Video Player

Why do We Need Differential Pricing?/Industry Perspective

Mark McClellan PhD '93

Judy C. Lewent SM '72: August 12, 2004; Running Time: 56:05

About the Lecture

About the Lecture

Why do We Need Differential Pricing?/Industry Perspective

The very first tablet or drop of a new medicine comes at a dear price-- $800 million – according to recent studies of R&D in pharmaceutical industries. But manufacturing subsequent pills costs literally pennies. What’s a fair way to price life-improving, or life-saving medicine? The two speakers in this part of the forum vigorously defend charging different prices for medicines in different parts of the world. Judy Lewent argues that differential pricing ensures global access. She says, “There would be little sense selling drugs at prices people can’t afford.” It also generates the revenues necessary to generate new cures. “When we price for access, it’s a reflection of our belief in the power of free markets to advance the social good. We can meet the world’s health needs and also make a profit and continue to prevent, treat and cure disease.” Mark McClellan sees on the horizon a new order of drug treatments, such as tailoring molecules to the needs of an individual patient. But, he says, we won’t reap the benefits of these potential cures if current trends continue: nations that band together to lower drug costs for their citizens, and the reimportation of brand name innovator drug products. McClellan says if we don’t “provide financial rewards that reflect the value of innovation, we may not continue to get improvements that biotech makes possible.” Both speakers endorse more affordable medicines, but through insurance coverage rather than price controls.

Lecture Details

Location: Wong Auditorium

About the Speakers

Mark McClellan PhD '93

Administrator, Centers for Medicare & Medicaid Services (CMS)

McClellan previously served as Commissioner of the Food and Drug Administration beginning in November 2002. During 2001 and 2002, Dr. McClellan served in the White House as a Member of the President's Council of Economic Advisers and was a senior policy director for health care and related economic issues. From 1998-99, he was Deputy Assistant Secretary of the Treasury for Economic Policy, where he supervised economic analysis and policy development on a wide range of domestic policy issues. McClellan is on leave from Stanford University , where he was Associate Professor of Economics and Associate Professor of Medicine at Stanford Medical School. He was also a Research Associate of the National Bureau of Economic Research and a Visiting Scholar at the American Enterprise Institute. Additionally, he was a Member of the National Cancer Policy Board of the National Academy of Sciences, Associate Editor of the Journal of Health Economics, and co-Principal Investigator of the Health and Retirement Study (HRS), a longitudinal study of the health and economic well-being of older Americans. McClellan is a Member of the Institute of Medicine . He earned his M.D. from the Harvard-MIT Division of Health Sciences and Technology and his Ph.D. in Economics from MIT.

Judy C. Lewent SM '72

Executive VP, CFO, President, Human Health Asia, Merck & Co., Inc.

Lewent is responsible for worldwide financial, corporate development, and corporate licensing matters, as well as for the Merck human health business in Asia North and Asia South, and for the Merck current joint venture relationships with Johnson & Johnson and Aventis. She is Chairman as well as a Board member of Merck Capital Ventures. Lewent also serves as a member of Merck's Management Committee, a senior management group which makes strategic decisions for the Company. Lewent is a member of the Board of Directors of Dell Inc., Motorola, the National Bureau of Economic Research, and Penn Medicine (University of Pennsylvania Health System); a trustee of the Rockefeller Family Trust; a life member of the MIT Corporation; and a member of the American Academy of Arts & Sciences. Lewent earned a B.S. in Economics from Goucher College in 1970 and an M.S. in Management from MIT's Sloan School of Management in 1972.

About the Host