19 hours Ago By Ariel Katz, Forbes Councils Member
Ariel Katz, CEO and cofounder of H1 . Rising prescription drug costs are deepening health inequities. Drug prices rose by an average of 15.
2% between January 2022 and January 2023, outpacing the inflation rate. Most Americans feel this strain , concerned about their ability to afford prescription drugs for their families. About one-third say they don't take their medicine as prescribed because of the cost.
This disproportionately impacts minorities, with Black and Hispanic adults reporting to be significantly more worried than white adults ( 61%, 69% and 50% , respectively). The pharmaceutical industry faces the challenge of balancing innovation with affordability. Developing new treatments demands significant investment, driving up drug prices and making it difficult for many to afford essential medications.
Yet profits fund future research and development. The key is finding a balance that allows for continued innovation without making medications so expensive that they're inaccessible to those who need them most. Technology plays a crucial role by streamlining R&D processes, improving efficiency and reducing costs.
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Patient recruitment, data collection, analysis and the rigorous FDA approval process add to the expense. Once approved, manufacturing and distribution costs contribute to the final price. And because many drugs fail to go to market, high upfront costs compensate for potential failures.
• Market Dynamics And Competition: Supply, demand and market exclusivity significantly impact drug pricing. Brand-name drugs are priced almost 85% higher than generic drugs. When patents expire, generic or biosimilar versions enter the market, potentially lowering prices.
However, certain loopholes can extend exclusivity and delay competition. • Healthcare System Structure: The bargaining power of insurance companies and pharmacy benefit managers (PBMs) also influences drug costs. According to an FTC report , six of the nation's largest PBMs control 95% of all prescription drug costs and determine which pharmacies can sell them.
As a result, access to affordable healthcare is restricted. • Political And Policy Pressure: The Inflation Reduction Act , the Most Favored Nation Model and the Pharmacists Fight Back Act are examples of federal efforts to reduce drug costs while still enabling innovation. Policy shifts also often come with administration changes, although President-elect Trump hasn't yet laid out a specific plan.
How Can Technology Help? Amid these complex and interdependent factors, technology paves the way for a future where drug innovation and affordability coexist. From AI-powered market insights enabling competitive pricing to predictive analytics that optimize production and prevent shortages, technology leads the way. Here are five examples of how it's driving change: 1.
Optimizing Clinical Trial Design AI is already disrupting clinical research. By analyzing vast amounts of global data at record speed, researchers can identify ideal trial sites, principal investigators and diverse patient groups. They can also predict trial outcomes and potential drug interactions to adapt trial designs accordingly.
Patient recruitment, a common bottleneck, is significantly improved with AI, which analyzes eligibility criteria and patient demographics to quickly identify and assemble suitable participants, minimizing dropouts and delays. For instance, an AI system used in a pediatric cancer trial cut recruitment workloads by 90% . Studies have found that "AI-driven R&D efforts from discovery up to preclinical could deliver time and cost savings of at least 25-50%.
" These initiatives lower development costs and accelerate time-to-market, ultimately passing savings on to patients. 2. Enhancing Analysis Of Real-World Evidence Leveraging real-world evidence (RWE) can lower drug development and administration expenses, paving the way for more competitive pricing strategies.
Advanced analytics can rapidly process RWE from electronic health records (EHRs), wearables, clinical trials and patient-reported outcomes, offering insights into performance across diverse populations. Machine learning (ML) also enhances pharmacovigilance by detecting adverse events in real time. These insights improve safety, reduce liability costs, inform value-based pricing and support targeted treatment decisions and label expansions without costly new clinical trials.
3. Speeding Up Regulatory Compliance Regulatory compliance is often costly and time-intensive. AI can streamline these processes by automating tasks like FDA documentation drafting, compliance checks and error detection.
AI also enhances risk management by analyzing data from trials and adverse event reports to identify patterns and flag issues, as well as by tracking global regulatory changes and suggesting corrective actions. 4. Predicting Development Costs And Optimizing Production Predictive analytics can accurately forecast drug development costs, potentially leading to more justifiable pricing.
Additionally, AI optimizes manufacturing processes by identifying inefficiencies, predicting maintenance needs to reduce downtime, improving yield and minimizing waste. For example, our partner AstraZeneca leverages AI to cut manufacturing lead times from weeks to hours, enhancing quality control and lowering operational costs. These kinds of advancements contribute to more stable drug pricing.
5. Accelerating Drug Discovery, Targeting And Repurposing AI vastly increases the scale of exploration, uncovering new uses for existing drugs and accelerating target identification. This reduces R&D timelines and costs while increasing the likelihood of success.
The impact is evident —46 AI-discovered drugs entered phase II and III clinical trials last year alone. Pharma startups, more driven to keep costs in check, have had tremendous success. Lantern Pharma has three AI-repurposed precision oncology drugs in trials, each in under three years and less than $3.
5 million, an “unheard-of timeframe in cancer.” Balancing Innovation And Affordability Drug pricing is influenced by numerous factors, but technology has the potential to strike the critical balance between affordability and innovation. Success hinges on the industry applying impactful solutions across drug discovery, development and commercialization to reduce costs and speed up processes.
It’s estimated that GenAI alone could unlock up to $110 billion annually for the pharma sector by enhancing productivity—from faster compound discovery to streamlined approvals and targeted go-to-market strategies. It’s time for tech companies, pharma and regulators to come together and embrace these technologies. If we reinvest these savings, we’ll create a more equitable pricing landscape that improves access to life-saving medications.
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