OR WAIT 15 SECS
As well as official European projections of sharply slowing industry growth and geopolitical concerns, pharma executives face additional hazards as they plot their medium-term strategies, writes Reflector.
The holidays are over and long-forgotten in Europe: the traditional challenges of getting back to work are intensified by official European projections of sharply-slowing growth due to lingering weakness in the industrial sector, a bleak global backdrop and geopolitical concerns hampering investment and exports - including elevated risks from rising global protectionism, slower-than-expected growth in China, and Brexit, and political turmoil in Italy.
Pharmaceutical executives face additional hazards as they plot their medium-term strategies: the relentless pressures for tighter drug-price controls in Europe were given new vigor even before the end of the vacation. In late August, the Dutch health minister publicly signaled an early outbreak to hostilities by announcing his intention of beating back drug companies’ demands for “excessive” prices by naming and shaming the culprits. His criterion for “excessive” was whether a company provided adequate justification for its price – in other words, open up the books.
It didn’t take long for his opening salvo to prompt retaliatory fire from industry figures. The national drug industry association, VIG, immediately rejected the accusations of overcharging. Bart van Zijll Langhout, head of Janssen Campus Nederland, told a Dutch radio talk show that openness about the pricing of medicines is not as easy as it seems.
And BIO Holland, which represents the biotech industry, countered with a demand for greater clarity in the criticism: “What exactly does that transparency entail that you request? How much detail are you looking for? When are you satisfied? And when do you find a pharmaceutical story actually plausible? In short: which conditions and criteria must our pricing exactly meet?” it asked.
If this was just an isolated clash in a single European country, it could be dismissed as the normal to-and-fro of debate on hot topics. But it wasn’t isolated. Far from it. In the same week, the Maltese deputy prime minister was covering the same issues - in a rather less confrontational tone - with leading drug industry organizations in Brussels. And he was more than an envoy from a small country: Malta is a central player in the Valletta Declaration, a joint bid by ten EU member states to force drug firms to lower their prices. Some of those countries are small too - but significantly the group includes Spain and Italy too. “The Maltese government is steadfast in its determination to continue leading this initiative forward in the interest of all European patients, and will be working in the near future, to put this matter on the Council of the EU’s agenda,” said an official announcement. “The final objective is to have a legal framework for transparency in negotiations between governments and the industry.”
And prominent campaigners rushed in to provide further ammunition for the attacks on high drug prices. Ellen ‘t Hoen of Medicines Law & Policy cited the European Union’s own regulations on orphan medicines to answer BIO Holland’s skeptical questions about pricing criteria. The rules already offer a guide, she said, by drawing a line between ‘sufficient’ and ‘excessive’ profitability and therefore between ‘sufficient’ and ‘insufficient’ return on investment. She in turn advocated a tightening of those rules, to eliminate any ambiguity: “‘Sufficient’ profitability should surely be, by definition, just that,” she suggested. It isn’t so hard to match commercial reward with development risk and cost, she argued, and to introduce clawback measures to allow for subsequent adjustment when products prove profitable above a determined threshold. “Medicine prices must come down by all means possible,” insisted the executive director of Health Action International, Tim Reed.
The war of words continued, with the European drug industry defending itself from claims that commercial behavior is “not just excessive but abusive” by arguing that “ideas need to be protected… nurtured and given support to grow… because an idea can lead to a breakthrough, or even a much-needed cure.” Yannis Natsis, who heads medicines policy at the European Public Health Alliance, and has recently been voted onto the European Medicines Agency management board, shot back “Patent-based monopolies and exclusivities guarantee pharma’s profiteering, distort the free market, impede competition, stifle innovation, and harm patients.”
All of this skirmishing is nothing but a foretaste of what is to come as the autumn advances and hostility to high-priced new drugs gains still-greater public and political profile. Hanging over the drug industry is the threat of cuts to the incentives offered to innovation for orphan drugs and pediatric medicines, and even to the extensions to patent life and market exclusivity won decades ago in compensation for lengthening regulatory approval processes. The message articulated by the Dutch health minister -that drug firms act irresponsibly by charging unjustifiable prices - is an echo of that growing groundswell of unhappiness about imbalance in the relations between payers and producers of medicines.
The trend is evident in the controversies that broke out at the World Health Assembly earlier this year as poorer countries - in Europe as well as around the world - struggled to push through obligations on drug firms to reveal their costs. It underlies the ongoing standoffs between companies like Vertex and national authorities across the EU over pricing for its cystic fibrosis treatment, Orkambi, or Biogen, under legal challenge in Belgium and Italy for alleged inflation of the price of its spinal muscular atrophy treatment, Spinraza. WHO is now exploring the creation of a definition of ‘fair pricing’ of medicines, with the latest version unlikely to go far in settling the disputes, since it is open to wide interpretation according to taste: “A fair price is one that is affordable for health systems and patients and that at the same time provides sufficient market incentive for industry to invest in innovation and the production of quality essential health products.” The United Nations Human Rights Council recently adopted a call for action on “new developments relevant to access to medicines and vaccines as one of the fundamental elements of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.”
The Valletta initiative, with its declared aim of that obliging drug companies to reveal the actual price they charge each country for a medicine, outlawing the current widespread practice of contracts covered by secrecy, is only one of the growing number of analogous regional attempts to constrain the industry. Since Belgium and the Netherlands joined forces three years ago in what is now the five-country Beneluxa coalition, their example has been followed by Finland, Norway and Sweden in the FINOSE collaboration, the Nordic Pharmaceuticals Forum comprising Norway, Iceland and Denmark, the Fair And Affordable Pricing (FAAP) group of Hungary, Lithuania, Poland, Slovakia, the Czech Republic and Latvia, and a further nascent grouping among the Czech Republic, Hungary, Poland and Slovakia.
The new configurations of the EU institutions add further worrying unknowns to the picture. The increased presence of Green MEPs will give the renewed European Parliament a more industry-sceptic tendency than in its last five-year term. One of its leading figures, Dutch MEP Bas Eickhout, has already accused the Commission of “not sufficiently standing up against the pharmaceutical industry.” The Council presidency, held by Finland until the end of this year, has fixed an agenda which gives priority to sustainable and efficient healthcare. And the Commission, whose final make-up will not be known until later in the autumn, is certain to be careful to guard against the accusations levelled the outgoing Juncker administration of being too cozy with big business. At operational level, the Commission is increasingly exploring how to make public spending in the member states more efficient, with an emphasis on “value-based healthcare” and every-wider engagement of citizens, consumers and patients in policy discussions. Powerful campaigning organizations such as the Patient Access Partnership have set their sights on ensuring equitable access to quality healthcare for all, with “a multi-stakeholder dialogue on the cost of medicines” and “price transparency on R&D” seen as “essential.”
In the background is the constant drum-beat of concern in the United States over high healthcare bills - almost the sole issue on which Democrats and White House find common ground, and that could still lead to legislative action there to ease the strains on patient treatment by forced discounts or cuts in drug prices. And all the time, as the economy weakens across Europe, the pressure on healthcare spending intensifies.