People are living longer, healthier lives than ever before, and much of the increase can be attributed to innovative medicines.1 Still, the need to invest in medical innovation has never been more important as the population ages, the burden of disease continues to increase, and scientific advances allow better targeting of diseases.
The pricing of innovative medicines is complex but ultimately must strike a balance between ensuring access for every patient who may benefit and preserving incentives for medical innovation and investment in research and development. If we meet these goals, we can continue to deliver life-changing treatments today, invent tomorrow’s breakthroughs, and fuel a sustainable, virtuous cycle of innovation.
Celgene’s pricing principles are born of the belief that while we can’t influence every aspect of healthcare, we can do more to embrace our responsibilities to patients, health systems and society in a way that is both defined and transparent.
As a part of these principles, 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 medical inflation (CMS projected growth rate for National Health Expenditures for the year). 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 significant increase in the value of one of our medicines where this standard would not apply.
We will provide information related to any increases in price, including enhancements in value, at: www.celgene.com/value. We believe that this transparency is important for patients, the health care system and society.
These principles for pricing innovative medicines are deeply rooted in our fundamental values, mission and purpose as a company.
When considering pricing for its therapies, Celgene follows an approach that recognizes the following four principles:
Principle 1: The price of medicines should be based upon the benefits they deliver to patients, healthcare systems and society.
Value is fundamental to price, but can be a difficult concept to measure. When determining value Celgene considers the following criteria:
- Patient Benefit: Considers how well the medicine treats disease, the patient’s quality of life while on treatment, any side effects caused by the medicine, and the convenience of taking the medicine.
- Benefit to Society: Considers the positive impact of a medicine on society, such as the benefits to the caregiver and family of the patient, the potential reduction in other healthcare costs, the ability of patients to return to work, increases in economic productivity, and the overall positive impact of innovation on social and economic welfare.
- Benefit of advancing medical progress in a disease: Considers factors such as the impact a new treatment can have toward curing or managing the disease, the severity and rarity of the disease, and the availability of other treatments.
Principle 2: Pricing should provide incentives for continued investment in discovery and development of innovative medicines.
Developing innovative new medicines is a costly and high-risk enterprise with very low success rates. Without appropriate incentives for investors, no company would be willing to pursue the level of research required to discover and develop transformative therapies for patients. For example, in the case of lung cancer, a serious and often fatal disease, only 10 of the last 177 medicines studied in clinical trials have successfully advanced through development to become available to patients. The other 167 failed, with the costs borne exclusively by the inventors who discovered and developed the medicines.
At its core, Celgene is a research and development company. In 2017, we re-invested 45.5% of our annual revenues into research efforts2, which is well above the biopharmaceutical sector average. It is this relentless dedication to research and development that has fostered the discovery of life-altering medicines for patients. While these innovative medicines initially generate revenue for Celgene, they will ultimately go off patent, enabling society to benefit indefinitely from the availability of low-cost generic alternatives. Without the original research and development of the innovative medicine, generic alternatives would not be available to society.
Principle 3: Pricing flexibility among countries according to their financial circumstances permits broad global access.
The benefits of medical innovation are global, and Celgene believes that patients from countries of differing economic circumstances should be able to benefit from these innovations. At the same time, the costs of innovation should be shared according to the financial circumstances of a country, such as the relative per capita gross national income. A flexible model that allows differentiated prices according to an economy’s ability to pay is therefore required to maximize patient access and sustain investment in research and development.
Celgene is supportive of pricing flexibility to support broad patient access. With regard to biopharmaceuticals, however, some higher-income countries use international referencing policies to demand the same pricing developed to support patient access in low- and middle-income countries. Use of international reference pricing can adversely affect incentives to discover additional new medicines and patient access.
Principle 4: Patients who can benefit from Celgene products should have access to them.
Celgene’s purpose is changing the course of human health through bold pursuits in science, and a promise to always put patients first. Ensuring patients who need Celgene medicines can receive them is central to this purpose. We work collaboratively with governments, health systems, payers and all other stakeholders to find constructive solutions to pricing and access issues. Our aspiration is to provide every patient with the medicine they need, but this requires the collaboration of all stakeholders. Patient access is a shared goal; it cannot be achieved by biopharmaceutical companies alone.
* * *
These principles define how Celgene approaches the pricing of its innovative medicines in the countries where we operate, striving for consistency, clarity and transparency. We will continue to evolve these efforts, in collaboration with all stakeholders, to ensure an optimal outcome for patients.
1 New therapies accounted for 73% of the increase in life expectancy between 2000-2009. Source: Lichtenberg FR. NBER Working Paper No. 18235. Pharmaceutical innovation and longevity growth in 30 developing and high-income countries, 2000-2009. Available at http://www.nber.org/papers/w18235.
2 On a GAAP (generally accepted accounting principles) basis.