The post earlier where Genentech and politicians to save “American Jobs”.. well, health care reform hasn’t passed and you know where Genentech’s newest plant is- try Singapore. And Genzyme can’t even run one in the US. What do you bet that biologic plant in Singapore may end up with similar issues we never find.

Mr. JOhnson carefully leaves out what American’s are getting for their price increases and sometimes from this industry, it isn’t innovation but the shaft.

I think you may have missed something in the article that I mentioned in my comments. The article cited an almost 9% price increase and then quoted an analyst who said that the price increase would generate $10B in added revenue. Since according to the article that extra $10B send the industry over the $300B mark, the baseline must be >$290B. Well last I checked, a $10B increase on a baseline of $290B is ~3.4%. Feel free to correct my math.

Clearly, the NY Times didn’t have access to the information or chose to ignore data that didn’t fit its hypothesis. Since I am quite aware that PhRMA and individual companies did provide much of that information to the Times reporter, I believe that the latter must be the case.

Finally, there is no database or information source for rebates/discounts to commercial entities. These are part of private contracts and are not captured by IMS or others. The closest we have is a set of government reports concerning the Medicare drug program. As Johnson points out, “government reports show that rebates in the Medicare prescription drug program average 20-30% for many brand name drugs and those rebates have actually increased.”

Atlex

Your post was helpful in that it points out that there are still many factors one has to consider when analyzing and re-stating the data.

Just a couple of points, if you can answer them please…

In your 2nd paragraph you say that each company more or less does their own thing when it comes to price increases. Price increases are based on several factors. But, I have to be honest here, we also buy market reports and we do check and compare categories against each other. If company XYZ has the same asthma medicine as mine, all things being equal, I would take a price increase if they did….And it could be justified too…After all it is what the market will bear no?

The job losses; we do honestly have to factor in mergers and “restructurings”. It would be nice to have a complete analysis of what were the job losses. I do not have this complete analysis, but how much were lost as a result of shipping jobs overseas or on a positive note, streamlining efficiencies, or how many sales reps lost their jobs?

The article does talk about wholesale prices and retail prices, so I do not follow what you were saying about sticker prices. Yes, I do get that there are rebates that haven’t probably been fully allocated in the statistics. The IMS reports does refer to rebates increasing, but there is no supporting data. Can anyone direct us to the supporting data for this, how can we track this? I think you are right, if we are going to discuss any of this, we all need to have a look at all the data.

Regarding your 7th paragraph, why didn’t you point that out when the Times asked for your input?

CAGR for the pharma industry, while still historically low, will be from 4 - 7% through to 2013. Medical costs, which I guess includes all medical costs including drugs, went up 3.3% over 2008.

What sort of growth would you prefer to see, given that a record number of Americans are unemployed - 15.7 million, the highest rate since 1983. 5.6 million are in long term unemployment (probably without health care/insurance), 9.3 million are employed part time - probably no benefits, 2.4 million are marginally employed - no benefits.

To be fair, it would be very nice to know what medical costs really are, i.e. doctors fees, hospital costs, etc. What continues to push up those medical costs, given the cost benefits that can, in many cases be realized by drug therapies? Yes, patient adherent to drug treatment plans are important, but much of that problem is caused by access and the cost of drug prices themselves. What is the impact on overall health care costs increases because patients cannot afford their drugs? We SHOULD be comparing this, this is important information.

When we talk about price increases, we should also examine which company is taking what price increase, particularly in light of the serious fines that have been levied regarding criminal charges.

If anything, there definitely needs to be more transparent dialogue on all of these issues, and maybe the Times article will spark some of it.

At the end of the day, the pharma industry needs to take in money and patients need to spend it. No one has the money tree.

We all have responsibility on this issue. Pointing fingers across the desk at one another, get us nowhere.

Altex, just a few points: Evelyn mentioned CEO salaries, if you have been paying attention, a week or so ago, I published some information about CEO salaries. We can of course go back and re-post them, but it is rather current..

The article stated 9% growth and that the industry is expected to exceed 300B this year. It didn’t say it was at 300B last year, I do not believe they gave us the starting figure…If you see it let me know.

Imagine that, Pharma complaining that results presented in an article in the NY times did not in fact contain all the data and the article seemed to be skewed to show something other than what is reality? I wonder what would have prompted them to do this?

Should we all be appalled that the NY times did not reach out to Pharma and ask them to validate the data with input from them? If they didn’t do this, then what is the possible reason for not wanting to get Pharma’s take on the numbers?

Hmm, what an atmosphere of distrust…..I wonder how that happened?

stay tuned…

You may disagree with Ken Johnson’s comments, but he did include supporting data and you only included accusations. I have a couple of more thoughts regarding this report by the NY Times. As Mr. Johnson points out, the study that the Times looked at is “retail” based on only includes “gross” price increases (ie, change in list price) and not “net” prices increases (after accounting for contractual or legislated discounts/rebates). In fact, the Times included data that would make a casual observer skeptical of the numbers they cite. While noting a 9% increase in list prices, the Times also mentions that this 9% increase will generate roughly $10B in added annual revenue Given that the total annual revenue prior to this is roughly $300B, the actual “net” price increase is roughly 3%. Of course, this is probably low for a couple of reasons (eg, brands comprise only 80%-85% of prescription drug sales), but it is more accurate than the 9% number they cite in the article, particularly if they compare it to the CPI, which is a “net” inflation calculation.

Another fallacy in the article is the hypothesis that pharma is raising prices in advance of health reform. The article has one expert saying that pharma increases prices in “anticipation” of legislative changes. Then, later cites an expert saying that prices increased at a more rapid rate “after Congress added drug benefits.” Gross price increases have been consistently growing over the past 6-8 years, not in anticipation of or following legislation, but due to the need to reach immediate sales goals made more difficult by greater levels of rebating and discounting to private and government payers.

Atlex