• by Thom Forbes  @tforbes, July 23, 2015

The escalating cost of pharmaceuticals is under both scrutiny and attack as a new study comparing pricing and effectiveness was announced and 118 physicians signed a letter urging grassroots advocacy. But Big Pharma says rampant consolidation in the health insurer industry is sure to put a squeeze on prices and — you know the script — in their ability to conduct R&D on new life-saving formulations.

“A slate of 118 well-known cancer experts have signed their names to a list of recommended drug pricing reforms in hopes of curbing the soaring costs of cancer care and spurring a grassroots movement to combat the trend,” Tony Hagen reports on OncLive.com.

The doctors recommend “an advocacy movement be modeled after the HIV/AIDs activism of the late 1980s and 1990s, when, with many lives at stake, the gay community and its supporters worked to spur faster drug development and broaden access to promising experimental drugs,” Hagen writes.  

“The high prices of cancer drugs are affecting the care of patients with cancer and our health care system,” the doctors maintain in a post to the website of the journal Mayo Clinic Proceedings.

“They are the latest to target high prices,” observes Jeanne Whalen in the Wall Street Journal, reporting that members of Congress have demanded that pharmaceutical companies justify the pricing of hepatitis C medication. Also, Medicare’s board of trustees said Tuesday that new medications “will help drive a sharp increase in the program’s prescription-drug spending over the next decade, raising annual growth to 9.7% between 2015 and 2024, from 6.5% in the prior eight years.”

In the New York Times, Andrew Pollock reports that “so-called pharmaceutical cost transparency bills have been introduced in at least six state legislatures in the last year, aiming to make drug companies justify their prices, which are often attributed to high research and development costs.”

Lori Reilly, EVP for policy and research at the Pharmaceutical Research and Manufacturers of America, “said it was misleading to look only at the cost of developing a particular drug because that ignored the money spent on the drugs that fail during development. Only about 12% of drugs tested in people reach the market,” she points out to Pollack.

Meanwhile, the Institute for Clinical and Economic Review (ICER) has received a grant from the Laura and John Arnold Foundation (LJAF) to provide independent analysis on pricing linked to patient benefit for new FDA-approved drugs.

“As part of the program, ICER will create public reports after a drug is approved by the FDA, including information on the drug's cost-effectiveness and how it might impact healthcare budgets,” Emily Wasserman reports for FiercePharma. “The organization will churn out 15 to 20 reports during the first two years of the initiative, and will release the first two reports in September 2015.”

“We need prices that make sense,” ICER president Steven Pearson, M.D. says in a statement announcing the initiative. “Right now, it’s often a black box: we don’t know if we are getting good value with new drugs at these higher prices.”

The statement cites a recent Express Scripts report that found that more than a half-million patients had medication costs in excess of $50,000 in 2014, an increase of 63% over 2013.

“Cancer drugs now routinely carry annual price tags upwards of $100,000. And often these prices have little to do with how much better a drug performs compared to what is already on the market,” according to the Express Scripts study.

Novartis CEO Joe Jimenez, however, tells Bloomberg’s Simeon Bennett that the consolidation of health insurers in the U.S. is putting a crimp on what pharmaceutical companies can charge.

“Across the board in the U.S., the pricing environment is more difficult,” Jimenez said Tuesday. “With a consolidated payer base as well as consolidated providers, you have to assume going forward that price increases in the U.S. are going to be quite limited.”

Novartis itself has proposed a pay-for-performance system for Entresto, a new heart failure medication that got FDA approval earlier this month. “Insurers would initially pay a lower price, followed by an additional charge if the drug succeeds in keeping patients out of the hospital,” Bennett writes.

On the consolidation front, Anthem is poised to buy Cigna for more than $48 billion, Dana Mattioli, Liz Hoffman and Anna Wilde Mathews report in the Wall Street Journal. The announcement could come as early as today — or not, as the t’s are crossed — leaving UnitedHealth Group as the only standalone health insurer among the Top Five if everything in the works goes according to plan.

“The expected deal follows by about three weeks Aetna’s agreement to buy Humana for $34 billion. In a sign of the takeover frenzy among big health insurers, Cigna also vied for Humana but failed to arrange a cash-heavy offer that Humana had requested, people familiar with the matter said,” Mattioli, Hoffman and Wilde Mathews reports.