Drug Pricing

Excerpt from remarks to Boston College Chief Executives Club  

May 18, 2017

NABEL: 
Tell us about drug pricing.

SCHLEIFER:
Drug pricing has the potential to be the undoing of our industry. We’re not getting it right, and we’re tone deaf if we think that people just don’t understand. There is the argument to be made that the public doesn’t understand some aspects of this, which is—how can it be that an industry that, we have a drug called Eylea which takes people who are legally blind with macular degeneration, the wet form, and gives them driving vision! You’ve heard of drugs for AIDS, vaccines for childhood diseases that otherwise were scourges. You’ve heard about cholesterol-lowering drugs. We have one of those.

The industry produces unbelievable, frankly miraculous things. The fact that you could come up with something that you could inject in someone’s body or take by mouth and make their asthma go away, or make their cholesterol go down to levels that have never been accomplished before, or give sight back.

NABEL: 
What’s the responsible response by the pharmaceutical industry?

SCHLEIFER:
We do have to communicate how hard this is. We do have to let people know that if we’re not successful, our entire society is going to be overridden with, unfortunately, elderly demented people from Alzheimer’s disease, which is going to be a zillion dollars a year to take care of if the industry doesn’t come up with a success. That’s just one example. Diabetes, heart disease—these are things we really—not to mention the next thing that comes along, whether it’s Ebola—we stepped up and came up—we actually have something that worked—we got something very quickly, although the Ebola epidemic went away.

NABEL:
It’ll come back.

SCHLEIFER:
I think it is going to come back. There were, unfortunately, a few deaths in Africa last week from it. But the point is that you can do all these great things. Why do you hate it? Why is the industry ranked right there below media? And how can it be that insurance companies—I know John Hancock is here, and I like them. But how can it be insurance companies are now loved? We all used to hate the insurance companies, right? Who loved the insurance companies? Nobody. And now everybody hates the pharmaceutical industry.

And you have to ask yourself why. Part of the reason is we don’t—people don’t understand that our system is the best system in the world. The system comes from the Constitution, where our founding fathers—right there between Congress’s ability to declare war and levy taxes is the ability to grant patents, which the founding fathers knew we were going to be entrepreneurial. Lincoln, our only president that ever actually got a patent—he didn’t make any money on it, because he didn’t commercialize it—but Lincoln said that patents are the fuel of interest for the fire of genius.

More drugs are invented in the United States than anyplace else in the world, because our system actually works. We have the NIH. We have these great academic medical centers. We train scientists. We train clinicians. We know how to do clinical trials. We have a great regulatory schema. We have entrepreneurs. We have capital markets. We have the world’s greatest ecosystem. But it’s in danger.

That’s why I’ve been pretty outspoken about criticizing—I’m not going to mention by name unless you really push me—the people who I’ve felt—and I’m not talking about the people who do the horrible things, the Shkrelis of the world that buy up a patent, don’t invent anything, and raise the price from a buck to 1,000 bucks. I’m talking about the more insidious problem, which is when people every year are raising their prices by 15%, sometimes 10% twice a year. That’s where we start to—we get in trouble. We have to stop doing that. We have to start pricing our drugs—and we’re proud of the fact that with Sanofi, we priced Dupixent in a way that the most critical people in the public arena looking at this said it was cost-effective—that is, it delivered the value.