Mass. Politicians Need to Hold the Line Against Biotech Industry Pressure on Drug Costs

BOSTON - Mayor Martin Walsh spoke to a Massachusetts Biotechnology Council event at the Omni Parker House ballroom this week, and focused his remarks on the challenge of bringing more jobs in the sector to Boston as well as to biotech powerhouse Cambridge - without continuing the open competition between the neighboring cities sometimes instigated by former Mayor Thomas Menino.

The new mayor seems interested in bringing biotech jobs to the Boston metro area, not just Boston proper, and that kind of regional thinking is a good sign as far as this publication is concerned. Even if the industry in question is highly problematic in far too many ways to cover in a single editorial. 

However, that's not what I found most interesting about the event.

Here's what got my attention: biotech leaders are sounding very, very nervous about cost-cutting measures being pushed by state and federal regulators, built into health programs at both levels of government, and pursued by hospitals and other healthcare providers. Specifically measures that favor purchasing older cheaper drugs instead of extremely expensive newer drugs. 

According to the Boston Herald, Geoff MacKay, president and CEO of the Canton company Organogenesis, said, “Nobody in this room, I don’t think, is against evolving­ our model and making it more efficient. But the path to get there is going to lead to very, very bad consequences if we’re not careful. The cost to get approved is significantly higher from a regulatory point of view. And if you invest the time and the money and take the risk, if there’s a precarious reimbursement setting, the whole equation is in jeopardy. Innovation is in jeopardy.” 

Mass. Biotech Council President and CEO Robert Coughlin, a good friend of Walsh's and fellow former state legislator, followed up, “We need to develop policies that won’t hinder innovative products.” 

And here's the funny thing about those sentiments. Biotech companies aren't paying for most of the basic research that leads to the expensive cutting-edge treatments in the first place. Yet the federal government is not forcing those companies to stop gouging people with high sticker prices for new drugs developed with public funds. 

This is a longstanding problem, but it's coming to a head as the right-wing in Congress has pushed cuts to the basic research grants given to scientists through the National Institutes of Health for over a decade. 

The NIH and smaller federal programs now only cover about $32 billion of the $100 billion spent annually on pharmaceutical research and development in the US. 

The biotech industry picks up most of the tab for the rest of that sum. Which certainly sounds impressive.

However, as stressed in a Johns Hopkins Medicine release in late 2012 on a report by two faculty members in The Journal of the American Medical Association, biotech research and development dollars "are focused on large clinical trials and late-stage research, rather than the basic research that fuels future innovation ... spending research dollars on projects most likely to yield short-term returns, even at the expense of investment in diseases that are severe, common and cannot be prevented or treated effectively." 

So it's easy to see where this is going. The biotech industry is going to make political support from elected officials like Walsh for an end to government cost-cutting measures on expensive new drugs part of the already high public sticker price of their siting new facilities in the Boston area. Lest we forget all the tax breaks, cheap land, and various other public giveaways that go into convincing companies to "create jobs" in a given locale. Jobs which - where they actually materialize - largely go to highly educated people who move here from all over the globe, not the working-class residents most in need of work. Nor should we forget the fact that biotech industry made their huge profits selling drugs and other treatments whose initial development was massively subsidized with taxpayer money - a key point that most commentators fail to mention. 

Open Media Boston continues to believe that the way out of this and several other major societal crises around healthcare delivery in the US is to finally enact an "everybody-in, nobody out" single payer national public health system and to vastly expand government funding for basic scientific research - heavily regulating the remaining private biotech industry in the process. But we're well aware that we're living in the United States of 2014, and that we're not going to see those kinds of major popular reforms instituted anytime soon. 

Given that, this publication's advice to Walsh and other forward-thinking Bay State politicians is to hold the line against the biotech industry on these and related matters. 

Biotech cannot be allowed to continue to make vast profits off of people's misery, and then put a stop to the few defensive measures that the government is willing to take that might benefit working families in some fashion. Measures like favoring cheaper older drugs over expensive newer drugs - even though many actors like hospitals are mainly doing that to cut their costs. Of course, that means that many people are being denied newer meds that might be better than older meds based purely on a cost-benefit analysis. 

Which is ultimately nearly as objectionable as biotech industry price gouging. 

Another problem that can only be truly solved by the major reforms mentioned above. Which shows you the mess we're in on the healthcare front - and so many others. 
 

Jason Pramas is Editor/Publisher of Open Media Boston