John Lechleiter on PhRMA and Innovation

Pharmaceutical Executive, Pharmaceutical Executive-07-01-2012, Volume 0, Issue 0

Eli Lilly CEO John Lechleiter on his agenda as incoming chairman of PhRMA, US healthcare reform, the euro crisis, and the small problem, of innovation.

Pharm Exec: Will PhRMA endorse a presidential candidate?

John Lechleiter: It's not been our policy to endorse political parties. We support individual candidates who support our positions. We've been clear about what we think the important policies and legislation are: those that enable us to do the work of medical innovation, to make our products accessible and affordable for the people who need them, and that promote a balance between incentivizing new effective medicines and ensuring safety, which is very important.

John Lechleiter

PE: Do you have a wish list of changes to the health reform bill?

JL: I think the major thrust of our activity...has been to call for the repeal of the Medicare spending advisory board, IPAB. As laudable as the objective of controlling costs might be, we believe it's a system that is just not going to work. It's not going to serve the interest of patients; it's certainly not going to accelerate progress in medical innovation.

PE: Polls show the American public looks at this question and says, well, price controls on drugs is a great idea.

JL: There is a tendency to look at price controls or controlling input cost as some sort of a solution. But every time we try that experiment it backfires; we've seen that at the state level. The mirror image of that, on the positive side, is Medicare Part D. This is a program where the discounts that the system reflects in cost savings are negotiated between third party payers and the pharmaceutical company; we compete to get on Humana's or UnitedHealth's Part D formularies. The estimated costs of Part D over this 10-year period has dropped by $40 billion because of this market-driven approach.

PE: What is the industry contribution to addressing the debt crisis in Europe?

JL: We're paying a certain price already with challenges we have on receivables in certain countries, on arbitrary price cuts, and a more stringent application of cross-border therapeutic reference pricing. Germany has a new system in place for a little more than a year that we believe works against innovation by setting very stringent access controls for new medicines, in some cases comparing new medicines to very old and largely antiquated off-patent drugs. This does nothing to reward innovation. Despite that, given the chance, we can demonstrate that the new medicines that we're producing do add value, and save money in the long term. The evidence is there but it is not always reflected or accepted in the systems of health technology assessment adopted by many European countries, led by Germany and the United Kingdom. The United Kingdom is rethinking its system, and the goal is to work diligently with the NHS to make sure the United Kingdom remains a place, as it has been, that rewards innovation.

PE: Is there one overriding action that could be done to fix the innovation problem?

JL: There is no magic bullet. We've talked about IP protection: we should have longer data exclusivity guarantees and better enforcement of global standards in other countries. We need regulatory systems that are timely, consistent, predictable, and scientifically based. Opportunity for access and market-based pricing are key incentives as well. There are other things in the constellation: immigration reform is one. It's hard enough for us to hire the best scientists, who may happen to be foreign born and who went to US universities; but then we have to fight to keep them here. Why do we want them to go back to China and compete against us? Or the K-to-12 education system in this country; if it doesn't improve in science and math, it's going to undermine our competitiveness even further. There are primary elements and secondary elements, but I think patent data protection, regulation, market access, and market-based pricing are probably, from a policy domain, the areas that represent the biggest levers, where we will need to continue to do the most work.