Dr Steven Pearson: No Silver Bullet to Constrain Drug Prices

There is no silver bullet when it comes to implementing policies to constrain drug prices, but a value-based price approach will be essential, said Steven Pearson, MD, MSc, FRCP, founder and president of the Institute for Clinical and Economic Review.

Transcript (modified)

What policies can be implemented to help constrain drug prices going forward?

Well, there’s a growing menu of policy considerations on the table and they range from Medicare negotiating prices itself to states somehow pegging the prices that they will pay to the best price paid to the VA system; there are lots of considerations around having drug companies make more transparent the costs that they incur when bringing a drug to market. All of these are going to be debated, I think, over the coming months because they all may play some role, but they will require extensive consideration because there’s no silver bullet.

Nothing is going to solve this problem because there will always be a tension, to some extent, between the resources that we have to spend on health, our desire to maintain broad access to important new medications, and the resources or the incentives that we want to create for future innovation. So within the set of policies that could possibly address that tension we think that using a value-based price approach is going to be a core part, especially if Medicare negotiates because it will need some standard for understanding what a fair or sensible price is.

If we’re going to use incentives in the market system, both carrots and sticks for pharmaceutical companies, to encourage them around pricing there has to be some sense of what a fair or sensible price is. So our goal is to help provide, in an independent and transparent way, some benchmark that triggers people to think more broadly about what the policy mechanisms would be for really, really transforming the system so that value is at the center.