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to subtract $26 billion. That’s a scary amount of money in an industry where the largest biotech company, Amgen, generated about $15 billion in revenue last year.
The biotech business model, shaky as it is, has long depended on charging sky-high prices for the few products good enough to navigate the long cycle of product development. Words like “cost-effectiveness” or “comparative effectiveness” are scary terms that sound like price controls, in an industry that depends on there being no price controls.
I understand that creating new healthcare products takes a lot of time and money, and involves a lot of risk of FDA rejection. Some investors are walking away. Biotech is in trouble, so I understand why people get defensive when some guy says your products have to be safe and effective AND cheaper?
Emanuel’s message may be simple, and easy to dismiss, especially the “1-100-0” part. But that would be missing the larger point. The reality is that healthcare spending can’t go up forever. The prices of new technologies aren’t going to go up forever. Instead of scoffing about the skunk at the garden party, everyone in that room would have been better off listening, and thinking about how to adapt to the new reality.
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