Valuing Obesity Drugs Isn't 'Clever' Or 'Depressing,' and Other #JPM24 Thoughts

Programming Note: Cost Curve is probably off tomorrow, almost certainly off Friday, and definity off Monday. I’ll catch everyone up next week.

J.P. Morgan put, arguably, the two hottest companies up yesterday: Lilly and Novo Nordisk. And though there was (still) not much policy focus, it’s hard to talk about GLP-1 meds without talking price and value. 

The most interesting bit was probably Novo, though David Ricks at Lilly said some thought-provoking things, too (more on that anon). 

Novo CEO Lars Fruergaard Jørgensen , discussing the value of obesity medicines, noted that the value in the United States would be higher -- thus justifying a higher price -- because the cost-offsets in the United States were higher. This is not a particularly controversial way to think about things. Pretty much everything (other than, I guess, gasoline and jeans) is more expensive here. 

STAT called that logic a “clever and depressing justification for high U.S. drug costs.” Which is weird. I mean, value (and therefore price) does indeed change from market to market. That’s a health economic reality. H*ck, it’s a basic economic reality. It’s not particularly “clever” and I don’t think it’s particularly “depressing.” (I mean, I find it “depressing” that drugs prices are often lower in other countries because those countries place a lower value on a human life.)

But the fact that STAT framed basic health economics as some sort of clever ploy underscores the distance that industry has to go in educating consumers and policymakers about basic health economics. 

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Lilly’s David Ricks suggested that employer coverage in the United States would probably not be particularly tied to economics (in part because the benefits occur far in the future, so a drug plan today wouldn’t reap the benefits before the member switches health plans). 

Instead, Ricks said that obesity-drug coverage will probably be seen as a basic part of the keep-employees-happy calculus that underscores a lot of corporate perks. “[Employers] tend to look at it as a benefit. It's just people want it, so we give it to them because we want them to stay.”

(The government, on the flip side, is all about the health economics.)

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There was a session last night run by mentor/mensch/founder/all-around-good-guy Jim Weiss looking at industry reputation. 

Much of it was focused on the importance of civic engagement (often overlooked!), but the piece that caught my attention was BIO Chairman Ted Love’s view that one key is to look for alignment with various stakeholders. And Love’s take was that the one thing everyone wants -- industry, consumers, policymakers -- is “access.”

“Access” -- like “innovation” or “value” -- is a slippery term. There is an Alice in Wonderland “'it means just what I choose it to mean -- neither more nor less” vibe around the word. (Is access a function of price? Benefit design? Access for an individual? Access for a population? The mind reels.) But having that discussion is helpful, from a reputational POV. 

It’s not the whole ballgame, but if the conversation with the public was around access rather than profit or price, we’d be a lot better off.

• Look, I haven’t made any secret of my belief that importation isn’t/can’t/won’t be a thing, the politics notwithstanding. Turns out that Arnold Ventures’ Mark Miller feels the same way (“I’m very skeptical about how long [states] would be able to keep that going,” he told Bloomberg.) Make of that what you will. 

• This Health Affairs Forefront piece on the 340B program gets pretty wonky on transparency. But the upshot is that there is a constituency for efforts to prevent the government from paying full price for 340B discounted meds in Medicaid. 

• NPC CEO John O’Brien has a great overview in Chain Drug Review of the key pharma policy issues in 2024, touching on IRA, PDABs, 340B, and PBMs. Acronyms FTW!

• There’s nothing new in this Bloomberg primer on where IRA stands as 2024 begins. But it’s a clear piece of writing and good for those just jumping into the issue. 

• If I had more time and a few extra hours of sleep, I’d provide more commentary on this Commonwealth Fund report on the U.S vs ex-U.S. prices on the drugs subject to Medicare price controls, which includes some net-price calculations that I don’t have full confidence in. And there’s always the need for commentary -- see above -- on the different ways that different countries attach value to drug benefits or the need for innovation.