To patrons of the Rum Boogie Cafe in Memphis, he’s Mick, a skilled guitarist with a bushy white beard who favors fedoras and sings soulful tunes about fishing and drinking. To Americans outraged by pharmaceutical prices, he just might be the guy to blame.
Not that they would know him. While Mick Kolassa may be a household name to hard-core blues lovers, he’s hardly one to the patients and politicians who complain about avaricious drug companies. But long before 2014’s “Michissippi Mick,” his first album, Kolassa helped revolutionize the way the industry decides what to charge, and how it justifies commanding premiums for game-changing remedies. He doesn’t figure he has anything to apologize for.
“One of the problems we have in health care is that nobody wants to pay for the actual value,” he says. Without the fedora one afternoon at Medical Marketing Economics, a consulting firm he helped found and that has had a client roster including Valeant Pharmaceuticals International Inc., he puts it another way. “I wish drugs would fall out of the sky free. Don’t we all.”
It was at MME, 80 miles from Memphis in Oxford, Mississippi, where Kolassa fine-tuned the idea that a drug’s price should reflect its usefulness to society. He believes pharmaceuticals are some of the best deals around. When his 89-year-old mother grumbles about the bill for the glaucoma pill that keeps her from going blind, he tells her it’s a bargain. What price can you put on sight?
The burly Kolassa, who at 64 takes generics for blood pressure, cholesterol and arthritis, sold his interest in MME to his partners last year, so he can split time between drug pricing and the blues. Clients still seek the guru out.
“He was the first one to put it down on paper: Here is the way that drugs should be priced -- you should be pricing drugs so you don’t give away the value,” says Jim Yocum, executive vice president at DRX, a Connecture Inc. unit that makes price-comparison software.
The Kolassa theory seems straightforward enough. Basically, it holds that drug companies should charge handsomely for products that will benefit not only the patient but the economy, by keeping people out of hospitals or allowing them to live productive lives. The price should factor in a profit that can finance more crucial discoveries.
A case study displayed on MME’s website sheds light on what the firm calls its “value-based strategies.” A client wondered whether it should cut a price to reverse slowing sales. After discovering some doctors really liked the drug, MME recommended “a set of aggressive price increases immediately.” The client obliged, and “revenue has increased substantially.”
That might come off as crass to some. Pose the question to Kolassa, though, and he’ll tell you it’s anything but. “If you are asking me if I am ashamed of what I am doing, not at all, I am damn proud of it,” he says. "I would rather have these apparently costly drugs and keep people alive than not have them.”