Holy Surge of Enthusiasm!

July 1, 2011

Pharmaceutical Executive

Pharmaceutical Executive, Pharmaceutical Executive-07-01-2011, Volume 0, Issue 0

While Europe's EFPIA preaches about embracing change, much remains to be done to prove the adjustment in philosophy

If you want to know what the Vatican is thinking, a pontifical high mass is a good place to start. If you want to know what the European pharmaceutical industry is thinking, you can do worse than attend its equivalent—the annual meeting of Europe's main drug industry association, the European Federation of Pharmaceutical Industries and Associations (EFPIA).

This year's ceremony, in mid-June, offered some fashionable displays of ecumenism: a desire to bridge divisions, to collaborate, to work together. "Europe's public health challenges can be solved only through sustainable partnership," EFPIA trumpeted, even before its meeting had gotten under way.

The federation's president, Glaxo SmithKline CEO Andrew Witty, pledged to "continue listening to patients, customers, and other stakeholders and work in partnership with them to find solutions to the challenges facing Europe." The declarations of a firm purpose of amendment from the European industry's high priest were backed up, as outward signs of inward grace, with a volley of leadership statements on ethics and trust, and with a tightening up of the industry's own limitations on samples for healthcare professionals and funding for patient associations.

Other virtues that the industry paraded included joint actions with European regulatory authorities on everything from new pricing methodologies to seeking innovative responses to the challenges of an ageing society. The new definitions of saintliness envisage new approaches to drug development: "We have to rethink our business model in the way we operate," says Witty, "a different relationship which does not try to force-fit the same model, the same economic structure." It is important now, says EFPIA, that the industry works closely with the authorities in Brussels and across the member states. "New thinking, new mindsets, and new partnerships will be essential," added EFPIA's new director-general, Richard Bergström.

John Dalli, Europe's health commissioner, was a willing concelebrant of the service: "Let me stress that I consider the pharmaceutical industry to be a crucial partner in providing European patients with access to safe and effective medicines," he intoned in a speech to EFPIA members. "We need to work closely together to face the many challenges that lie ahead and to prepare the groundwork for a successful and sustainable future," his litany continued; it is critical, he says, speaking of new partnerships, "that all voices are heard and taken into account."

A New Tune

The pharma industry's Damascene conversion to cooperation may in part be pure altruism, but there are some strong practical incentives for the European drug industry to start singing from a different hymn book too. Over recent months the debate on healthcare among European governments has become increasingly focused on keeping a tight rein on expenditures—with frequent evocations of the growing burden of medicine costs. In the face of this irresistible force (since national authorities continue to control the purse-strings of drug spending in Europe), the drug industry is recognizing that it can no longer rely on what it has for years regarded as a clinching argument in its dealings with governments: that industry research imperatives require decent prices for drugs. Such an approach has for years been the immoveable element in pharmaceutical companies' strategic approach to the organizations that decide what industry can charge. But times have changed, public spending constraints are much tougher, and the industry knows there is no point in advancing its chin to meet the outstretched fist of national pricing and reimbursement authorities.

The June council of European Union health ministers ended with a tirade against overpriced drugs, unleashed by the current council president. Miklós Réthelyi, Hungarian minister for national resources, who chaired the meeting, highlighted the importance of "cost-efficient use of medicines." It will be necessary, he says, "to impose controls on expenditure on medicines." He insisted that contracts will have to be signed on prices and volumes, and prescriptions will have to be regulated. The meeting took note of actions by member states that "include the regulation of the pharmaceutical sector." This angle of attack is becoming the norm in the EU, as a followup to extensive council debates last year on healthcare that produced highly critical reports on the cost of medicines.

As a consequence, industry is shifting its arguments away from the need for drug sales to fund the research cycle, and is putting its faith in a more comprehensive view of the overall healthcare scene. It is trying to build a new niche for itself in this broader context, profiling itself as a generator of savings in the total healthcare budget through its delivery of products that prevent disease, reduce hospitalization, or that offer cheaper alternatives to surgery and other therapy options. Success in this revised strategy depends on winning friends not just among the authorities that handle drug budgets, but among the authorities that handle the entire healthcare budget. Hence the surge of enthusiasm for new partnerships.

More of the Same

Nonetheless, obscured though they may be behind clouds of incense, or muffled by the outbreak of harmonious chorusing, some stubborn vestiges of the old industry dogma still lurk. At its most innocent, the pre-reformation doctrine emerges in messages such as the mild cautionary observation about the risks of excessive government cost-cutting: "The key is to avoid actions that have unintended consequences—too strong a focus on cost, rather than value, will undermine valuable innovation and therefore reduce patient benefit," EFPIA points out.

EFPIA claims that its members "have shown their commitment to work with governments to bridge funding gaps," and it invites any government "to talk to us about their needs"—because, it goes on, "EFPIA is committed to finding solutions that work short-term without having international knock-on effects and without hurting valuable innovation."

The tone sharpened perceptibly with warnings from Bergström that while major innovations are within the reach of industry, "there are significant challenges in delivering these to patients in an equitable way." And Witty upped the ante by pointing an accusing finger directly at politicians who are "not geared up" to thinking about effective ways of tackling healthcare problems, because they have "too short-term a horizon." Healthcare authorities lack the information systems that would allow them to understand what drives their overall costs and to identify accurately how to make real savings, he alleged, and the industry suffers from the "schizophrenia" that affects Europe's governments. Depicting his own industry in a way that conjured up images of a choirboy punished for stepping out of line, Witty remarked: "We have been taken behind the woodshed and given our treatment by the governments and everybody else."

Like a disappointed missionary who finds his message rejected by unsympathetic pagans, Witty inveighed against widespread resistance to arguments linked to overall healthcare expenditure: "People only care about what is in their silo. Nobody really believes they will have to worry about the consequences," he says. On top of that, he even attacked the very foundation of the institution he claimed to be seeking an understanding with: any progress in Europe is impeded, he suggested, by "the division of the member state and European competencies for this agenda." As a result, "we have duplication at several levels and an increase in bureaucratic barriers."

The overwhelming impression left by the EFPIA meeting is that although the industry says it has embraced a new vision, and claims to be a born-again believer in cooperation, little has changed in its inner soul. The same old determination appears to persist, to be devout only in a clear quid pro quo bargain where virtue is to be rewarded by guaranteed salvation. "We will make our medicines better, and it is up to member states to make provision for paying for them," says Witty. And he warned that "governments must not drive the pendulum too far in one direction—balance is their responsibility too." It is hard to resist the conclusion that the industry's odor of sanctity is tainted with a more earthy scent of the pursuit of wordly goods—that business model is still in place.

Reflector is Pharm Exec Europe's anonymous columnist, a commentator so close to the action in Europe that his identity must remain a secret

Related Content:

Europe | Global