Posted by: Audrey Erbes | May 4, 2014

Drug Costs Factor in Novartis SKF Deals Plus Events


We all recognize that drug cost is becoming ever more important to the future of pharma companies, and not just in Europe where the government decides at what price they will reimburse a new product. Also now cost is a problem in the U.S. where payers and even doctors are becoming more cost conscious. The push back recently against the high price for Gilead’s hepatitis C (Hep C) drug is a good example of the changing pricing terrain.

Biologics aimed at formerly untreated severe conditions got away with the” through the ceiling pricing” of tens of thousands of dollars because payers were only paying for small population. But as those drugs increased their indications and expanded the populations served, that level of pricing was no longer acceptable to payers and patients.

Roger Longman in an interview with the Wall Street Journal “Q&A: What the Deal Frenzy Says About Pharma’s Future” April 22, 2014 identifies the drivers behind the recent Novartis and GSK product deals as helping them get economies of scale that allows them to bring new products to market at a lower cost. Quote “GSK and Novartis are both concerned about the issue of how you prove value. How do you deliver products more cost effectively to patients? It’s a hell of a lot more difficult to justify the investment in a few cancer drugs –which is what GSK was doing – and charge a high price and guarantee a return, than if you already have an oncology franchise, which is what Novartis has been doing.

It only works if you can deliver those products at relatively lower prices thanks to different kinds of economies of scales and have a more viable business as we move into this era of pretty strict cost containment.”

Their moves are anticipated to improve market access for their future new marketed products. It’s old knowledge that it’s easier to get a hospital to buy your new drug if you have a line of products across which to develop a deal for the new addition. A one product company can’t afford to give the buyer a better deal. Development costs can also be lower when costs are spread over several products. See more details at

Highlights of Upcoming Life Science Events This Coming Week

  • BioCentury This Week, See new program Webcast Starting Sunday, May 4, 2014,, Available anytime starting at 9:00 a.m. EDT; Topic: “Ranking Contender: Eshoo’s Agenda,” Speaker: Rep. Anna Eshoo (D-Calif.)
  • NCC AWIS Chapters, Monday Evening, May 5, 2014, Event: “20th Annual NCC Awards and Recognition Banquet”
  • Bio2Device Group, Tuesday Morning, May 6, 2014, Topic: “Preventing Drug-Related Patient Injury and Death With Advanced, Cost-Effective Technology Systems,” Speaker: Alan Jacobs, MD, PhD, Founder and CEO, PerceptiMed
  • EPPIC, Tuesday Evening, May 6, 2014, Topic: “Creating a Billion Dollar Pharmaceutical Enterprise: Success Story of Pearl Therapeutics;” Speaker: SarvajnaDwivedi, Ph.D. is co-founder and chief scientific officer of Pearl Therapeutics, Inc

Life Science Business Development Course: An Intensive Course June 19-20

This course which focuses on dealmaking, collaboration and alliances includes two days of intensive classes and then two months of project time with help of resources and access to BioCentury and Thomson Reuters Recap deal databases. See details at Registration is now open.

Find all the details for this coming week’s upcoming events plus those through June 2014 in AudreyspicksMay4,2014. You can download the pdf of Audrey’s Picks by right clicking on the highlighted titles.

You can always find my weekly blog and listings at



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