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Finding balance

EMIG chairman, Leslie Galloway, speaks to Rob Skelding about giving SMEs and big pharma an equal share of the floor

Ballet dancer's feet, on tip toes Why does pharma need the Ethical Medicines Industry Group (EMIG) to negotiate on its behalf when it has got the Associations of the British Pharmaceutical Industry (ABPI)?

"If you look at the way the pharmaceutical industry has polarised in the past 15 years into mega-companies and small-to-medium-sized enterprises (SMEs), there is a giant chasm between them and their interests; smaller companies tend to be forgotten and so a body to represent them is necessary," says EMIG chairman, Leslie Galloway.

Galloway describes himself as a once small company guy who became passionate about SMEs seemingly too often getting the thin end of the wedge on PPRS and other so-called industry-wide decisions.

What started in the 1980s as a simple business network for like-minded entrepreneurs and people running 'smaller, keener' operations in healthcare is now a 70-plus member organisation making headlines in the trade press and seeking a recognised voice in debates with the Medicines and Healthcare products Regulatory Agency (MHRA), the ABPI, NICE, the Department of Health (DH) and Downing Street; any group, in fact, whose decisions may affect the welfare and commercial potential of pharmaceutical SMEs. That said, EMIG now goes further than that.

"Our membership profile comprises 80 per cent SMEs, of which 10 per cent are biotechs, but the remaining – and growing – 20 per cent are companies over the £100m mark," Galloway explains during an interview in London's High Holborn. "So although we started out looking after the interests of SMEs, we represent a rapidly growing swathe of pharma companies."

Is it reasonable to denote a £100m-plus pharmaceutical company as an SME? "One of the things all companies really like is our flat fee structure, including our larger members. No one is dominant. We have quarterly meetings for people engaged in discussing policy and everyone feels that they are involved," he says.

By stressing the importance of this, he infers a contrast with the industry's chief representative body – the ABPI – pointing out that EMIG's membership overall has expanded by more than 250 per cent in just a handful of years under the current arrangement.

"A lot of people feel that they need an organisation that represents them more effectively. We don't say that people should leave the ABPI. That's a choice for individuals. We have members in common and my interest is to grow EMIG and make sure its members' interests are represented."

What is EMIG for?
What does the group really stand for and what happened to drive such a rapid expansion in membership? Galloway, whose unassuming opening question – "so, have you ever heard of EMIG?" – belies his passion for the role, believes that the recent PPRS negotiation was the bulb in the spotlight for EMIG.

"When the PPRS came out in 2005, it changed a lot of things. Most pharmaceutical SMEs felt disenfranchised by the blanket seven per cent price cut and a lot of things came to a head, with people coming together under the EMIG banner to mitigate it. Looking at the most recent (and unexpected) PPRS negotiation, you can see that the principal benefits are not necessarily those SMEs can really enjoy and, yet, they pay the same percentage cut as the bigger companies."

Lesley GallowayFurthermore, he feels that, on behalf of its members, EMIG has achieved important breakthroughs; transforming enormously since 2005 into a "full-blown trade association that is growing quickly... but that still has a long way to go".

"The networking we do is just as important as ever, but the lobbying is now crucial. Thanks to our efforts, we have secured some key concessions for SMEs out of the latest PPRS deal."

He gives as three examples:
1. A delay in the implementation of the proposed price cuts
2. An extension of the exemption from these price cuts for companies turning over up to £25m
3. An increase in the threshold for the AFR (Annual Financial Return), from £25m to £35m.

"These are very practical benefits for SMEs on important issues and so our members can see and feel how we're making a difference. It is because of this that more companies are joining us and helping to make us stronger."

Campaigning for change
While EMIG may serve as a stalwart in campaigning and lobbying for a gradation, militating against policies that it believes hit the commercial returns of SMEs inequitably, the group still lacks a direct influence – even a seat at the debating table in many cases – when it comes to formal negotiation. And so, while there is supposedly a notable cost difference between EMIG and the ABPI memberships, how much can it actually change things? Does Galloway feel that EMIG can really provide sufficient influence and return on the time and money invested in it?

