When It Comes to Healthcare Costs, New Medicines Are the Solution, Not the Problem

Medical innovation saves lives and has reduced health expenditures.

By Mark Alles, Celgene CEO

Mark Alles

Mark J. Alles serves as Celgene’s Chief Executive Officer.

When the President’s Cancer Panel convened recently to consider priorities for cancer policy, its focus was exactly where it should be: encouraging innovations that produce life-saving medicines, and increasing patients’ access to those medicines.

There is legitimate concern about healthcare costs, so it is important to understand what matters and what works. Simply put, medical innovation saves lives and over the past decade has reduced health expenditures by more than $1.5 trillion. But the real measure of this progress is the millions of Americans who are living active lives because of disease-altering treatments, despite their medical conditions. Take Don Wright, who at age 62 was diagnosed with multiple myeloma, an incurable blood cancer, and told he had no more than three years to live. Thanks to medical innovation, Don is alive 13 years later. He recently completed his 100th marathon since his diagnosis.

Don Wright is but one example of the many Americans now living longer, healthier and better lives due to new treatments. Today, more than 30 million diabetes patients are benefitting from new medicines that offer better control of glucose levels. Innovative therapies have helped cut deaths from heart disease in half and reduce by 20 percent cardiovascular disease’s share of national health expenditures. Also of note, new cancer therapies are linked to a 25 percent decrease in disease-related deaths since 1991 and a societal economic benefit of $2 trillion.

Treatments that provide the greatest health impact for seriously ill people should have the lowest cost sharing requirements.

All of this tremendous progress has been achieved while retail expenditures on life-enhancing therapies have remained steady at just 10 percent of total U.S. healthcare spending. In fact, as a percentage of the healthcare dollar, retail prescription medicine costs are the same today as in 1960, and are projected to remain no higher than this level for at least the next 10 years. That’s remarkable stability – maintaining the same rate of spending when more than 550 new medicines have been approved over the past 15 years.

It is certainly true that many of the newest innovative medicines have a high cost. But the value innovative medicines deliver to patients and society is immense. Innovative “specialty” medicines such as treatments for cancer, HIV/AIDS and multiple sclerosis comprise less than four percent of total healthcare expenditures and are taken by less than one percent of all patients. Yet notwithstanding the immense value of these medicines, many insurance plans impose disproportionate cost burdens on patients who need them, requiring patients to pay on average five times more out of pocket for medicines than for hospital care.

To change this situation, we propose a straightforward principle: treatments that provide the greatest health impact for seriously ill people should have the lowest cost sharing requirements. Additionally, the most vulnerable patients must be protected from insurance company practices such as adverse tiering (in which all new drugs for a serious disease are assigned to the highest cost sharing level) and step therapy (where patients are required to try one or more drugs before the medicine their doctor wants to prescribe is covered).

All healthcare stakeholders should work together to promote reforms that enhance broad, affordable access for patients and eliminate cost-sharing hurdles that may discriminate against patients who need care the most.

Despite these insurance shortcomings, the good news is that the virtuous cycle of medical innovation continues to deliver. Today 89 percent of prescriptions are filled as generics, at prices 75 to 90 percent lower than the original patented medicines. This incredible value is built into our healthcare system by design. The cost of innovative medicines plummets after a period of patent protection, providing the best medical solutions in the world at the lowest costs to society for generations while incentivizing medical researchers to continue developing new and even better therapies.

We are in an unparalleled time of medical advances that can continue to improve patients’ lives, increase life expectancy and reduce the economic burden on healthcare systems. The United States is leading the way, developing 57 percent of the world’s breakthrough medicines. But we can maintain this momentum only if patients have access to the medicines they need. What’s the point of developing innovative new medicines if patients cannot benefit from them?

All healthcare stakeholders should work together to promote reforms that enhance broad, affordable access for patients and eliminate cost-sharing hurdles that may discriminate against patients who need care the most.

This article was originally published on Forbes.com on June 2, 2017.