Merck CEO Frazier acknowledges pricing 'challenges,' need for new models
- Merck CEO Ken Frazier acknowledged the challenges the pharma industry faces in drug pricing, in a recent interview with The Wall Street Journal.
- Frazier said Merck is “eager” to try out performance-based pricing, but cited the existing laws on pricing as a barrier to sharing risk.
- He also discussed the shift in research innovation from big pharma to smaller, venture-capital backed companies which focus on a particular target.
Merck has so far avoided the pricing spotlight, but the 93% increase in the price of its top diabetes med, Januvia, between 2010 and 2015 has not escaped notice. Frazier acknowledged that some prices will continue to inch up. However, he expressed interest in outcomes-based pricing, which many have pointed to as a potential game-changer in how drugs are priced.
Other large pharmas are also confronting the pricing controversy. For example, GlaxoSmithKline CEO Andrew Witty has highlighted his company's focus on low-margin products, such as vaccines and consumer health—areas relatively immune from the pricing debate
Likewise, Jim Jimenez, CEO of Novartis, is focused on restructuring Alcon to limit operational costs in order to better control pricing without hurting margins. Novartis recently entered into a pay-for-performance agreement with Cigna and Aetna with its new heart failure drug Entresto.
- Wall Street Journal Big Pharma’s Delicate Dance on Drug Prices