Worcester Business Journal

12 Worcester Business Journal • February 29, 2016 www.wbjournal.com FOCUS Healthy Business Bioscience community defends drug pricing model Pharmaceutical spending has risen 183 percent since 2000 Nationwide spending on prescriptions rose from $121 billion in 2000 to $271 billion in 2013, and the costs are expect- ed to reach $435 billion by 2020, accord- ing to The Office of the Actuary in the Centers for Medicare & Medicaid Services. The fledgling bioscience industry in Central Massachusetts has a lot at stake, O'Sullivan said. The 35 MBI labs in Worcester alone host an average of 125 employees for startup companies. These companies include those conducting contract research and development to startups creating novel software for the industry. Although these companies may not be the ones that ultimately reap the financial benefit from a high-priced novel drug, they are part of the infra- structure that is supported by that high potential payoff. Without that large payoff, the invest- ment in the life sciences could start to dry up, affecting all levels of the indus- try, he said. "The biotech and pharma companies need to have an honest discussion on costs. There's a cost for failure and a cost to develop," O'Sullivan said. "They need to make their case to the legislature and advocacy groups to prove it." Rising costs The final payoff is not often seen by the companies actually developing the drugs, said Lora Pellegrini, president of the Massachusetts Association of Health Plans, which represents health insurers. A lot of these drugs are first fostered in incubator situations and then their work gets bought up by the larger com- panies who had nothing to do with their development right at the time the drug is ready to be brought to market, Pellegrini said. Those larger companies then reap the monetary benefits for years to come. "They often use federal money to sup- port the research, and then right before they go to market the licenses are often bought by a larger company," Pellegrini said. The health insurance industry has been held accountable to cost contain- ment and bringing affordable care to BY SAM BONACCI Worcester Business Journal Digital Editor A mid growing political and industry pressure to suppress the rising costs of prescription drugs, leaders in the Central Mass. bioscience community said they are willing to discuss compromises but the turmoil could have a cool- ing effect on a growing market in the region. "We have to be careful because it isn't just drug pricing. It's the economy," said Kevin O'Sullivan, president and CEO of the Massachusetts Biomedical Initiative (MBI). "It's a big part especially out here where we have education and life sciences." The pressure on drug companies – from startups to major pharmaceutical manufac- turers – has primarily come from health insurers and politicians like Massachusetts Attorney General Maura Healey, especially as the Affordable Care Act has put pressure on other players in the healthcare industry, such as doctors and hospitals, to cut costs. BlueSky Bioservices employees work in labs in the Massachusetts Biomedical Initiative incubator space in Worcester. With 35 labs, approximately 125 people work for various companies at MBI.

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