The world is anxiously waiting for a COVID-19 treatment to end the public health crisis and begin the economic recovery. A treatment for this disease will bring tremendous value to society, but how much are we willing or prepared to pay for this value? National Pharmaceutical Council Chief Science Officer Robert Dubois sat down with Memorial Sloan Kettering Cancer Center’s Peter Bach, Institute for Clinical and Economic Review’s (ICER) Sarah Emond, Northwestern University’s Craig Garthwaite and Tufts University’s Peter Neumann for an honest conversation about how to price COVID-19 treatments. The panelists tackled difficult questions about the role price plays in the market, what elements of a therapy’s value should be evaluated, and how should a drug’s benefits be divided between manufacturers and the public.
Underscoring the complexity of these issues, Emond argued in the panel's opening statements that policies need to be grounded in data and evidence. She said it’s important to have policies that incentivize innovation for our society to get back to normal.
What role does price play in the market?
One of the primary questions covered during the webinar is the same one the pharmaceutical industry, payers, policymakers and providers are grappling with right now: what role does a product’s price play in the market? Bach stated that a COVID-19 therapy’s price should represent the threshold that society is willing to spend to meet the outcome it wants. He called the decision to price a treatment “an allocation question,” suggesting that society must make decisions around whether to pay for a COVID-19 drug instead of other measures, such as increased personal protective equipment or testing. Garthwaite disagreed, asserting that COVID-19 medicines and face masks should not be treated as competing resources. Instead, he argued that price is more than an allocation; price is a signal in the marketplace to tell participants what society values.
What elements of value should be considered when pricing a new COVID-19 treatment?
Another theme that emerged from the afternoon was the question of value-based price. Specifically, when calculating a price for a new COVID-19 treatment, should the price be based on a value that includes social benefit?
Emond noted that ICER recently opted not to incorporate societal benefit into its assessment of remdesivir, due to data uncertainty. Instead, the organization chose to focus solely on medical costs. Neumann expressed disappointment in ICER’s decision and underscored the importance of conducting sensitivity analyses when a product may reduce mortality.
Do we divide a treatment’s benefits between the manufacturer and society?
Each of the speakers agreed there is an urgent need and immense value in a treatment that can stop COVID-19 and restart the U.S. economy. Dubois challenged the group to address who deserves the reward for creating this value – the manufacturer or society? Further complicating the issue, panelists considered how to price products that benefited from government-sponsored research. Garthwaite noted that the answer depends on the perception of the National Institutes of Health (NIH) and “whether you think the NIH is a supplement or complement for the work done by drug companies.” Regardless, Garthwaite agreed that for firms partnering with the NIH, price needs to be limited before the partnership begins, not after it has taken place. Bach agreed and outlined the need for clear expectations between manufacturers and the government.
Over the course of the webinar, Bach and Emond asserted that there are other non-financial rewards that accrue to companies and scientists, including scientific altruism, improved reputation or staff retention. “I worked with pharma scientists who were motived to answer crazy scientific questions, curing human disease,” Emond shared. “They weren’t motivated by a stock price or what price they could charge.”
Continuing the conversation
This webinar was just the start of a conversation that will only grow in importance as more drug candidates advance in clinical trials. Though more questions were raised than answered during the webinar, the dialogue was useful in building the foundation for this topic and understanding the competing priorities among health care sectors. Although the panelists viewed how to price treatments in different ways, they agreed on one important point: solving this trillion-dollar pandemic requires evidence-based decision-making with patient access as a key priority.
For more on this topic, check out Dubois’ Health Affairs blog.