Pursuit of Innovation Creates Value for Patients, the Health System, the Economy and Society

Defining the value of innovation in health care is essential to delivering even higher value.

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

A few decades ago, drug discovery was, for the most part, a matter of trial and error. The world’s most successful pharmaceutical companies would often collect dirt from far-flung locales and screen that soil or sand for medically active components. Biology was often a secondary concern. It was the speed of trial and error that was important.

Today, drug discovery is more targeted and intentional, building on a wealth of data that has grown exponentially since the early days of trial and error. Our knowledge of cell biology and genomics is now sufficiently advanced that it is possible to create medicines based on our individual immune cells or genetic profile. These advances promise patient-tailored medicines, such as the new CAR T therapies that “train” the patient’s own immune system to fight cancer, that have the potential to transform how cancer is treated.

This kind of innovation, however, requires investment to be sustained. Both the basic science and the delivery of treatments require investment to foster the next generation of therapies. The challenge is ensuring access to and reimbursement for those new medicines, thereby enabling innovators to reinvest in research and development. This is the virtuous cycle of innovation.

Mark Alles

Mark J. ALLES, CELGENE CHAIRMAN AND CHIEF EXECUTIVE OFFICER


If the costs of a new intervention far exceed the benefits, or if patients cannot get access, we’ve failed – as a system – to provide value. Conversely, when we see benefits that far outstrip costs, we can be confident that we are moving the health system in a direction to higher value, with better health and lower costs.

Understanding that balance has never been more critical. The United States spends $3.3 trillion on health care every year, or 18 percent of the nation’s gross domestic product (GDP). That’s about equal to the entire GDP of Germany. Among the primary drivers of this spending are hospital care (32 percent); physician and clinical services (20 percent); retail prescription drugs (10 percent); and other health, residential, and personal care services (5 percent). We have a responsibility to make sure that those dollars are spent wisely and to define what we – as a company and as a part of the health care system – believe is a good investment in the health of the nation.

Celgene’s Value and Innovation Framework Report is an effort to help meet that responsibility. We have developed a framework that outlines our approach to value and defines our role as a driver of value.

 “We have a responsibility to define what we believe is a good investment in the health of the nation.”

Though spending on biopharmaceutical products remains a relatively small piece of the overall health care environment, the biopharmaceutical sector has had an outsized impact on outcomes, and we are proud of our role in a therapeutic revolution that has cut the cancer death rate by 25 percent since 1991. While overall spending on biopharmaceutical products has indeed increased over the years, it has contributed to significant improvements in health outcomes. In fact, one study found that over 70 percent of recent life expectancy growth is due to the increased use of medicines.

Even with the increasing innovation coming from the biopharmaceutical sector, there are signs that drug spending is stabilizing. In 2017, per-person spending on prescription drugs rose just 1.5 percent across plans covering employees and their families, less than half of the increase reported in 2016 and the lowest increase in 24 years of tracking drug-trend data. Another study found that after accounting for rebates and discounts, spending growth on prescription drugs in the United States slowed to 0.6 percent in 2017.

But we cannot simply proclaim successes, declare that we have provided value, and avoid further discussion. Instead, we must start with a clear definition of our goals and a fair-minded examination of our impact at every level of the health care system. This report is evidence of our commitment to evaluating our performance as “value drivers” so that we can continually refine our role in the virtuous cycle of innovation.

To learn more about how Celgene defines value and measures it through medical innovation, read the 2018 Value and Innovation Framework Report.