Funding of Pharmaceutical Innovation During and After the COVID-19 Pandemic | Health Care Economics, Insurance, Payment | JAMA | JAMA Network
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January 14, 2021

Funding of Pharmaceutical Innovation During and After the COVID-19 Pandemic

Author Affiliations
  • 1School of Public Health, University of California, Berkeley
JAMA. 2021;325(9):825-826. doi:10.1001/jama.2020.25384
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    1 Comment for this article
    Pharmaceutical Pricing Reform via Regulated Royalties
    Robert Sobel, M.D. | Clinical Assistant Professor, Feinberg School of Medicine, Northwestern University
    I thank you for insightful and timely assessment of the dynamics in play in pharmaceutical innovation. I have been concerned for years that the artificial dichotomy spawned by the 1984 Hatch-Waxman Act has been a failed compromise that has promoted many of the inefficiencies and inequities of our pre-pandemic system. Its fall-out includes the pervasiveness of pharmacy benefit activities (to deal with widely divergent pricing schemes between new and old, with niche exceptions), associated direct interference with clinical decision making within the patient-physician relationship, less attention to long-term and relative benefit investigation, and diversion of innovation to areas of drug-cycle timed profit over areas of need.

    Each pharmaceutical agent is a unique invention, where our understanding of its long-term risk-benefit is ever evolving. Thus, new and old drugs should be allowed to co-exist in a market where clinical decisions drive and the system follows. Our reliance on awaiting generic competition to right the imbalance of new drug excess pricing perverts the market immeasurably. Unfortunately, the 2009 Biosimilars Act, modeled on the Hatch-Waxman Act, again looked to control costs through ending a drugs reign, not negotiating its reimbursement through whatever natural lifespan that agent may have.

    My alternative has been a proposal I have called Regulated Royalties. All approved agents would be marketed under long-standing licensure arrangements, allowing for a price-regulated, adaptable, open-formulary. In such a setting, we could accommodate the inevitable and life-saving advances to come, while ensuring clinical independence and promoting greater equity. The current structure of pharmaceutical pricing in this nation disrupts care to patients in both public and private domains; it is ripe for reform. May we indeed take lessons from this moment to create a more balanced and competitive system.