PhRMA's Policy Proposals Seek Innovation, but at What Cost?

The proposals recommend modernizing policies across the healthcare industry, including the drug discovery and development process, promoting value-driven healthcare, increasing the consumer voice, and addressing market distortions.

Drug price discussions have gained a permanent spot on every media channel, and diverse groups, including the Consumer Union and AARP, have thoughts to share. A new report from HHS estimated prescription drug spending in 2015 in the United States was nearly 17% of overall personal healthcare services. While pharmaceutical innovation is being touted as the reason for the high costs, the Pharmaceutical Research and Manufacturers of America (PhRMA) has come back with a set of policy proposals that will further boost innovation across the healthcare industry.

PhRMA’s policy proposals are far-reaching and include the following:

  • Modernizing the drug discovery and development process
  • Promoting value-driven healthcare
  • Engaging and empowering consumers
  • Addressing market distortions

The proposal seeks modernizing the way the FDA functions to keep pace with the drug discovery process. They suggest increased acceptance by the FDA of innovative drug development tools and real-world evidence to ensure a patient-centric process. Additionally, modernizing the work force and hiring experts who have a better grasp of the innovations within the pharmaceutical industry, is recommended. Finally, PHRMA has proposed the need for increased competition in the market by allowing more generics to enter the field, and maybe even multiple generics to treat a given condition.

PhRMA suggests encouraging value-driven healthcare through greater diffusion of evidence and transparency between payers, the FDA, and drug manufacturers. Current legal barriers, the proposal states, prevent timely dissemination of safety, value, or efficacy information on a product, if the information is not on the product label. Things such as safety and efficacy study results for products under development, hospital readmission rates, or impact on other diseases, cannot be proactively shared by the manufacturer with payers and providers till after the product is approved. This can prove a major impediment as healthcare seeks a major transition to value-based care. Additionally, PhRMA proposes that clinical decision support tools based on value, such as the frameworks developed by the American Society of Clinical Oncology, the National Comprehensive Cancer Network, and the Institute for Clinical and Economic Review, should be all-encompassing.

Healthcare consumers must have a bigger role to play in their own healthcare decision-making process. But decisions can only be based on access to information on cost-sharing, quality of care, and efficacy data. Additionally, utilization management tools used by health plans should be non-discriminatory, especially with respect to formulary design.

Finally, the proposal addresses modernizing the scope of the 340B drug discount program to ensure it is more patient-centric and that the savings that a facility receives from its enrollment in the program eventually reach the vulnerable population. The proposal also advocates against adverse tiering by commercial plans to ensure patients have enough choices to manage their health condition.

These proposed changes are definitely pro-consumer. However, marketing costs take up a huge chunk of the pharmaceutical budget, with reports that 9 prescription drugs will spend more than $100 million on ad times. Can we propose even tighter restrictions on these pharmaceutical spending trends and nip a part of the problem in the bud?


PhRMA. Policy solutions: delivering innovative treatments to patients. Published March 2016. Accessed March 11, 2016.