GSK CEO Andrew Witty on “Exploring Delinking the R&D Charge”

At a March 17, 2016, Center for Strategic and International Studies (CSIS) event in Washington, D.C., on “The Bio-Pharma Industry and Society,” Sir Andrew Witty’s keynote address included a discussion of GSK’s decision to explore the delinkage of R&D costs from drug prices. Witty suggested that delinkage could initially be implemented in the context of rare disease drugs. Witty has made this proposal elsewhere. This is from the transcript of Witty’s keynote address:

. . . we are exploring, and I think rare disease may very well be the place to do this, we are exploring delinking the R&D charge from the pack price. What does that mean? It means being very upfront, to say this is what it costs to develop this product, this is what the return is we need to essentially ensure that shareholders continue to put money at risk in this type of research field, and then here’s what the cost of production of this product is. And we actually have a pack price at one level, and we have a lump sum, if you can conceptualize it that way, of the R&D charge. Entirely possible that two different parts of the system pay for those two different things. Government maybe pays for one, patients pay for another. What does that mean? It means that once you’ve paid the R&D charge, you don’t pay forever.

And I think that that is something we should really start to explore as an idea. I’m sure there are 5,000 people who can give me 10,000 reasons we shouldn’t try it, but they’ll be the same people who told me transparency is a terrible idea.

Witty’s talk is on YouTube, and his comments on delinkage begin at 27:50: