The J.P. Morgan Healthcare Conference usually begins – unofficially – with the announcement of a large acquisition, getting people talking about the big deals they expect in the year ahead.
This year was different.
Instead of a mega-buyout, the announcement that started the chatter was an upstart venture-backed company, EQRx. The company – which didn’t even have a presentation slot at the meeting – isn’t aiming to cure cancer or leverage CRISPR. Its business goal is to disrupt the industry by unleashing cheap me-too drugs with the goal of lowering drug prices.
That a pricing-focused start-up dominated the pre-JPM conversation was a tell-tale sign of a big shift in how the industry is looking at pricing and access. Because it wasn’t just EQRx that was talking about the topic. A steady stream of stories covered industry executives’ thoughts on why the cost of drugs remains high for patients and what can be done about it.
These included various views on prescription drug insurance structures with significant patient cost sharing, who reaps the value of drug rebates negotiated in contracts with middlemen pharmacy benefit managers, and the practice of price mark-ups by hospitals.
Talking about pricing can no longer take a back seat. Every company’s perspective on how to limit the impact of drug pricing on patients and society must be at the heart of the story that company tells investors, healthcare professionals, patients, policymakers, business partners, payers and voters. It is the now most meaningful part of how a company’s corporate social responsibility efforts are seen by the public.
To be sure, no company should make its presentation at J.P. Morgan solely about pricing and value. The industry’s lifeblood remains innovation, and the promise of the next cure is what keeps the biopharma industry moving forward. But companies that cannot or will not speak clearly and proactively about value risk their reputation, and that is a trend that will remain for the foreseeable future.
It is imperative that biopharma companies start taking the following approaches:
First, they must make proactive pricing ideas, solutions or frameworks a component of their company narrative. Rather than pointing to problematic structures elsewhere in the system affecting cost, biopharma must focus the story on what they can control. One size does not fit all, so companies should think about how pricing/value solutions can fit their own specific situation, needs and story. There is reputational high ground open for the taking for those proposing proactive solutions.
Second, both technology and operational innovation are vital in any truly innovative industry. Companies must elevate communications around creative approaches to pricing or contracting to meet the demand of external audiences who are hungry for novel solutions. Innovators innovate, both in the laboratory and in the marketplace. And while many companies are great at talking about scientific breakthroughs, they must not miss the opportunity to apply the same focus to storytelling about their business models and pricing.
In the receptions I attended, the chatter often revolved around how the JPM buzz was muted this year. But to complain about the lack of the big-bang deal was to miss the real buzz: that we’re headed to a new future in the way companies use patient access to frame their mission, gain competitive advantage, and become part of the larger healthcare solution.