Research into innovative medical therapies against cancer is undergoing rapid developments. But new anticancer therapies, like immunotherapy, can be very expensive. This jeopardizes the accessibility of these medicines for patients and puts additional pressure on hospital budgets and health care systems.
Price negotiations between European governments and pharmaceutical companies are often shrouded in secrecy. The costs of Research & Development (R&D) are often not made available and prices can vary significantly between countries, as some nations can afford to negotiate discounts on the real price, while others cannot.
But no one is aware of this real price in the first place, due to of the lack of transparency in price negotiations. Pharmaceutical companies often state that the current high prices are necessary to cover the high R&D costs. Another argument claims that cost transparency could deter R&D investors. Proponents of greater transparency argue that secrecy drives these high prices.
There is a strong call for greater transparency during price negotiations of new, often extremely expensive cancer medicines. The Dutch government and politics as well as the European Parliament underline its importance, and the Dutch new coalition agreement includes transparency as a tool to achieve lower costs.
But does mutual transparency work between countries negotiating prices with the pharmaceutical industry? In other words, will prices be lower, can more patients be treated, and can R&D investments remain stable?
The answer is yes, but only if you provide full transparency about R&D costs as well. In the experiment, prices decreased by 26% while R&D investments remained stable despite the cost reductions. If you only apply price transparency, the prices drop somewhat, but R&D investments will be lower as well.
These were the results of an economic laboratory behavioral experiment involving four countries (the Netherlands, Germany, Spain, Poland), conducted by researchers from the Netherlands Cancer Institute and the University of Amsterdam. This study is the world’s first in which alternatives for the current pricing policies were investigated. A laboratory behavioral experiment is a method used in social sciences and economics to determine the viability of certain measures. These experiments usually offer a good insight into the real situation. In an ideal scenario, these types of experiments are supplemented with field research or pilots in the real world.
In this experiment, the 400 participants (students) acted out the roles of their own governments in negotiation with pharmaceutical companies (also students) about the price of an innovative anticancer drug. They were divided into three experimental arms:
- The control arm: Full secrecy about prices and R&D costs;
- Transparency in price negotiations only;
- Full transparency about the prices and R&D costs.
Policies that aim to curb high prices of medicines have primarily been opinion-based, as previous research by the NKI has shown. Several methods can be applied to lower the costs, including transparency about price negotiations, but until now, there has been little to say about its effects due to the lack of proof.
The only way out of this impasse was through empirical research, the study’s investigators claim in a commentary published on January 27.