Payer risk outrivals regulatory jitters as biggest biotech hurdle

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Another trend we're hearing a lot about at the J.P. Morgan confab this year is the increasingly aggressive role that payers are playing when it comes to the growing number of pricey therapies coming out of the industry pipeline. Earlier in the week the California Biomedical Industry Report from BayBio and PwC noted that the biotech execs they surveyed in the state signaled growing fears that reimbursement rather than regulatory approvals loomed as the most worrisome barrier to their business. And today PwC's Health Research Institute stepped up with a new study on the top issues in healthcare, hitting many of the same chords.

"Pharmaceuticals and medical devices play a pivotal role in health outcomes," notes PwC in its new report. "But the path from lab to bedside is often long, arduous, and expensive. And now the final hurdle is not regulatory approval; it's reimbursement."

Clearing the hurdle now requires some careful added attention in the clinic, says the big consulting firm. The best developers will start early at pairing new drugs with diagnostics, a theme likely to be music to the ears of big outfits like Roche ($RHHBY). And the payers want to see some hard data on comparative effectiveness with rival therapies as they seek out the most cost-effective solutions. After an approval, insurers are also looking to pharma to monitor costs as they shift from simply paying for a prescribed therapy and start reimbursing based on outcomes.

"Getting FDA approval is now one step in the process," says Gail Maderis, the CEO of BayBio, according to a report from Xconomy. "We're seeing a shift in concern from the FDA to insurance coverage. From a company's very early days, corporate partners and venture capitalists now want to know that if a product gets to the market, will it be reimbursed?"

- check out the report
- here's the Xconomy story

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