What a Reuters Analysis Gets Right — and Wrong — About 2023 Launch Prices

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I’m a little conflicted about this story from Friday about how launch prices for new drugs are rising. It’s from Reuters, and it looks at the list prices for all the medicines that hit the market in 2023. The underlying data seems sound, and it matches, more or less, the database that I maintain (DM me if you have specific questions). 

For starters, this is an important topic. Explaining launch prices (and the underlying value story) is going to be increasingly crucial, and the industry is only going to pull itself out of its reputational hole if it can turn this kind of attention into an opportunity. Stories like the Reuters one make that plain. 

I also love that they gave love to TheracosBio, which I continue to maintain is maybe the most interesting company in the country right now. 

But there are reasons not to like the specific execution of the Reuters piece. 

The biggest issue is that the article operates under the assumption that launch prices are something that can be tracked year-over-year (by that metric, launch prices are way up, to a median of $300,000 a year), which is a blunt and frankly useless way to look at the numbers. Adam Fein has expressed some aggravation at this kind of thinking before. 

It’s also a missed opportunity to look deeper at certain elements of the story. It’s increasingly hard to launch medicines now, not because of high prices, but because of PBM negotiation, and even launch brands are seeing list-to-net bubbles once they finally get coverage. 

And there is a whole story on the underlying economics and incentives of orphan diseases that could be told through this data. 

Finally, I’d really love to see someone take a hard look at the conventional wisdom — noted in the Reuters piece — that the IRA is going to prompt higher launch prices. There’s a strong economic argument to be made that if a company can show a drug’s value justifies a higher price, they’ll take that price. It’s not like companies weren’t doing that before the IRA, and it’s not clear how the law would change that calculus.

We’re not having a very thoughtful conversation right now on gene therapies. 

So let’s start with a truth: gene therapy sales are ramping slowly. There are exceptions — Novartis Zolgensma jumps to mind — but, in general, it’s been more of a slog than expected. 

Why, exactly, it’s been such a slog is a critical question, and the answer here is multifactorial and well the scope of this newsletter. (I’m just a flack fascinated by pricing.) But I’ve noticed two trends in the coverage of slow gene therapy launches that make me worry that the point is being missed. 

The first trend is the general sense of impatience, which seeped into coverage last week of the meager sales of Roctavian in its first few months. There’s a lot more to say here, but I’m definitely not the guy to make that argument. 

The second trend, which is closer to my heart, is that there seems to be a very real and very misplaced desire to make this about the price of the therapies. Price is almost certainly not the core of the problem, even if it’s fun to put those numbers in headlines. 

To be sure, the system is not particularly well set up to handle the finances, but it’s not the dollars themselves that are at issue. 

Still, it’s real tempting to make this about cost. For an example, it’s worth checking out this CNBC piece from Friday about sickle cell therapies. The lead anecdote is about an insured patient — who sometimes seeks care 20 times in a month — who is worried about the cost. Never mind that such a patient is highly likely to a) have the therapy covered and b) see out-of-pocket costs drop. 

If you read to the end of the story, though, it turns out that the patient isn’t worried about price at all, but durability: “If they could guarantee me the outcome — that I wouldn’t have sickle cell … I would do it in a heartbeat. In a heartbeat,” he tells the reporter. 

So the entire story turns on an anecdote about a phantom concern about cost.

That does everyone a disservice because it moves the dialogue in a way that’s not constructive. There are a lot of elements of the way gene therapies are provided that need to be worked out, but pricing/value is not one of them.  Suggesting otherwise just creates a distraction.

This is a must-read op-ed from the Wall Street Journal on obesity meds. It makes a simple point, but one that has nonetheless been missing from the discussion: obesity drugs are cost-effective, so it makes no sense to restrict access to them while maintaining coverage of medicines that are far less cost-effective. Penn’s Zeke Emanuel is one of the co-authors, which is noteworthy in itself. 

I’m pretty sure that no one is taking IRA-fix legislation seriously right now, but seeing how the messaging around various proposals evolves will probably say something about where the debate may go. So I’m curious about a House subcommittee hearing on Thursday — in recognition of Rare Disease Day — that may include a discussion of two IRA fixes, the ORPHAN Cures Act and the MINI Act. 

People make fun of me sometimes when I suggest there is an “Arnold Playbook” that starts with Arnold Ventures-funded research that is used to build up the evidence base for legislative efforts and public campaigns. But it’s hard to deny that dynamic, so you should probably check out the latest JAMA piece on patents around REMS programs. The research itself is pretty thin — it looks like there are not a lot of REMS-related patent games — but it’s still a signal of things to come. 

The sheer volume of state attorneys general asking Congress for federal action on PBMs is probably significant — see this letter for the details — and it’s probably also noteworthy that this has become a truly bipartisan issue. 

Colorado’s PDAB, as expected, has decided to set an “upper payment limit” on Enbrel. STAT’s coverage is worthwhile for Amgen’s reaction, which includes a legal threat and some concerns about the way that the PDAB gathered patient perspectives. 

Speaking of PDABs, this “PDAB 101” event from Aimed Alliance on March 18 seems like a good way to spend an hour. 

Part of an Oregon transparency law has been overturned in response to a PhRMA lawsuit. The state said it will appeal the decision, which removes a requirement that manufacturers taking price hikes provide data on marketing and R&D investments. Other elements of the law, such as launch-price disclosures, remain. 

One of the pro-PBM arguments is that PBMs are a conservative, market-based solution to what ails health care and should be treated with the same reverence afforded the flag and apple pie. Not so fast, wrote the Pioneer Instutute’s Bill Smith and Robert Povovian in a New Republic op-ed titled “Pharmacy Benefit Managers Are Not Conservative.”