Rebuilding European Pharma's Competitive Agenda

May 18, 2014

Hope springs eternal as the EU heads into a change of leadership, writes Reflector.

For European business, the perils of the immediate past are being replaced by the promise of the future, as the financial crisis appears to recede, and the prospect beckons of new opportunities under a new European Parliament and a new European Commission. The European Parliament elections this month will bring many fresh faces to Brussels, and every lobby group in town is already planning how to win their attention and hopefully their favour. Of even more significance, a new European Commission is due to take office in November, replacing the timid and tired ten-year administration of José Manuel Barroso with — it is hoped — a team bursting with renewed dynamism and energy, and with a readiness to listen to well-formed policy pitches.

It is against this background that the principal drug industry associations in Europe launched a call in mid-May for "an integrated European industrial policy for the pharmaceuticals sector". The industry has achieved its own integration in putting this plea together. It unites — in a rare show of unison — both the European Federation of Pharmaceutical Industries and Associations and the European Generic Medicines Association. The conflicting interests of the research-based and generic companies have often kept them apart, but they have started to work together much more closely in Europe, partly because of the tougher conditions they all face, and partly because shifts in ownership and in corporate strategy have blurred many of the distinctions that were so clear in the past.

So now they are, as they say themselves, "joining forces". They launched their appeal at the annual EU Business Summit, taking advantage of its theme this year, “The Business Agenda 2014­–2019: Rebuilding a Competitive Agenda”. The drug industry associations' particular angle is that Europe’s healthcare systems have suffered from economic recession and austerity policies, and this has affected access to healthcare for EU citizens. Their response is to urge promotion of "an integrated life sciences industry for Europe" that will serve both the health of society and economic prosperity.

The campaign that EFPIA and EGA are conducting focuses on three priorities. First of all, they want a clear recognition that medicines are essential to improve patient outcomes and equity of access to healthcare across Europe. Then they want a more predictable business environment so as to give the industry incentives to invest, to bring "better and more cost effective treatments" to patients. And alongside, they want a context that will "make the EU an attractive global hub for pharmaceutical research and manufacturing."

These may all seem, at first glance, to be reasonable, even laudable, objectives, unlikely to run into opposition from anyone. But there is more to the campaign than meets the eye. That first priority, of recognising the importance of medicines in European healthcare, is not quite so obvious as it looks. There has been a rising tide of concern in Europe about the role of medicines over recent year.

Part of this has sprung from politics — perhaps, more aptly, from ideology. Distrust of industry in general, and of the healthcare industry in particular, is every day more evident in European public discourse. A long tradition of what started as rather lonely dissent — going back to the days of Andrew Herxheimer and Charles Medawar in the 1980s — has matured into organized opposition, now manifested in the popular acclaim and high public profile that greets the Ben Goldsteins of latter-day Europe. This has been compounded by a loose but increasingly influential anti-science movement that ranges from the advocates of homeopathy to the more muscular international civil society organisations capable of mobilising thousands of supporters onto the street with a finely-phrased leaflet on genetically modified crops.

As long as the negativism was inspired by ideology, it was possible to contain and to counter. But the new ingredient in the mix is the scepticism discernible among economists about the merits of medicines in healthcare. Until recently, only zealots liked to draw attention to the huge disparity between spending on prevention and spending on medicines. Now it features routinely in official documents from national treasury ministries and the EU Council of ministers of finance and economic affairs. And it is never absent from any of the numerous governmental and intergovernmental reflections on that new Holy Grail of sustainable healthcare systems.

In other words, the old certainties are no longer valid. While elimination of medicines entirely from healthcare remains a view espoused only by the most radical, severe curtailment of the spending on medicines in general is now common currency. The industry that makes them is having to fight as never before against views that were, until now, the preserve only of eccentrics.

The "predictable business environment with incentives to invest" is just as challenging an objective. It is hardly necessary to point to the current unpredictability of the world economy and the still-fragile European recovery, and its obvious implications for the feasibility of a predictable business environment. Much of that, however, is in the lap of gods far more potent than those that stoop to the concerns merely of the pharmaceutical industry.

But the aspiration for incentives to invest does fall fully into the regulatory and economic arena where health ministers, industry ministers, and economic affairs ministers hold sway. And this is no easy terrain. The term "incentives to invest" is just the latest variation on the theme that goes back decades — to the era of the Bangemann round tables and before — when attempts were first being made at European level to square that intractable circle of prices sufficient to fuel the research cycle.

Indeed, as the costs of drug development have soared, the terrain has become yet more difficult. New treatments for hepatitis C, for cancer, or for multi-drug resistant tuberculosis are emerging, but at prices that discourage healthcare paying agencies from accepting their use. In turn, this discourages drug firms' shareholders from entertaining the research programmes that can deliver innovative treatments. And despite the all the heady recent talk of risk-sharing and public-private partnerships, there is still little sign of workable new business models that can offer the incentives being sought.

As to making the EU "an attractive global hub for pharmaceutical research and manufacturing," the scale of the challenge can be easily demonstrated by the recent avid interest of Pfizer in AstraZeneca (because the EU is still an attractive global hub, etc) and the alacrity with which drug firms are disengaging from Europe's more troubled markets — and switching to Asia and Latin America. Conserving some of the EU's member states as attractive hubs may be possible - although more through national than European action — but trying to make the EU as a whole an attractive hub is a venture certain to disappoint, and probably doomed to failure.

Well might the generic medicines industry boast — as it does in this joint pitch — that it is investing in new manufacturing sites and increasing growth and jobs across Europe. And well might EFPIA speak — as it does — of employing 700,000 people. The claims are doubtless true. But if they demonstrate anything, it is the industry's current prosperity. Not a recipe and not a justification for meeting the challenges the industry says are so vital to its interests.

"With the EU elections approaching, there is no time like the present to start talking with potential leaders of tomorrow about how to pave the path towards a healthy EU in the future,” concludes the industry announcement of its campaign. Start talking, yes. But come up with some decent arguments if you want to win the debate.