Biotech Industry Increasingly Concerned Over Drug Pricing, New Review Finds

It’s no secret that prescription drug pricing is important for many organizations within pharma and healthcare related industries. But who’s having the most sleepless nights over rising concerns? According to a recent review by BDO advisory and consulting firm, one of the biggest groups of worry warts come from biotech managements.

Each year, BDO reviews top risk factors cited by the 100 largest companies listed in the Nasdaq Biotechnology Index. In fact, 89 percent cited worries over pricing pressures according to the examined filings with the US Securities and Exchange Commission.

Moreover, concern has been rising each year. In 2013, 66 percent of biotech’s cited pricing as a major risk factor to their business. That rose to 68 percent in 2014 and 79 percent in 2015.

While pricing still isn’t the #1 concern keeping these companies up at night (it’s not even in the top 10), it did make it to the 16th most worrisome issue. And the fact that concern has grown year over year means it’s likely to continue, barring serious change, of course.

In case you are curious, greater risk factors concerning these organizations include things like increasing competition, complex regulations, litigation, patent disputes, and payer reimbursement, among others.

As David Friend, Chief Transformation Officer and Managing Director of BDO’s Center for Healthcare Excellence & Innovation, explains, “They’re moving away from a world where they could price what they wanted, so maybe they didn’t understand the risk until now. But it’s a huge, systemwide problem and they’re just beginning to grapple with it.”

BDO compiled their latest rankings before the recent Brexit vote took place in the United Kingdom, so it will be interesting to see where issues like threats to international operations and sales (ranked at 13) will fall next year. Drug makers face uncertainty in how business in the UK will look once a deal is finalized.

Mickael Marsali is a Senior Consultant and founding member of Arterial Capital Management in London. To learn more about his life and career, please visit his professional website.