Industry Voice: US healthcare - intermediaries drive up drug prices

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Key points

Faced with spiralling costs, the healthcare system in the US is at a crossroads. From a political and social perspective, the basic aim is to make healthcare in the US more affordable and more efficient.

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The data speak for themselves: in 2015, healthcare spending in the US amounted to more than US$3trn, which corresponded to 17.5% of the country's GDP. Healthcare spending in most European countries ranges between 9% and 12%; in Switzerland, 11%.

From an investor's standpoint, the challenge is correctly assessing the future path of healthcare policy under the Trump administration. New solutions and models for pricing drugs offer rewards, but carry risks as well. Wholesale list prices for drugs have skyrocketed in recent years. The estimated mark-up between production costs and the prices patients end up paying in the US is a whopping US$140bn annually.

In practice, this means that scores of intermediaries such as distributors and retailers are also making good money on the sale of medications. The challenge here is for healthcare experts to come up with new reimbursement models for novel and innovative treatments, the objective being to keep medical progress affordable.

For drug prices, the implications are: only value-oriented pricing models benefit society in health economics terms. Our modelling also takes account of the fact that future innovative breakthroughs will not command the same premium prices versus conventional standard-of-care therapies. Hence, earnings growth will rely increasingly on sales volume.

For more information, please contact:

Claude Mikkelsen

[email protected], +44  203 770 67 85, www.bbbiotech.com

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Disclaimer

All forward-looking statements included in this release are made only as of the date of this release and BB Biotech and its directors and officers assume no obligation to update any forward-looking statements as a result of new information, future events or other factors.

 

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Key points

Faced with spiralling costs, the healthcare system in the US is at a crossroads. From a political and social perspective, the basic aim is to make healthcare in the US more affordable and more efficient.

Save

Save

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