Global consequences of the Biden Rx pricing plan

Will Canada and other nations feel the impact from reformed drug pricing plans for the USA? (1,000 words, 5 minutes)

Aug 29, 2023

The global pharmaceutical industry is bracing for the potential impact as Washington pushes forward with a plan to lower drug prices in federal U.S. formularies, including Medicare and Medicaid. According to a press release on the White House website, the move aims to reduce healthcare costs and enhance accessibility for Americans. However, analysts say the measure could also lead to reduced profitability for pharmaceutical companies, ultimately affecting drug accessibility and innovation in Canada and worldwide.

KFF Health News, an independent source for health policy research, writes that the Biden administration’s drug pricing plan centres on the negotiation of drug prices for federal formularies. This approach differs from previous policies where the government was prohibited from directly negotiating with pharmaceutical companies.

One main concern of drugmakers is that lower negotiated prices for new medications may cut into pharma companies’ revenues, hindering their ability to invest in substantial research and development. However, an article published in the Harvard Business Review notes that it is possible for the U.S. to lower drug prices without sacrificing innovation. Further, research conducted by the University of Southern California offers options to mitigate the plan’s adverse impacts on the prescription drug market.

For their part, pharma industry leaders have spoken up about the controversial plan. Reuters reported that Pfizer CEO Albert Bourla called the plan “negotiation with a gun to your head,” saying that the drug pricing reform is not a negotiation but an arbitrary setting of prices. Eli Lilly’s CEO David Ricks also voiced his concerns about the potential impact of Medicare price negotiations on drug development. In an interview with NBC News, Ricks said he worries about the harm this plan could do to “new cures and possibilities in medicine.” Additionally, Reuters also reported that Merck has sued the U.S. government, seeking to halt the drug price negotiation program.

If the administration’s drug pricing plan is successful, other countries might experience similar pressures to reduce drug prices domestically. In Canada, a decrease in research and development activities may also affect the country’s reputation as a hub for pharmaceutical innovation, potentially diminishing the country’s standing in the global pharmaceutical arena. An article on the Commonwealth Fund writes that it is essential to find a balance between fair prices for drugs and preserving incentives for R&D.

Additional sources:

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BeiGene Canada launched a partnership fund to support Canadian, non-clinical, cancer research and innovation. The $500,000 BeiGene Canada Fund for Research and Innovation will collaborate with other health research funding and programs across Canada.

LISTEN UP

In season 10 of the NPC Podcast, Shanil Ebrahim, Partner and National Life Sciences and Healthcare Consulting Leader at Deloitte Canada discusses improving healthcare literacy, expanding the use and integration of healthcare data, and public-private collaborations promoting equity in healthcare. Hear him in conversation with podcast hosts Mitch Shannon, Jim Shea and Mark McElwain.

HEALTHBIZ REWIND

This feature of NPC Healthbiz Weekly looks back at some of the most insightful moments from previous NPC Podcast episodes. In Healthbiz Rewind, you’ll read bold life sci predictions made during the renowned “Prognostication Korner” segment of the NPC Podcast.

Wendy Adams
General Manager
Galderma Canada Inc.
Thornhill, Ont.
Season 10, episode 05
Listen to this episode here

What bold predictions will you make about the life sciences industry during the coming 12 to 24 months? (This episode was recorded in Feb. 2022)

I’m not a big visionary. I’m a good strategist. I don’t like the scary part of AI, but I like the positive side of AI. I think AI’s got such a deep-reaching opportunity and accelerator to it, and I believe there will be applications we don’t know about yet that will be used in our industry.

I think smartphones will be an instrument that we use for diagnostic reasons. I see the trend of phones playing a much more active role in healthcare management, and not just apps. I think there are better diagnostic tools that can be attached, like a credit card system that we can manage ourselves in our own homes. I’d love to reduce the queue from booking appointments and doing tests and having to drive places versus having a test that can attach to your phone.

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