Sector News

Bayer CEO happy to have fair outcomes-based pricing

December 4, 2014
Life sciences
Outcomes-based pricing holds no fears for Marijn Dekkers but the Bayer chief executive has urged governments to level the playing field when comparing old drugs with innovative products.
At the German major’s Perspective on Innovation meeting in Leverkusen, Dr Dekkers (pictured) told PharmaTimes that in terms of realigning payment mechanisms around health outcomes is perfectly reasonable. “We are all for only getting paid for really good drugs,” he said, adding that as an innovative company “we have the ability to come up with treatments better than those on the market”.
Dr Dekkers went on to say “it is okay to be tested on that in the process of price-setting, that is fine, we should only be paid for the value we bring”. However he did add one important caveat.
He noted that in no other industry does a product’s price drop 80% when it goes off-patent, the key sticking-point when reimbursement issues come up. “When we have a new drug that is significantly better than the previous drug but the previous drug just went generic, we are compared to the 20% price, not the 100% price”.
Dr Dekkers said that when one uses the 20% (i.e. generic) price for comparisons, it is hard to show continuously improvement of new drugs even though they are significantly better than older ones. It is “a huge dilemma [and] if we don’t solve it we will take away the economic motivation” for high-risk innovative projects.
Volkswagen Beetle analogy
He then gave PharmaTimes an analogy with cars, saying that “if the automotive industry have patents like we have, we would all still be driving around in Volkswagen Beetles from the 60s. All the innovations and continuous improvements VW has made would not have justified the price differential”.
Dr Dekkers was upbeat at the meeting, noting that in the pharmaceuticals segment, Bayer has successfully completed 25 Phase III clinical studies since 2010 and emphasised the strength of its pipeline (more on this to follow on PharmaTimes).
He also highlighted the firm’s over-the-counter business, ranked number two in the world after acquiring the consumer care business of Merck & Co. When asked why an innovative company was focusing on OTC, Dr Dekkers said “we need diversifaction as a buffer…we don’t have to be sexy all the time, more selective sexiness”.
By Kevin Grogan
Source: Pharma Times

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