10 Questions for PhRMA's CEO Stephen Ubl

Trade group PhRMA's CEO talks Sean Czarnecki through his first year in the job amid public outrage about price gouging.

Stephen Ubl
Stephen Ubl

To what extent has partisanship in Washington and public outrage against drug pricing limited your goals?

It’s a polarized environment, but innovation is one of the few issues that brings both sides of the aisle together. For example, the user fee agreement passed in August 2017 on a near unanimous basis. Coupled with the 21st Century Cures initiative, that agreement we reached with the FDA could transform the agency and expedite patient access without sacrificing the gold standard of approval requirements.

Does bipartisan outrage against drug price increases change how you approach the administration or lawmakers?

Several anomalous factors, such as a record number of FDA approvals for new medicines, drove a spike in drug spending in 2014-15. It was the slowest growing category in healthcare. Now, it’s up 3.5% in 2016 with prices up 2.8% on a net basis, according to Express Scripts.

I took 60 trips to meet researchers and scientists during my first year. That’s when I realized the work of researchers and scientists and technological advances went underappreciated, while inordinate focus stayed on a few bad actors, such as Martin Shkreli and Valeant.

We launched Go Boldly, a multi-year, high-eight-figure investment, to get people excited about the science again, featuring real researchers and scientists talking about the important work they do and the new era of medicine.

It lets us engage other stakeholders on how the system needs to evolve. Our companies should negotiate with pharmacy benefit managers and plans around specific metrics based on outcomes achieved by the patient.

PhRMA is known for defeating bad policy, but advocating for proactive policy ideas that can address patient affordability challenges is less well developed.

What accomplishments have come about because of your engagement?

Smart policy is being advanced by the new FDA commissioner on generic competition and the passage of the user fee agreement. The key components are about taking advantage of disciplines. We’re at a tipping point where the industry is unlocking human biology, genomics, and data aggregation that will allow for real-time measurement of products in the marketplace.

Has PhRMA taken an official position on the ACA repeal effort?

We didn’t. It was a very fluid dynamic, which made it difficult. One thing is clear: regardless of whether legislation is resuscitated or not, the locus of decision-making around healthcare will migrate to the states, which will have greater autonomy to shape their insurance markets and plans will have greater autonomy in shaping their benefit design. We’ll engage in that as it unfolds. Transparency and price control legislation are taking shape at the state level. We’ve increased our resources there.

How can the pharmaceutical industry tackle the national opioid emergency?

We’ll engage with the Christie Commission and others at the federal and state level. We try to put PhRMA in a more forward-leaning posture and advance policy ideas that could help address the situation, such as mandatory prescriber training, better use of prescription drug monitoring, and stronger law enforcement efforts to prevent diversion. We can also engage stakeholders such as the National Institutes of Health in public-private partnerships.

Has the industry had a role in causing that crisis?

All stakeholders have a responsibility to come to the table and offer constructive solutions and we’re committed to doing that.

Why did you change membership criteria, establishing minimum thresholds for R&D spend, causing 22 companies to leave?

Companies such as Turing and Valeant aren’t making long-term R&D investments. They’re taking advantage of regulatory arbitrage, selling medicines that are off-patent but lack effective competition. They haven’t developed products and taken the multiyear effort to bring a medicine to market. We wanted to ensure we walk the walk if we’re going to differentiate our membership.

Some members’ R&D spend far exceeds the threshold of 10% of sales and $200 million. How did you arrive at that figure?

Our membership on average spends about 20% of their profit on R&D, but it can fluctuate year over year. We want to differentiate our members without inadvertently creating a situation where they couldn’t meet the criteria. So we tried to thread the needle.

We issued a 10-page policy document outlining market-oriented solutions to address patient affordability.

What is a fair and ethical premium a company can charge in proportion to R&D?

As a matter of antitrust law, we don’t comment on pricing generally. But when setting prices, our companies engage with stakeholders in the particular disease areas, looking at competing therapies, and developing their approach accordingly.

Pricing and spending is moderated partly because three pharmacy benefit managers control 80% of the marketplace and exercise incredible leverage on our companies. Nine out of 10 prescription drugs are generic and recent research suggests $60 billion in industry revenue tied to brand medicines is at risk to biosimilar competition.

It takes an average of about two years before branded medicine faces competition from another branded medicine. It’s a competitive dynamic.

Do you have an AOR?

Our agency for the Go Boldly creative is WPP Health & Wellness, led by the PhRMA Partnership with creative by Y&R.

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