and companies can’t effect change on their own. The complexity is daunting, but companies should resist the temptation to default to the status quo of having eyes for R&D only.

We call on companies to show leadership by engaging with multistakeholder collaborations to draft a road map to health efficiency that focuses on creating a streamlined path for routinely getting the right treatments to the right patients at the right time.

The term health efficiency acknowledges the twin goals of improving health and increasing efficiency. Both are critical and must be considered together. Biomedical innovation is vital for health improvement and is only possible if innovation is rewarded. Likewise, improving health efficiency will require innovating on systemic solutions as much as on biomedicines.

What systemic solutions do we think are necessary to capture the full potential value of new medicines? There are probably dozens — elucidating and prioritizing them is one reason we need to capture the brainpower of multiple stakeholders, and could be step one for a precompetitive consortium.

But we can certainly define three as a good start.

Precision medicine will be key. Personalizing the selection and dosing of costly medicines, such as autoimmune biologics, requires the development of diagnostics by companies, reimbursement by payers, and use by physicians. 

Second, we must develop the ability to track outcomes at scale to support innovative value-based payments for necessarily costly innovations, such as durable cell and gene therapies.

Third, repurposing generic drugs to save lives, while in some cases simultaneously reducing costs, must become routine.

These may not be the first changes needed, but one thing is clear — a blueprint for achieving health efficiency is long overdue. The next wave of innovation must be translating new medicines into value for patients.

Effecting change will require broad recognition by all stakeholders that this unwieldy, difficult work to fix the pathways by which drugs reach patients is as essential as innovation in creating the drugs themselves. Market inefficiencies in our current system fuel financial waste and harm patients. Members of industry have much to gain by helping the system catch up with the science, which is the only way to ensure that biomedical innovation is part of the solution to long-term sustainable healthcare.

Gigi Hirsch is director of the Center for Biomedical System Design and NEWDIGS at Tufts Medical Center. Jane Barlow is EVP and chief clinical officer at Real Endpoints.

Signed commentaries do not necessarily reflect the views of BioCentury.