Conversations and healthy debate about issues facing our industry and the health care system are critical to addressing some of today’s challenges and opportunities. The Catalyst welcomes guest contributors, including patients, stakeholders, innovators and others, to share their perspectives and point of view. Views represented here may not be those of PhRMA, though they are no less key to a healthy dialogue on issues in health care today.
We are pleased to share a blog post from Dieter Weinand, Member of the Board of Management and President, Pharmaceuticals, Bayer.
In so many countries around the world, the quest for access to quality health care is a commonly shared theme. However, as I discussed earlier this year at the Financial Times US Healthcare and Life Sciences Summit, an interest in health care does not always equate to policies that result in better health care.
The increased utilization of medical services associated with growing and aging populations fuels the current trend of rising health spending and puts pressure on health care budgets. This poses a significant challenge for governments, societies and economies around the world.
Understanding the cost constraints that confront both private and public payers, policy approaches targeting medicines’ budgets in isolation for the sake of short-term savings are not the right response. We need a political paradigm where innovation and affordability are seen as two sides of the same coin.
This requires a few things:
- We must look at health care systems holistically to understand the real reasons for spending increases. Expenses for prescription medicines average at 10 – 16 percent of total health care expenses in Western economies and are not the primary driver of health spending growth. The Organisation for Economic Co-operation and Development estimates that some 25 percent of health care expenditure is wasted due to inefficiencies caused by sub-optimal care, or by giving therapies to patients who do not respond. If medicines were used properly, the U.S. health care system could save $215 billion annually. In Europe, medication non-adherence costs governments an estimated €125 billion.
- Policies aimed at making health care more sustainable can’t target medicines’ budgets in isolation. Policies must consider the positive impact of pharmaceutical innovation on other areas in health care, like the reduction of emergency visits or hospitalizations, and on the overall economy, for instance through improved workforce productivity and economic competitiveness. All this can contribute to significant budgetary savings. Ultimately, the period we pay for pharmaceutical innovation is relatively short in exchange for a lifetime of generic prices. Generics currently make up nearly 90 percent of the prescriptions in the U.S., and some 95 percent of the medicines on the World Health Organization’s Essential Medicines List.
- The entire health care system must be oriented towards outcomes and reward value. Medical progress mostly happens incrementally, rarely in one big step forward. Therefore, we have to appropriately value incremental advances, including in safety and efficacy, or formulations and dosing options that significantly increase patient compliance. New information technology, biomarkers, companion diagnostics and the enhanced use of real world evidence can help us to better target medicines for use on the right patient at the right time. And they can form the basis for outcomes-based payment models that enable us to pay for what works. We should move away from rudimentary methods like reference-pricing that leave the patient entirely out of the equation, disregard health care system specifics and ultimately destroy the incentives for continued innovation.
Our industry is ready to transition to a holistic model in which we are not rewarded for the number of pills we sell, but for the actual results achieved in patients. If we cooperate with other stakeholders across the health care spectrum on this journey, I am confident that we can reduce waste, improve lives and better address the needs of growing and aging populations.