Drug pricing has been one of the hot topics of the year. As Citron Research's controversial executive editor Andrew Left said last month, “Regulating the price of pharmaceuticals and eliminating price gouging might be the only issue that Trump and Hillary both agree on.”
Conversing with SunTrust Robinson Humphrey Managing Director and Senior Biotechnology Analyst Edward Nash and Associate Biotechnology Analyst Mike Guo, Benzinga had the chance to discuss drug pricing, an issue that goes well beyond Valeant Pharmaceuticals Intl Inc VRX, Mylan NV MYL or Martin Shkreli.
“If you look at what we’ve seen in the last year-and-a-half or two years, the issues that have popped up around pricing, have always been with older drugs that have been out there for a while, which have been rebranded, or had their patents extended, or just don’t have any competition… and they’ve had their prices dramatically increased overnight,” Nash explained. So, controversy in these cases is quite easy to understand.
However, the expert added, this is not considered biotech. “At some point, that is going to be the low hanging fruit… and that kind of gouging (if you want to call it that, which in some cases, it is) is where I think we would start to see the first, initial attempts to make some type of pricing changes there.”
Nonetheless, he went on:
- “Any changes that would come about… won’t happen overnight… It takes time and a lot of work.”
- Companies in the biotech space, developing drugs that are the first approved for an indication, or drugs that target orphan indications, or drugs that offer much higher levels of efficacy or safety than pre-existing treatments, will always be able to charge a premium.
“So, normal biotech, while it does get affected by rumors and talk [about price gouging],” would not feel a big impact over the near or longer term. Instead, Nash concluded, this is something that would have a larger impact on specialty pharmaceuticals and generics pharmaceuticals first.
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