"It's the value you deliver, not the price you pay. Our 70-plus members employ more than 6,000 people and turn over in excess of £1bn annually. We represent a sizeable swathe of the dynamic pharma industry and we want our voice to be heard. Because the industry is so keenly regulated, we have to make sure that the rules help companies of all sizes to prosper and not just the larger firms with the louder voices."

"There is an essential infrastructure to our industry, some principles of which currently work best if you're big, but are more fragile if you're an SME."

So lobbying excepted, what can EMIG do 'officially' from outside key talks with government and other stakeholders?

"I think it's important to work with other organisations and departments to achieve your aims. We would like to sit on the future PPRS negotiating team. We would like a seat on the Ministerial Industry Strategy Group (MISG) too; at the moment, the ABPI and BIA (BioIndustry Association) are both there, but not EMIG. So each end of the spectrum is represented, but not the vast swathe of companies in the middle."

"We also want to work more closely with the MHRA to improve performance and with NICE to ensure that companies delivering incremental innovations – the mainstay business of most SMEs – are recognised in terms of the value they deliver and so are able to grow."

Taking action
Given its flourishing membership, why isn't EMIG already an authorised stakeholder in key discussions?

"Traditionally, the ABPI has been seen as the leading industry group, but there definitely needs to be a re-assessment of who's representing whom. We asked for a seat on the PPRS negotiating team, which the ABPI declined. We have worked with the ABPI and BIA throughout the most recent negotiations, but we also made clear our intentions to make direct representation to the DH. In due course, we met and talked with the DH through our own efforts, which is why we have good reason to believe that our voice was heard in gaining the SME concessions."

"We have also worked closely with the MHRA. Although the MHRA charges for its regulatory activities – eg marketing authorisation licences have increased by 30 per cent in the past three years – we're not convinced that the performance has followed likewise. It says a great deal that the MHRA is willing to work with us very closely, but I think there is a way to go, as we have a lot to offer in terms of how the regulator looks at us and how government looks at regulation."

Putting PPRS aside, does he feel that regulations are stacked unfairly against SMEs in general, or perhaps that the innovative pharmaceutical leviathans are able to wield influence sufficient to ensure they're always nearer to the winning end?

"We do have to make sure that regulations put in place to fit well with larger companies' aspirations do not disadvantage the industry's SMEs in the process."

He adds that healthcare technology assessment (HTA) is a good example of this: "If 20 per cent of the products take up 80 per cent of the overall drugs bill, why worry about all the others? One problem with HTA is that when a product passes successfully through the system, those subject to NICE guidelines are not guaranteed uptake."

"Another problem is that some products – particularly incremental innovations delivered by SMEs – are never actually considered by NICE. Where do you stand if you're not even given a chance for HTA to work for you? A lot of companies have products in this category, which says to me their products aren't going to be used. This is a major problem if you're an SME because it means you don't have a pipeline of new, innovative products streaming onto the market. I realise that big companies can 'fall foul' of HTA too, but, for SMEs, the same quirks of the process hit us harder and it's this seeming inequity that EMIG stands to address in all areas."

A joint MHRA/EMIG (Medical and Regulatory Group) project is being discussed for later in 2009 to look at these issues.

Defining issue
The proposal in the most recent PPRS deal for generic substitution had some smaller firms flinching, with others throwing a more serious wobbly. One of the most clamorous in their dissatisfaction was Norgine, whose chief operating officer Peter Martin overtly rescinded his membership of the ABPI and switched allegiance to EMIG.

This issue, from the trade press/internal industry network perspective at least, seemed really to put Galloway and EMIG on the map.

"We didn't seek the limelight; we were too busy trying to effect change. But then the limelight came our way. The key issue is not about making a lot of noise; it's more about practical co-operation. That's the essence of EMIG. It's a very democratic, active and energetic organisation" – and one that clearly has a passion for the cause it fights.

The Author
Rob Skelding is a healthcare write.
To comment on this article, email pm@pmlive.com

16th July 2009

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