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Jim Robinson is the President of Astellas Pharma US. These remarks
were delivered during The RPM Report’s FDA/CMS Summit for
Biopharma Executives on December 11 in Washington, D.C.
The Collision of Innovation And
Access In US Healthcare
The RPM Report’s FDA/CMS Summit for Biopharma Executives included
sessions devoted to many issues that impact the biopharma industry
and patient care. They raised essential questions about public policy
and biopharma. But all are part of a much bigger question: How do we
create and sustain real value in our healthcare system?
By Jim Robinson
Whether you are a payer or a provider, a patient or
a biopharmaceutical company – almost all of our questions
about health care eventually end up being about value.
If I asked everyone here to define value in health care, I
suspect we’d get broad agreement around one basic answer:
Better patient outcome at lower costs.
But as you know, there’s nothing easy about answering all
the questions that come after. For example, what is a quality
outcome and who decides? If you figure out what quality is,
how do you determine what factors are responsible for that
outcome? Is it a lifestyle change? A medicine? A surgery? If
you can figure that out, how do we measure the impact of
each intervention – and how do we pay for it?
We simply have to find good answers to these value questions, and soon. Because our healthcare system is facing a
fundamental challenge: Medical innovation is becoming increasingly complex and expensive at a time when payers are
less willing to pay for it.
These two opposing forces – the rising complexity and cost of
innovation and the limits of payment and access – are colliding.
The only way to reverse this collision is by delivering better value.
But no single entity in the healthcare system can accomplish
this goal on its own. Developing a more value-driven system
in America can only be achieved with every stakeholder at the
table. Unfortunately, I don’t think that’s happening.
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Even as science is leading us towards more personalized or
precision medicine, our overall healthcare system is heading
in the other direction – where patients and providers have
less control over treatment decisions; and where top-down
cost-cutting is undermining bottom-up innovation.
With budgets shrinking and costs rising, I understand the
impulse for payers to focus on cutting costs in the short-term.
But I don’t believe this will lead to long-term value.
At Astellas we understand that we have a special responsibility – because we develop products that, in some cases,
can be the difference between life and death. And because of
that, we have a commitment to ensuring that patients have
access to our medicine -- whether it involves the government,
private insurers or individuals paying for the medicine or, in
some cases, Astellas providing it for free. We’re certainly not
alone in this. Many of our peer companies think and act the
same way.
Now, there’s no disputing the fact that medicines – along
with most other products and services in the healthcare system – are getting more expensive. And the question everyone
wants to know is, “why?”
To help address that question, I’d like you to think about
something for a moment. Picture in your head a news headline running across your computer screen. And the headline
says, “Scientists Discover Molecule That May Hold Key To
Cancer Cure.”
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We have all seen it, and after seeing stories like this year
after year, we have all probably wondered, “Why haven’t we
cured cancer?”
It’s a complicated question – and the answer is even more
so. Earlier this year, Scientific American said that “taking a
drug all the way from initial discovery to
market is considered harder than putting
a man on the moon.” Now, I don’t want
to take anything away from the folks at
NASA but that’s not far off.
Diseases are complex – not monolithic.
They are instead a group of conditions with different causes, pathways
and targets. And diseases are smart. We
can identify one pathway that works
to fight a disease like cancer – which
is incredibly complicated – only to see
the cancer find an alternate pathway to
evade our treatment.
But for the biopharmaceutical industry, that is our business.
Failure is simply inevitable.
You’ve probably heard that the average cost to develop a
new drug is just over a billion dollars. But that understates
it. Last month, a new Tufts study pegged it at $2.6 billion.
The science is getting tougher as we
tackle intractable chronic diseases like
cancer, MS and rheumatoid arthritis and
various infectious diseases – and so are
the economics.
R&D Economics Daunting
In fact, if you look across the industry,
conducting research and development is
now – on average – a money loser.
Let that sink in for just a moment. Over
the last few years, the cost of capital has
been greater than the return on investment
from R&D. That’s why some Wall Street
analysts have been saying that R&D is a
Astellas Pharma US President Jim Robinson
Innovative Therapies Progress
value-destroyer instead of a value-driver
Despite the Odds
for the biopharmaceutical industry.
Despite these scientific challenges – and the economic chalNow, I don’t agree with that view. But it certainly gets your
lenges that I’ll speak to in a moment – biopharmaceutical attention. And it provides new urgency to find real value
researchers continue delivering life-saving and life-improving throughout the system.
therapies.
At Astellas, we’ve dealt with our share of failure.
