May 15, 2017

Health care execs are sweating over pricing pressure

Public outcry over high prices for drugs and health care services has caught the attention of the people who decide those prices. But that doesn't mean there will be any immediate action. A new survey from investment bank Lazard found that more than half (57%) of 300 U.S. and European health care executives and investors said pricing and reimbursement was the top challenge for them right now.

Data: Lazard Global Healthcare Leaders Study, 2017; Note: September 9 and December 20, 2016 with 213 C-level executives and 87 investors; Chart: Andrew Witherspoon / Axios

The problem is even more acute for the drug industry, especially in light of President Trump's occasionally harsh words. About 88% of U.S. pharma executives view pricing as the top pressure. David Gluckman, the co-head of health care at Lazard, told me that survey respondents believe pricing actions will be "driven by the government, but also significantly influenced by health insurers."

Some other snippets from the survey:

The next biggest concern was the cost and quality of health care, cited by 39% of respondents. In the United States, 80% of investors and 55% of executives believe most health care payments will be based on clinical outcomes or "value" instead of volume. More than half of respondents expect an uptick in mergers and acquisitions in the next 18 months. They expect more partnerships with companies that aren't based in the health care sector, like Apple, Google and IBM.

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