JUST A FEW YEARS AGO, SPAIN WAS FOR EUROPEAN DRUG MAKERS THE COUNTRY OF INFINITE PROMISE. Sales forecasts were as bright as a Valencia orange, with the Spanish market set to vault beyond Italy and the United Kingdom
toward the top of the region's league charts as represented by Germany and France. But like Newton's apple, gravity came calling
instead, with the dead weight of recession and a budget, debt, and lending crisis that has added new tensions to the traditionally
combative relationship between industry and the 17 regional governments that subsidize the cost of medicines to the public.
Relying on the adage to never let a crisis go to waste, Spain's leading business school, IESE, organized an expert conference
on October 2-3 to address two simple questions. First, if austerity is the "new normal" in healthcare, how can providers and
payers work together to generate more value from existing resources? Second, what must be done to ensure the system continues
to create value in the first place, through support for innovations that have, for example, made Spain a world leader in transplant
Participants, including myself, agreed that Spain had reached the end of the road in crafting policy remedies from existing
rule books. "My government has adopted no less than 30 reports on sustainability of the public system since IESE convened
its first meeting on healthcare in 1994," observed Catalonia's Health Secretary, Roser Fernandez. "With our budgetary resources
so constrained, the task of the administrator is to facilitate, not innovate."
Thus, it fell to the pharmaceutical industry to show up with answers to the questions posed by the IESE team. But first we
listened to a litany of woe from Farmaindustria President Jordi Ramentol: The government now regulates drug pricing by emergency
executive order, arbitrarily, with no opportunity for appeal. Companies wait 535 days on average for payment, with no interest
on arrears. A 40 percent cut in the drug budget has been decreed for 2013, on top of double digit declines for each of the
past three years. He stressed that company revenues today are at the level of 1998, a virtual lost decade of eroding wages
and layoffs for the 160,000 people still employed by the industry.
Farmaindustria presented a three pillar proposal to reverse this backward slide—and asked representatives of the public sector
in attendance to stay and listen to it. At its heart is what Ramentol referred to as a "repositioning," not only around policy
issues but on the specific manner in which government and industry interact. What companies want most is a uniform, predictable
government strategy on pharmaceuticals, applied equally, with legal security, across regions. "We would rather have clarity
about the penalties imposed on us than endless, ad hoc changes in regulation. Let's have one approach and stick to it."
The other two pillars are what the industry is offering in return for a clear road map. First up is alliances with stakeholders
to promote increased access to medicines, particularly through at-home investments in R&D, which, at just under €1 billion
annually, ranks second only to the much larger auto sector. The second is to build new "clusters of production" to pool capacity
and improve the sector's job-creating export potential. The Spanish industry exported €8.8 billion worth of drugs last year;
Ireland, a far smaller market, shipped out more than €40 billion. So why can't Spain achieve the same?
Farmaindustria is promising more production in return for an industrial strategy that recognizes the innovative industry's
contribution to Spain's future—as a knowledge economy, not a fading refuge for tourist touts. The message is: Access to tomorrow's
medicines depends on a growth plan for the industry that provides them today. Without more growth in the economy, the public
welfare deficit will smother this pivotal Spanish industry for good. Social charges, already high at 26 percent of GDP in
2010, are forecast to reach a staggering 35 percent by year end.