drug pricing


Steve Burrill on Drug Pricing and Capital Markets

Guest:

Steve Burrill, CEO, Burrill and Co

Bio and Contact Info

Listen (3:20) What is going on with capital markets?

Listen (6:48) Drug pricing an easy target but only 11% of healthcare cost

Listen (11:02) Public misunderstands true cost of drugs

Listen (4:21) Which companies excite you today?

Listen (6:00) Where do you stand on FDA's approach with 23andMe?

Listen (4:30) More facts on aging crisis

Burrill and Co has just published their yearly overview of the biotech industry, this year called Biotech 2014: Transforming Healthcare. CEO Steve Burrill joins us today to give his personal takeaways on recent trends.

In 2013, the Burrill Select biotech stock index was up 61%, the biggest gain for any year going back to 1994 when the index was established. This March though, biotech stocks took a tumble. Why the fall? Steve links it directly to the recent controversy over drug pricing, particularly that of Gilead's hep-C drug, Sovaldi.

"Gilead's stock, along with that of some other major biotech companies, dropped and this took off a bit of the market cap and some of the excitement around the industry," Steve says.

Burrill goes on to address the current pressure to lower drug pricing, where it's coming from, and how biotech companies can respond. He says that the general public has a big misunderstanding about drug pricing. The cost of drugs only accounts for 11% of total healthcare spending, and yet drug companies are disproportionately beat upon to lower pricing.

"The real pressure," he says, "is on the doctor community, the hospital community, the broader healthcare community that's consuming 90% of the costs not the 10% that the pharma products are."

Steve doesn't think Gilead will give in on pricing, but will continue to make special deals with various payers and hospital groups, such as their recent agreement with Kaiser. Big pharma and big biotech have become "very sophisticated in working with the various payer communities to both determine outcomes and assign value propositions," he says.

We finish the interview with a discussion about how much FDA regulation is needed for genetic testing. Steve also shares more facts about the aging crisis for healthcare systems around the world.

Podcast brought to you by: Chempetitive Group - "We love science. We love marketing. We love the idea of combining the two to make great things happen for your marketing communications."



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