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By Dilip R. Choudhury

Dilip ChoudhuryThe major goal of pharmaceutical and medical research is to develop medicines and treatments to meet unmet medical needs, improve the quality of lives, and have these therapies accessible to the patients. In recent years, several new generations of innovative medicines for life-threatening diseases have been developed. These have made a significant impact on curing of some of the diseases, extending life expectancy, and improving quality of life of the patients. Many of these medicines are highly effective but very expensive. The high cost of these innovative medicines present a major challenge to the patients, pharmaceutical companies, and payers (pharmacy benefit managers).

How does one set the price of a specialty drug to maximize access to patients while also enabling a return on research and development (R&D) investment? In 2014, over $100 billion was spent globally on anticancer drugs. This increased expenditure is putting pressure on payers to have a greater control of costs. The result has been de-listing of a number of drugs from formularies as these therapies are considered too expensive, even though most effective. For example, the National Institute for Health and Care Excellence (NICE) of the United Kingdom removed several life-saving drugs for incurable diseases. Equally, in the U.S. market, large U.S. pharmacy benefits managers have de-listed a number of medicines, including some new hepatitis C virus drugs, based on cost. Such actions result in patients losing access to the most effective and safe medicines for many life-threatening diseases. Several pharmaceutical companies have expressed interest in developing “indication-based pricing” or “performance-based pricing” models for such innovative medicines. The challenge for both pharmaceutical companies and the payers is balancing price and patient access for new niche therapies with enormous development costs, which has recently been reported to be up to $2.6 billion to bring a new innovative medicine to market.

During the 2015 AAPS Annual Meeting and Exposition, the hot topic session Drug Pricing for Innovative Medicines: Balancing the Patient Access and Return on R&D Investment will explore the economic forces of the pharmaceutical marketplace and how these forces will shape the future of pharmaceutical R&D. There will be short presentations by two speakers, Stephen Schondelmeyer, Ph.D., professor and director at the University of Minnesota, and Ed Schoonveld, M.B.A., principal at ZS Associates, followed by questions from the audience and lively discussion. Attendees will leave with a better understanding of the challenges of pricing innovative drugs related to the expected efficacy and safety and position of the drug in the market.

Dilip R. Choudhury, Ph.D., has 30 years of experience in application of pharmaceutical analytical sciences to development and registration of pharmaceutical and biologic products and medical devices with several global pharmaceutical companies.