Enabling Innovation and Creating Value

Our Approach to Pharmaceutical Pricing

By Mark J. Alles, Chairman and Chief Executive Officer, Celgene Corporation

Americans want and deserve better health care.1  Yet many patients are also concerned about the affordability of health care, including out-of-pocket costs which are rising faster than health care spending.2  When it comes to health care, we should not have to choose between access, quality and affordability. This is especially important for those patients suffering with life-threatening diseases who may only be able to be effectively treated with the newest, most innovative medicines. For the benefit of all patients, we must find ways to ensure that American health care improves access and quality, while becoming more affordable over time.

Mark Alles

Mark J. Alles, CELGENE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Celgene has long held to a set of principles used to guide our decisions about the pricing of the medicines we discover, develop and distribute worldwide. These principles reflect our commitment to patient access, obligation to provide value for patients and the health system, drive for continuing innovation for the future, and the need for flexibility. Today, we are enhancing these principles by setting forth an approach to price increases reflecting medical inflation and increased value. This approach is intended to continue to provide transparency around the value of our therapies and contribute to policy solutions that support access and affordability for patients.

First, if Celgene increases the price of any individual therapy across our portfolio, the price increase will be limited to no more than once a year and at a level no greater than the Centers for Medicare and Medicaid Services projected increase in National Health Expenditures for the year. For 2018, this rate is 5.3%. Because value is a guiding principle of our pricing decisions, there may be exceptional circumstances in which additional clinical or health economic evidence demonstrates a clear and significant increase in the value of one of our medicines where this standard would not apply. We believe this action will provide greater certainty for all stakeholders and contribute to limiting the growth of health care spending.

Second, we agree that transparency about value and pricing is important. Patients, healthcare professionals and policymakers are asking for more information, and we are committed to providing it. That’s why earlier this year we introduced Celgene’s first annual Value and Innovation Framework Report, offering comprehensive evidence on the value we provide to patients, the health system, the economy and society, and future innovation. We also plan to provide information related to any increases in price, including enhancements in value, at: www.celgene.com/value.

Third, we are committed to advocating for public policy solutions that will improve patient access and affordability, encourage value-based payment models, and expand competition.

Increasingly, the health care system is pushing more and more of the cost of care to patients, especially those with serious medical conditions, in the form of high deductibles and percentage-based coinsurance.3  We believe that limits on patient out-of-pocket spending will improve access and affordability and lead to greater treatment adherence, better health outcomes and lower overall health system costs. It is positive to see proposals to include a patient out-of-pocket cap in the Medicare Part D drug benefit included in the President’s Blueprint to Lower Drug Prices.4

Celgene supports value-based payment models, which, when properly designed, can provide access for patients, predictability for payers, and incentives for continued innovation by biopharmaceutical companies. The development of new and bolder value-based payment approaches can be facilitated through necessary modernization of government regulations to accommodate value-based arrangements. We applaud the Department of Health and Human Services’ interest in identifying regulatory solutions that would enable the evolution of these new payment models and ensure that access and reimbursement innovation keeps pace with medical innovation.

Finally, Celgene supports the robust balance between incentives for innovation and generic competition. The Hatch-Waxman Act has created a sustainable system where nearly 90 percent of prescriptions every year are generics, representing massive price reductions compared to the original innovator brand.5  Last year, the Food and Drug Administration approved a record-high 1,027 new generic medications.5  Between 2018 and 2022, based on anticipated loss of exclusivity, an estimated $105 billion in price decreases will be realized by the healthcare system.5  Policies that enhance competition after innovators’ patents expire drive the virtuous cycle of incentives for new innovation and the long continuing value from generic competition.

At Celgene, our long-standing purpose is to change the course of human health through bold pursuits in science and a promise to always put patients first. After spending many years and significant resources to discover and develop innovative new therapies, our greatest priority is ensuring that patients have access to them. Affordable access for patients is essential to our ability to reinvest in research and development that will lead to the next generation of treatments — and ultimately cures — for diseases that affect millions of people worldwide.



1 Blendon RJ, Benson JM, SteelFisher GK, and Weldon KJ. Report on Americans’ Views on the Quality of Health Care. Harvard School of Public Health. March 22, 2011. https://www.rwjf.org/en/library/research/2011/03/report-on-americans–views-on-the-quality-of-health-care.html?cid=XEM_807207 Accessed June 2018.
2 Consumers for Quality Care Survey Finds Americans Acutely Worried about Health Care Costs. Consumer for Quality Care. April 25, 2018. https://consumers4qualitycare.org/research/ Accessed June 2018.
3 Commercially-Insured Patients Pay Undiscounted List Prices for One In Five Brand Prescriptions, Accounting for Half of Out-of-Pocket Spending on Brand Medicines. Phrma. March 2017. http://phrma-docs.phrma.org/download.cfm?objectid=C6A51770-0FCD-11E7-ACCC0050569A4B6C Accessed June 2018
4 U.S. Department of Health & Human Services. American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs. May 2018. https://www.hhs.gov/sites/default/files/AmericanPatientsFirst.pdf. Accessed June 2018.
5 Uhl K. 2017 Was Another Record-Setting Year for Generic Drugs. FDA Voice. 2018.
https://blogs.fda.gov/fdavoice/index.php/2018/02/2017-was-another-record-setting-year-for-generic-drugs/ Accessed June 2018.