Tuesday, March 16, 2010

Can co-opetition bring down drug prices?

Our blog posting today comes from Jairaj Mashru, brand engagement manager (and globally-aware marketer).

I read two articles recently that raised an interesting question in my mind. The pharmaceutical industry presents several complex challenges – one of them is that drugs are expensive, especially for treating or managing rare diseases. Rare diseases typically have a small patient population and often involve lifelong medication. Usually, the smaller a patient population is, the higher the price of the drug.

An article on Forbes.com reported the most expensive therapy in the world costs nearly $410,000 for one year of treatment. Most insurance plans include a lifetime cap of 1 or 2 million dollars (some may have higher caps), which makes it nearly impossible for a patient to stay on therapy beyond a couple years. They remain untreated, or even worse, also uninsured thereafter.

Another news story on Businessweek.com reported that Lilly, Merck and Pfizer have joined forces in Asia to focus on research for cancer treatments. They have formed a non-profit organization, the Asia Cancer Research Group to collaborate on research and development of new treatments for cancers that are more common in Asia (such as lung and gastric). This seems a bit counter-intuitive since the recent trend has been for big pharmaceutical companies in the developed world to acquire or license a new drug developed by a smaller company in the developing world.

However, pooling in resources (monetary, knowledge, technology, capacity, etc.) from the developed world and investing them in the developing world (lower cost countries) can be an effective way for pharmaceutical companies to work together to bring down the cost for innovative treatment solutions to manage rare diseases.

While politicians in the US are trying to create one big solution (a.k.a. major surgery) to solve many health care problems, perhaps a couple band-aids can help. Co-opetition can work to lower the drug prices or even discover new treatments, provided the goal is clear and the outcome can be a win-win situation for all parties.

It is easier said than done; however, these 3 market leaders have taken the initiative to bring their best resources together in search of new market opportunities that can benefit each of them as well as their customers.

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