We’re all familiar with the headline grabbers, such as HIV/
We’ve spent years – and millions of dollars – developing
AIDS deaths being down over 80%, or a 20% decrease in promising drugs that never made it to market. And even when
cancer deaths.
a drug gets to market, the odds of commercial success aren’t
But there have been so many other notable developments. high. But the price of failure is worth paying if it leads to the
For the first time in 50 years, we have seen the first new treat- promise of a life-saving medicine.
ment for Lupus. We’ve seen the number of prostate cancer
Take a medicine like Xtandi, a drug that we developed in
medicines available on the market jump significantly.
partnership with Medivation Inc.
If you look at what the FDA is approving, these are not
• Xtandi was approved by the FDA in 2012 to treat an ag“me-too” therapies. A recent study in Health Affairs found
gressive form of prostate cancer after chemotherapy.
that 40% of drug approvals in the last decade have been first• Then it was approved this past September for treatment
in-class treatments.
before chemo.
But even with this progress, there is still so much left to
• And now, it is being studied to treat other forms of cancer,
learn about the human body – and so much distance to travel
including breast cancer.
between that promising headline and the development of a
Developing and commercializing Xtandi wasn’t easy and it
safe and effective medicine for patients.
wasn’t cheap – but it was worth it.
At each stage in the drug development process, there are
Xtandi is providing hope to patients who didn’t have any
scientific, economic, regulatory and manufacturing hurdles just a few years ago. And Xtandi is a signature example of
to clear. These hurdles have always been high. Now they’re how the clinical value of a medicine can and does evolve
getting higher.
over time.
Consider that nearly 90 percent of drug candidates enterOf course, anytime you discuss a promising new medicine,
ing clinical trials fail. No other industry faces this challenge. the payment discussion isn’t far behind.
Can you imagine if 90 percent of Apple’s consumer devices
I won’t belabor the payment challenge. We all know the
or Ford’s car designs never made it to market? That would deal. More people need healthcare benefits and there is less
destroy their business.
money available to pay for it. And with 8,000 Baby Boom-
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ers retiring every day in the U.S., the problem isn’t getting
any easier.
R&D Costs Can’t Be The Only Response
As an example, I recently read a Forbes story where the writer
Pressure On Payors, Counterproductive Responses wondered why the industry justified the price of medicines by
talking primarily about the cost of development. I just did that
Medicare, Medicaid and commercial insurers already can’t keep
earlier: over $2.5 billion dollars to bring a new drug to market.
up with the cost of care. For this reason, the federal governBut this didn’t quite make sense to the Forbes writer. He
ment and private insurers are trying to take steps to decrease essentially said that you’d never pay more for a car because
costs and increase value in the system.
Ford wasted extra money on R&D
We see some of it in the implementawithout results. You buy the car for the
tion of the Affordable Care Act. And we
result of that R&D – because it is safer,
see it in the commercial market:
faster, more efficient. And he said, it’s
• Where payers are consolidating to
“the same with drugs… we should pay
build greater influence, and
what they’re worth, not what it costs to
“Our challenge is to get
• Shifting the risk to providers and
develop them.”
the costs to patients.
On balance, I think he’s right.
everyone in the system
So here is my concern: Some of the
But we’ve got to do a better job as an
pulling in the same
steps payers are taking that are designed to
industry and as a system of figuring out
increase value may in fact decrease value.
what “worth” or “value” really means
direction to focus on
More and more, payers are trying to
and who decides.
finding ways to put
force price cuts on medicines with little
If I have a drug that costs $80,000 to
consideration of the value they provide
value in instead of just
cure a disease, that sounds expensive.
for specific patient populations; or
But what if that drug prevents $500,000
taking costs out.”
they’re creating restrictive formularies
in future medical costs? All of a sudden,
that make specialized drugs – which
that expensive medicine looks pretty
often represent the most cutting-edge
cost-effective because the patient and
science – difficult for patients to access.
the payer are saving over $400,000.
Part of the problem is that we still
This is not a hypothetical situation.
don’t have consistent or reliable quality measures for many And it’s hardly the only one. There are countless examples
diseases; and just as the quality measures are sometimes ill- where a medicine creates significant value for patients
defined, so too are the financial incentives throughout our and society. And sometimes, these benefits don’t become
healthcare system.
clear until years after a drug reaches the market and new
Providers are being rewarded or punished for meeting or not insights are gained through real-world patient use and
meeting quality measures that often have little correlation to ongoing research.
better outcomes for patients. And pharmacy benefit managers
These distinctions between what constitutes real value are
are incentivized to cut costs now, even if it will cost the health hardly just a matter of perception.
insurance plans more later.
When we recognize the true long-term value of medicines,
Whatever the reason for this arbitrary cost cutting, it:
and create the right incentivizes to develop better medicines, it
• Puts the squeeze on patients, who have to pay a growing has a huge impact on improving patient outcomes and reducand unrealistic share of the costs for these medicines.
ing downstream costs. It has a huge impact on how medicine
• It also puts a squeeze on doctors, who can’t always is actually practiced.
prescribe the medicine they think will be best for their
And here too, I believe the biopharmaceutical industry has
patients.
an essential and growing role to play.
• It puts a squeeze on R&D because companies are hesitant
to invest in drugs that may not be adequately reimbursed. New Collaborations Critical
• And it moves us closer to a low-cost healthcare system As you all know, the evolving economics of health care have
when we need to be moving more towards a high-value forced significant changes in how providers are organized.
system.
Delivery systems are being consolidated. Previously indepenBut the blame for this worrying trend certainly doesn’t fall dent physicians are going to work for these systems. And as
only on payers. My industry hasn’t done a good enough job a consequence, prescribing decisions aren’t just in the hands
of doctors anymore.
communicating the value of our medicines.
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Individual physicians are increasingly influenced by the
protocols of whatever network they are a part of. And biopharmaceutical representatives – instead of taking their expertise
from doctor’s office to doctor’s office – are now making their
case to administrators, CFOs, and other C-Suite leaders of the
integrated systems.
So here’s another contradiction we are facing: At the same
time that the practice of medicine is becoming more individualized and personalized, the payment and formulary decisions
are becoming more centralized.
For companies like ours, it’s sometimes hard to know who
is really making the prescribing decisions, and on what basis.
And it’s compounded by restrictions on communications between biopharmaceutical company representatives and many
healthcare professionals.
Despite these challenges, Astellas is partnering with healthcare delivery networks to figure out how to deliver real value
for them and for their patients.
For example, we recently launched a new Strategic Accounts
Business Unit that works with leaders of health care systems in
five cities to better understand their unique needs. Each unit
features a multi-disciplinary team with complementary roles.
Some teams focus on building relationships with clinical and
non-clinical leadership, while others are tasked with engaging decision-makers on healthcare outcomes, quality and the
economic burden of disease.
Right now, Astellas is learning valuable lessons that we will
implement throughout our organization. And we’re learning
how to think more about value in everything we do.
When it comes to R&D, we are trying to listen to the voice of
our payers, our providers and our patients earlier in the drug
development process. This can ensure that we have the right
value measures and value proposition when we get to market.
A great example of this type of partnership is one we have
with Humana Inc. that brings together researchers and health
care experts to reduce inefficiencies in the management of
oncology, urology and immunology conditions.
We are building a more collaborative partnership between
the stakeholders who create, deliver and pay for medicine,
which is good for the health of the patient and good for the
health of the whole system. This collaboration enables the
development of more targeted medicines, fewer unnecessary
treatments and reduced costs; and ultimately, better care for
patients.
So in my opinion, if payers, providers, regulators and the
biopharmaceutical industry can come together – as partners
– I don’t see any reason why the United States can’t create a
truly value-driven healthcare system.
Our challenge – and it’s a big one – is to get everyone in the
system pulling in the same direction to focus on finding ways
to put value in instead of just taking costs out.
I know some of you in this room are working to develop
new payment models and incentives to measure quality and
to deliver value. And I know those models have a common
end goal: To enable providers to make treatment decisions not
because they think an intervention will work, but because they
have the right data and insight to know it will work.
Now it’s not my place to take a position on the viability
of one model over another, but what I do know is that every
stakeholder in the healthcare system has to be involved in
shaping these models. There’s no one-sized fits all solution
that can be imposed.
Instead, we need to look to the many partnerships that are
being developed across the country as our laboratories of
value – as the proving ground for which models really produce
the best patient outcomes at lower cost. Because we all have
valuable insights to add – and because collaboration is the
only way to reform a healthcare system as complicated as ours.
Astellas and the biopharmaceutical industry have a lot
to contribute to this discussion, and I’m looking forward to
working with many of you to build the value-driven healthcare
system that is best for patients and for all of us.
RPM
Put Value In, Rather Than Take Cost Out
Without question, we are being flexible. We are being nimble.
And we are listening to patients, providers, payers and regulators.
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