Our Five Drug-Pricing Predictions for 2022

We have an annual tradition at Real Chemistry of predicting the drug-pricing landscape in the year to come. While it’s often easy to pick the trends, it’s a lot tougher to figure out where the status quo will get upended.

That’s not going to keep us from trying, though. So here are this year’s prognostications from the Real Chemistry team. We published them first a week ago in our weekly Value Report newsletter. PM me if you'd like to on our distribution list.

(In the interest of accountability, we’ve graded our five bets from a year ago at the bottom of the newsletter.)

1/?Hospitals Wear the Black Hat

From time immemorial, the drug-pricing debate has been painted as having two competing villains: drugmakers and payers (both insurance companies and pharmacy benefit managers). 2022 will see a third malefactor enter the drama: hospitals.?

The recent changes in?transparency rules?has exposed the longstanding hospital practice of?egregious markups?on prescription drugs, and the 340B debate -- long considered too dull to generate attention -- is beginning toheat up,?raising?questions?about the extent to which hospitals really invest the largess from outsized profits on medicines back into the community.?

2/ Gene Therapy Makes a Comeback (For Real This Time)

?It's been a bumpy road for the gene therapy field, but Zolgensma’s?encouraging sales?are proof that commercialization is possible.

Tides will shift in 2022, particularly for those who will have a second go with the FDA. In the United States, there is the possibility of the return of?bluebird bio’s Zynteglo?and?BioMarin’s Roctavian?in mid and late 2022, respectively, along with?bluebird’s CALD therapy, and potential filings from uniQure, CRISPR/Vertex, and PTC Therapeutics. The over-under on gene therapy approvals is two, which would double the number of gene therapies on the market in the United States.

While the media and policymakers will seize the opportunity to dust off “the world’s most expensive drug” headlines, pay attention to the nuts and bolts.?Research shows?payers are amenable to a range of solutions to foot the bill?and the Institute for Clinical and Economic Review has looked favorably on one-time treatments. But -- similar to hepatitis C -- state Medicaid programs could be a stumbling block, as the short-term budget impact of multiple therapies obscures potential long-term cost savings.?

?--?Leah Nebbia

3/ Biosimilars Will Become ‘Layman’s Lingo’?

With?average savings of 30%?over reference-brand biologics, biosimilars appear to offer a practical solution to bending the pharmaceutical cost curve (at least for established biologics). However, launch delays, state interchangeability rules and?lack of patient, provider and pharmacist awareness?have limited biosimilar uptake in the U.S. to?only about 30%?in therapeutic areas where they compete.

But with midterm elections continuing the drumbeat around drug costs, a?new law?authorizing the FDA to bolster biosimilar education, and seven biosimilars of the world’s?top selling drug Humira?(adalimumab)—including one with interchangeability status—prepped to start?hitting the market in 2023, we expect to see a significant push around biosimilar literacy over the next year.?

Our prediction: “biosimilars” will be “mRNA” of 2022 holiday family dinner conversations.

--?Leslie Isenegger?

4/ CMMI Becomes the Most Important Acronym in DC

We’re going to call it: the Build Back Better Act is dead. That’s not a particularly daring take, and it’s a bit too anodyne to be worth even calling a prediction. But Washington isn’t done with drug pricing. The center of gravity will just shift to the Centers for Medicare and Medicaid Services’?Center for Medicare and Medicaid Innovation.

CMMI has broad power?to conduct “experiments” with the power to change the drug-price landscape. Trump used CMMI to push the (officially dead) “most-favored nation” policy; Obama tried, but?walked back, an effort to?reform Medicare Part B. This year, we’ll see CMMI drive the debate, to the point where we’ll make this call specific: CMMI’s director, Elizabeth Fowler, will show up in more drug-pricing stories than her boss (Chiquita Brooks-LaSure) or her boss’ boss (Xavier Becerra).

5/?Price Competition in Oncology: All Heat, No Light

Two decades ago, when I was much younger and more naive, I wrote?a piece for Nature Biotechnology?about the few remaining hurdles that biosimilars needed to clear to become a meaningful part of the treatment landscape in the United States. Needless to say, that trend took just a bit longer to unfold than expected.?

So it will be with price competition in oncology. The first of an influx of me-too medicines developed in China -- backed by companies ready to compete on cost -- could be arriving this year. But the ground isn’t yet fallow for this kind of price-related innovation: everyone from regulators (the FDA is suggesting?making it harder?to get Chinese me-toos approved) to customers (markup-happy hospitals?are unlikely to celebrate cheaper options) will make this a rougher road.?Despite the excitement, this will be an infrastructure-building year.?

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GRADING 2021

Predictions are all fun and games until it comes time to see which bets paid off. Here is how we did on?2021’s guesses:?

1. Transparency Will Make a Comeback. Hospitals transparency rule started to make an impact, so we’ll give ourselves credit.?GOT?IT RIGHT.?
2. Employers Will Throw Their Weight Around (More Visibly, Anyway). A week after we made this prediction a year ago, Haven -- the hype-filled standard-bearer for the idea that employers could “bend the cost curve” --?disbanded.?GOT IT WRONG.?
3. Medicare Part D Reform Legislation Comes of Age … and Passes. This was a bold one, but given that everyone agrees that out-of-pocket caps are needed, we took a flyer on this. While the Senate could still pass Build Back Better, it doesn’t look good.?GOT IT WRONG.?
4. The China Experiment Will Mint Winners. It hasn’t been easy, but some companies seem to be?succeeding at the trade-margin-for-volume game. Going forward, it looks like the China experiment will probably mean more losers than winners, though.?GOT IT RIGHT.?
5. COVID-19 Prices Come Back to Bite Biopharma. This is one that we’d love to roll over to 2022. Though there hasn’t been a reputational spike for industry, massive vaccine and therapeutics profits haven’t drawn much attention, nor has there been much attention to the pricing of weapons against COVID-19, perhaps because the government has largely footed the bill.?GOT IT WRONG.?

Two for five doesn’t sound that great, but it’s?better than we did in 2020. So perhaps the crystal ball is becoming less cloudy.