Time for an ‘honest conversation’ about drug pricing, O’Brien says
National Pharmaceutical Council CEO calls for payment based on value, exposing PBM payments
Ignorance about the path from scientific discovery to approved drugs, high out-of-pocket costs, and a Byzantine healthcare system that obscures net prices while inflating list prices have fueled policies that threaten biomedical progress, John O’Brien, president and CEO of the National Pharmaceutical Council, told BioCentury.
In an interview with The BioCentury Show, O’Brien, who led efforts to reduce drug prices as an HHS official during the Trump administration, said that whoever wins the White House in November will step into a political atmosphere that is hostile to biopharma companies. “Regardless of who wins, we’re living in a policy environment that’s impacted by misguided political hostility towards an industry that makes life-saving medicines. What’s good in politics is often not good policy.”
For the past three years, O’Brien has led the NPC, a pharmaceutical industry-funded think tank; he’s also held policy positions at HHS, CMS, BlueCross BlueShield, and PhRMA.
While it is difficult to predict what drug pricing policies Trump would pursue if he is re-elected, “Beltway chatter” suggests he would undercut the Inflation Reduction Act’s Medicare drug price negotiation program and attempt to revive international reference pricing proposals, O’Brien said.
When he served in the Trump administration, O’Brien defended a proposed international reference pricing system for Medicare Part B drugs. He told The BioCentury Show, however, that while he understands the “temptation to look outside the United States for answers,” he does not believe international reference pricing is good policy. “Central planning and price regulation doesn’t lead to innovation and adopting the practices of international systems that limit patient access isn’t the answer.”
“What’s good in politics is often not good policy.”
O’Brien expressed support for passing drug company rebates to patients, a policy that was promoted during the Trump administration, and for taking steps to make drug pricing more transparent. It is time, he said, for “an honest conversation about where that money is going.”
Payments to PBMs, including rebates of about 50% to commercial health plans to place branded drugs on preferred formularies, along with substantial discounts to Medicaid and discounts through the 340B program generate profits for middlemen, subsidize premiums and generate revenues for hospitals.
The biopharma industry and society would be best served by policies that pay for medicines based on their value, rather than “seeing medicines as an arbitrage opportunity to pay for other healthcare goods and services,” O’Brien said.
He warned that the IRA’s Medicare drug price negotiation program and its restructuring of Medicare Part D are going to place additional stress on biopharma companies and patients. The drug negotiation program incentivizes the development of biologics over small molecules and of drugs for narrow indications that affect younger populations, while disincentivizing post-approval studies to better characterize drugs.
O’Brien expressed concern that Part D plans will limit access to drugs that have been selected for price cuts, and that increased liability for drug costs will lead Part D plans to limit patients’ access to medicines.