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One of the more interesting announcements from this week’s JP Morgan Healthcare Conference was the launch of a new company that intends to create me-too products at prices up to 66% lower than the existing branded drugs. The company, EQRx, will be led by Alexis Borisy, a serial biotech entrepreneur. Borisy described his new company’s purpose to STAT: “I’ve spent the last 25 years creating breakthrough new medicines. We’ve ratcheted up the prices on them ever higher, frankly, because we can. And the reality is we can create a lot of these great new medicines, and turn that into a viable business charging a lot less for them.”
For all the drugs ICER has reviewed, only about one-third are cost-effective at their current US net prices. Clearly, there’s both a moral need and a business opportunity for a new type of company to develop more affordable options that work just as well as what’s currently on the market. But as many of you know far too well, pharmaceutical companies have grown quite adept at locking down marketshare. Even in crowded therapeutic classes where one would expect market dynamics to be driving prices down, a dysfunctional rebate structure is sometimes used to box out me-too therapies from insurer/PBM formularies, prioritizing drugs with high prices and large rebates over those with lower list prices. For EQRx to succeed in this sort of marketplace, the company will need to demonstrate a deep commitment to their mission of affordability with major (not minor) discounts off current net prices. Just as importantly, the company will likely need to rapidly reach sufficient scale across several therapeutic classes to build broad enough awareness that major employers, unions, and other plan sponsors – those same organizations that are increasingly frustrated with their drug spending – will actively seek out alternative options from EQRx.
Those are a couple of big ifs. But we are hopeful that EQRx is successful, and that they are able to help the entire industry focus more on aligning a drug’s price with how well it improves patients’ lives. As many of you have seen in previous ICER assessments, new therapies tend to perform very well in cost-effectiveness analyses when they have good clinical evidence demonstrating they work as well as more expensive drugs already on the market.
And by no means should this be seen as a threat to future pharmaceutical innovation. If anything, it may force drugmakers to stop hiking the prices of old drugs, and instead invest in the development of truly transformative therapies in new disease areas – improving health in ways that warrant those high prices.
ICER’s President Steve Pearson shared his thoughts about EQRx with several reporters:
EQRx wants to make high-end medicines less costly (The Economist)