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Exclusive Life Science Feature reason Acorda can invest nearly 22% of sales into R&D; is because services, higher costs for patients, and often no improvement in the company gets a reasonable rate of reimbursement for the drug the quality of care delivered." According to Cohen, it is incumbent in the U.S. In the EU, however, reimbursement is significantly less. on specialty pharma to clearly communicate the value of a Cohen believes the pharmaceutical pricing and reimbursement medicine, even those considered very expensive. "Yes, a company policies (e.g. external reference pricing [ERP]) outlined in the might charge $50,000 a year for a drug, but if you look at the September 2012, European Commission Economic Papers 461 – outcomes for the patients and see that it prevents hospitalizations Cost-Containment Policies in Public Pharmaceutical Spending in which cost $100,000, then you would gladly pay for this drug," the EU, "will prove to have been shortsighted and extreme and not he affirms. "In other cases, drugs may improve lives without constructive for supporting innovation in necessarily showing as direct a line toward drug development. If this were to happen in decreased costs, for example, drugs that According to Cohen, it is incumbent on the U.S., there would be, in effect, nothing improve walking ability or that reduce pain, specialty pharma to clearly communicate paying for pharmaceutical research and yet still are highly important to patients. It the value of a medicine, even those innovation." Cohen believes a European is dangerous to try to assert, as for example considered very expensive. style of reimbursement in the U.S. could Europe increasingly is doing, that drugs are open up opportunities for countries like only valuable if they can be proved to reduce China to take the lead. overall costs. This ignores the intrinsic value A state-run system, China developed a in improving the lives of people suffering five-year plan allocating billions of dollars with disease and disability." specifically earmarked to advance certain A little over a year ago, Vertex industries, including biopharmaceuticals. Pharmaceuticals (NASDAQ: VRTX) gained "We don't have the luxury of a government FDA approval for the first drug that treats entity pouring money into our industry," the root cause of CF (cystic fibrosis), he attests. "We have to earn it through the Kalydeco (ivacaftor). At a cost of $294,000 value of the products we produce. If we're for a year's supply, it is one of the most not getting reimbursed at the current level, expensive drugs in the U.S. Cohen notes then R&D; and innovation are clearly going however, that the research conducted by to suffer. I don't think this is really arguable." Vertex is leading to other discoveries and Cohen asks, "How are we willing to pay providing opportunities to treat even more for our future medical wellbeing?" This is a patients with differing strains of CF — a message he feels pharmaceutical and biotech point often overlooked when one focuses companies need to communicate better. only on cost. "In my view, the leaders of our industry have not spent enough time WHAT IS THE VALUE OF A MEDICINE? educating the public as to the value innovative medicines bring to Cohen believes that the pharmaceutical industry has been a society," Cohen states. "There needs to be a much greater effort on convenient target for public angst for too long. "If you read the the part of industry to educate patient groups, since those patient papers and watch the news, you would likely think prescription groups have the power to advocate for open access to medicines." drugs make up 75 percent of all healthcare costs," he states. Cohen believes the pharma industry is part of a solution, not part Consider this recent headline in the Wall Street Journal — "Drug of the problem. He advocates for the industry to stop taking Makers See Profit Potential In Rare Diseases." Cohen attributes such a defensive stance and begin offering some positive this misperception to the pharmaceutical industry's profitability offense. To support educating and gaining industry advocates, and rare commentary on other drivers of rising healthcare costs. A Cohen supports the industry utilizing existing coalitions such recent article published in the American Journal of Managed Care as PhRMA and BIO to develop public service announcements (March 2013) showed hospitals, not pharmaceuticals, as being designed to reach a wide audience. "If everyone would the primary driver behind spiraling healthcare costs. Accounting contribute to ongoing public service ads about what we do, the for more than 30 percent of all U.S. healthcare expenditures, the number of drugs produced, and the number of lives improved average cost per hospital stay in the U.S. ($15,734) is three times or saved for the various conditions, instead of just advertising the cost of the next closest country, Germany ($5,004). In addition, the latest erectile dysfunction drug, we could change the data showed provider consolidation through hospital mergers or perception of our industry from convenient whipping post to the buying up of physician practices resulted in "higher prices for innovation engine and creator of life-enhancing medicines." 28 LifeScienceLeader.com November 2013