Merck CEO: Don't Judge All Pharma On Turing

While it was rumored the Obama administration was ready to unveil some sort of administrative action to rein in drug costs at an invitation-only Nov. 20 forum that brought biopharmaceutical makers together with payers, employers, consumer and patient advocates, health care providers and other stakeholders, no such rule, regulation or guideline was revealed.

But some at the meeting insisted that doesn't mean an action isn't in the process of being crafted, with its release coming before President Barack Obama leaves office in January 2017, given top Health and Human Services (HHS) officials were adamant something must be done to ensure the quarter of Americans unable to afford their prescription drugs have access to the medicines they need.

"The reality is, cures and improvements in the quality of life are not available to everyone," declared Andy Slavitt, acting administrator at the Centers for Medicare & Medicaid Services (CMS), warning that the "trend of diminishing access will continue if we do not work together to find viable solutions."

HHS Secretary Sylvia Mathews Burwell said the big enemy against the US health care budget has been specialty drugs, which she said has accounted for 65% of spending on new medicines in the past two years.

"Innovation is meaningless if nobody can afford it," argued Debra Whitman, chief of public policy at the US senior organization AARP, which released a report on Nov. 20 showing that the annual retail cost of therapy with one specialty prescription drug was $53,384 per year – more than a $1,000 above the median US household income and twice the median income for Medicare beneficiaries.

But Burwell noted that specialty drugs are not the only drivers of increased health care spending – pointing out there's also been huge leaps in the prices of some older medicines.

It was inevitable the two companies that have been condemned the most in recent months for the massive price increases of their older drugs – Turing Pharmaceuticals AG and Valeant Pharmaceuticals International Inc. – would come up at the HHS pharmaceutical forum.

Merck & Co. CEO Kenneth Frazier, who also serves as the chairman of the drug industry trade group the Pharmaceutical Research and Manufacturers of America, didn't hold back – calling Turing and its CEO Martin Shkreli a "hedge-fund manager masquerading as a pharma company" and an "aberration."

"I don't like Turing being used as an exemplar of this industry," Frazier charged about the firm, which had raised the price of its toxoplasmosis medicine Daraprim (pyrimethamine) by nearly 5,500% – from $13.50 per pill to $750. "I don't consider them to be a part of the industry."

Shkreli, whose company is under investigation by New York's attorney general and lawmakers on Capitol Hill, has yet to follow through on his September promise to drop Daraprim's price, although it's been rumored he is considering lowering it by about half of what Turing currently is charging, which would still be nearly an 2,700% increase from what the drug cost US patients before the firm acquired the medicine this past summer from Impax Laboratories Inc.

Frazier was more reserved about Valeant, which also is under federal and congressional investigation – only saying the firm's model "is to not do any research."

"We believe great drugs can change the world. We don't believe profiteering changes the world," Frazier said, whose own company recently acknowledged it also is under federal investigation for its pricing practices.

But looking at the issues of rising costs and improving patient access overall, the Merck chief said his company shared the "concerns that have been expressed" and agreed there needed to be a "serious discussion between all the participants in health care about how we can provide greater value to the people we all exist to serve."

Using a recent study from Washington-based health care consultancy group Avalere Health, Frazier insisted "prescription drug costs are not the primary driver" of the insurance premium increases coming for 2016.

But while Obama administration officials acknowledged use of prescription biopharmaceuticals have played a role in bringing down health care costs when safe and effective medicines are used for appropriate patients, CMS' Slavitt also said spending on those products had increased 13% in 2014 versus 5% for health care spending growth overall – "the highest rate of drug spending growth since 2001."

"The truth is, we don't have enough public information on the effectiveness of new drugs in the real world or about prices and rebate structures," Slavitt contended. "We must increase the transparency of the information available about drug pricing and value."