Payer Power: What Are The Future Implications For Life Science Companies Developing New Products?

How US Commercial Payers Will Manage Rapidly Increasing Drug Costs

16 Jan 2019

Payers cannot control the pricing of new products by biopharmaceutical companies, but their goal is to deliver quality health care in a cost-effective manner. Several payer medical directors representing over 100 million commercially insured members have shared their insights for managing the challenging US market – revealing their thoughts on drug pricing currently, and steps they plan to take in the next 3 to 5 years to better control rising costs.

The US does not regulate or negotiate the prices of new prescription drugs when they come onto market. Instead, the US allows drug makers to set their own prices for a given product – and allows every drug that is proven to be safe to come onto market. The US also does not restrict life science companies from raising prices on marketed products and the industry has taken full advantage of this where there are no directly substitutable products. In fact, it is now estimated that far more of the industry’s revenue growth is due to price increases on marketed products than from new products.

Elsewhere, countries with single payer health care systems have government sanctioned agencies that meet with pharmaceutical companies and haggle over...