Health Insurance Coverage as an Emerging Hurdle for Drug Companies
Biotech and pharmaceutical companies have long seen approval from the federal Food and Drug Administration (FDA) as a major hurdle in getting promising new drugs to market. But in 2012, according to an article by Anna Edney and Catherine Larkin of Bloomberg, the FDA approved 39 new medications, a 15-year high. Analysts suggest that this increase was not due to FDA approval getting easier – just the opposite, in fact: in 2004, the agency actually made safety testing requirements more strict. However, drug development firms have now gotten used to the new rules and worked them into their usual processes in an efficient way, allowing more medications to be approved in record time.
The success has biotech companies thinking about other challenges on the pathway from lab to pharmacy. According to Gail Maderis, the CEO of BayBio, a company that along with the California Healthcare Institute and PwC published the 2013 edition of the California Biomedical Industry Report, drug companies’ concerns are shifting from FDA approval to health insurance coverage. (Maderis was quoted in an article by Luke Timmerman of Xconomy.) The Report presents the results of a survey of biotech industry executives on the trends and emerging issues they have noticed in the past year.
While the survey respondents generally felt that FDA processes for drug approval had become more efficient, they reported more difficulty in getting health insurance companies to cover the drugs once they were approved. Of the 183 executives asked about challenges on a national level, 107 said that health insurance coverage had gotten worse since last year and just six said it had gotten better. In comparison, 64 of 183 said that FDA approvals had worsened since last year, while 27 noted an improvement.
Drug companies’ worries seemed to be about insurance coverage in general, rather than specific types of health insurance or trends among plan types. Of 179 executives asked about potential threats to their businesses, only 50 considered consumer-directed healthcare and health plan design to be somewhat of a threat or a major threat. Other, more significant areas of concern included access to investors, FDA approval, restrictions on drug prices, government budget cuts, and taxes on the biotech industry.