The U.S. Supreme Court upheld the Affordable Care Act last year as constitutional. President Obama won re-election. After years of runaway spending on healthcare, the well established policy on healthcare in this country is that access needs to go up, and costs need to come down.
While many other groups are coming to terms with the new order of healthcare, biotech companies aren’t. Even though these companies hope to create important new products for patients, they still haven’t adapted to the changes.
That’s the most jarring conclusion of the latest “Beyond Borders” annual industry report put out today by the consulting firm Ernst & Young. The finding comes from a survey of biotech executives at 62 companies in the U.S. and Europe, with annual revenues of $500 million or less. The 92-page report, which includes all kinds of other industry stats, is being released today at the Biotechnology Industry Organization convention in Chicago.
Here are the numbers from the survey that caught my eye:
—About 93 percent of respondents said it’s “very important” or “important” to demonstrate the value of new healthcare products to payers. That put this issue roughly on par with three other strategic issues these executives face—raising capital, operating more efficiently, and prioritizing product candidates that beat today’s standard of care.
—Even though they recognize demonstrating value to payers is important, the executives aren’t acting on that knowledge. Only 11 percent of respondents said they have added people to their management team with reimbursement/payer expertise. A majority of respondents—54 percent—even said it was unlikely or very unlikely that they will add reimbursement expertise to their management teams. Even larger majorities of respondents said they don’t plan to add reimbursement expertise to their clinical development teams, or to their boards of directors.
There are even more signs throughout the report that biotech companies are flying blind into this murky world of reimbursement. And there is commentary in the E&Y report from Big Pharma companies that suggests biotech companies need to start figuring out how to gather data that will prove their drugs add value to the healthcare system—not just provide marginal benefit and more cost.
“We frequently find that the venture-backed biotech companies we encounter in deal discussions have not spent any time thinking about the competitive landscape and are unprepared to differentiate their pipeline products,” said Brian Edelman, a vice president of corporate finance and investment banking at Eli Lilly, in the report. “Biotech firms do best in situations where the molecule is a new mechanism of action or addresses an untreated disease—making the health economic benefit intuitively obvious. But when companies are coming into a crowded disease state where there are competing therapies, we tend to see clinical data packages that do not differentiate products relative to the standard of care.”
What that means, Edelman said, is that the would-be pharma acquirer … Next Page »
By posting a comment, you agree to our terms and conditions.