Washington's Interest in Precision Drugs is Innovation, Not Cost

On Tuesday, the Senate Health committee held a hearing on the promise of precision medicine. Last week, the House released draft legislation to support biomedical innovation. And following President Obama's State of the Union in January, the White House unveiled the Precision Medicine Initiative, meant to provide funding to accelerate biomedical research.

What none of these things do directly is to curb the price of speciality drugs—including precision drugs—which cost Americans more than $80 billion in 2013, according to the Campaign for Sustainable Rx Pricing.

Specialty drugs represent only 1 percent of all U.S. prescriptions but make up more than 31 percent of total drug spending, according to the Campaign for Sustainable Rx Pricing. And Americans want the president and Congress to prioritize high-cost prescription drug affordability, according to a Kaiser Family Foundation poll released last month.

Precision medicine is an emerging approach to health care that takes into account individual genes, environments and lifestyles, according to the National Institutes of Health. It allows doctors to potentially tailor treatments to individual people instead of using a one-size-fits-all treatment method.

The government's primary focus is not on cost, but on research and development.

With nearly 900 specialty drugs in the late-phase research and development pipeline, the bipartisan House legislation aims to, among other things, potentially expedite the Food and Drug Administration's approval process of precision drugs.

"Until the 1930s, we didn't have any pharmaceuticals to speak of, so this is a nice problem to have, the promise that we may be able to identify medicines that cure terrible diseases and save lives and extend lives, and we'll have to figure out a way to do it and to afford it," Sen. Lamar Alexander told National Journal.

It seems unlikely that any efforts to curb the cost of specialty drugs, if any are made at all, would be passed into law before new drugs hit the market, compounding already high costs.

"There are so many people now concerned about this, and the perception is that prices are completely out of control," said John Rother, president and CEO of the National Coalition on Health Care. "The sheer volume of new drug approvals are going to be heavily rated to specialty drugs, and those are going to be extraordinarily expensive."

But in terms of legislative action, "I haven't seen or heard much—I think as a Congress they might be a little cautious about trying to get in the middle of this," he said.

"There's going to be a lot of very expensive drugs on the market in the next few years," Sen. Chris Murphy said in an interview. "There are some fairly easy ways for us to save money on drug costs, and it's a debate that unfortunately isn't happening right now in the Congress."

Scientific advances in medicine are largely to blame, Rother said. As the industry has increasingly learned how to manufacture biologic drugs, they also can increasingly make drugs targeted to specific individuals or groups.

"We're seeing a big explosion in the category. There's been biologics around for awhile, but now we're seeing almost every company introducing or trying to introduce new biologic drugs," Rother said.

Precision drugs—many of which are biologics—are widely regarded as a new opportunity to treat high-profile diseases. The House's 21st Century Cures legislation directs the FDA to address whether accelerated approval or priority review would apply to precision medicine.

"It has become increasingly clear in recent years that our regulatory policies have not kept pace with innovation and there is much more we can be doing to provide that hope to folks. That's what this bill does," said Rep. Fred Upton, chairman of the House Energy and Commerce Committee, while discussing the draft in a health subcommittee hearing last week.

The Senate isn't quite matching the pace of the House, as no legislation has been introduced yet, but Tuesday's hearing was part of an effort to investigate the current state of biomedical research. Alexander, along with Sen. Richard Burr, released a report in January called "Innovation for Healthier Americans" that introduced the effort and identified some of its themes as being the high cost and excessive timeline of bringing medicine through the pipeline to patients.

But none of these initiatives discuss ways to cap the growing cost of specialty drugs, although 21st Century Cures does aim to reduce costs associated with long drug-approval times. Rother warned this "huge volume" of new biologics "will be driving health costs in the future," although at the same time he recognizes their medical value.

"The question is how to balance the needs of this intervention with the equally compelling need to keep it affordable," he said.

At the Senate hearing Tuesday, Dr. Francis Collins, the director of the National Institutes of Health, said precision drugs' contribution to preventive health care might end up helping with the industry's price tag.

"I would think that over the course of time this is one of the best opportunities we will have to cover health care costs," Collins said.

Murphy said that if Medicare spending starts to grow at a faster rate, "drug expenditure is going to look a lot less manageable"—but otherwise, people have been "lulled to sleep" by slow Medicare and Medicaid growth.

"I think that if some of these expensive drugs hit the market, there's going to be interest here in using the purchasing power of the federal government to drive down those costs," he said.