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Pharma must engage on the affordability question, says ABPI

UK pharma trade body says the industry must be willing to discuss drug pricing

ABPI reception 

The UK pharma industry must stop talking about the affordability of drugs “behind closed doors” and be open to questions over medicine pricing.  

This is according to Alison Clough, the acting chief executive of the ABPI, who told a conference in London this week that there has been much 'air time' devoted to the issue of drug affordability, which has grown exponentially during the past year.

She said that pharma has typically wanted to talk about this issue behind closed doors, “but now that changes”, she said, adding: “We need to find a solution to the question: how does society pay for medical progress?”

Professor Adrian Towse, director of the ABPI funded Office of Health Economics, (OHE) said that one of the main reasons was the need for a return on investment on pharma's R&D. 

But he argued that high costs did not come from the fact the pharma's research model was broken, even though over the past 20 years productivity has declined whilst R&D expenditure has risen with fewer marketed products being approved.

He said that this was not evidence of it not working, but rather because pharma is now more focused on developing drugs for more diseases that matter to payers, and this involved taking on more risk than ever before. He noted that only 11% of drugs that began phase I testing would now be expected to make it to approval. “In essence, we are paying for failure”, Prof Towse said, but added that this was simply a result of taking on more risk.


The current medicines budget is around £15bn in total (when administration costs are also added in) with the bulk of the increase year-on-year coming from secondary care drugs, predominately biologics for cancer and auto-inflammatory disorders. 

But the industry is offsetting some of these costs. In 2014 the ABPI said the UK pharma industry paid a 'rebate' to the Department of Health worth £310m. This comes as a result of the 2014 PPRS deal which allows pharma to set prices in the UK, but stipulates that it must pay back any money accrued over a given growth limit - which in 2014 was flat.

Clough said that in 2015 she expects this rebate to more than double to £800m, meaning that there is more money to pay for new medicines. 

She explained that this means the pharma industry has “put its money where its mouth is - now it's time for the NHS to play its part”, ie, allow new medicines through to patients as quickly as possible and end the red and black listing of drugs.

The rebates should be helping this, but the ABPI and many other senior executives in the industry told PMLiVE that this money is going back to the DH and NHS England, but it is not seemingly always going to local payers, with many unaware that this rebate exists. 

Outside of the rebates, the ABPI was still clear that it wants to see political reform of England's health technology assessor NICE, with Clough saying in no uncertain terms that there was still a “depressingly slow uptake of new medicines” in England. 

An internal reform was attempted last year by the Institute to make it more value-based in its assessments, but this was deemed too difficult to integrate into NICE, and so it was dropped. The ABPI says that the government must now intervene in order to ensure better access to new medicines in the future. 

Short-term budgets vs long term savings

Gilead's new hepatitis C pill Sovaldi was discussed repeatedly at the conference, given that it is a clear example of the problem: it's highly efficacious (it can effectively cure more than 95% of all patients within its licence) and has been deemed cost-effective by NICE - but in an unprecedented step, the NHS is delaying its use by three months in order to save enough money to pay for the upfront cost.

Senior NHS managers have been bulking at the 'prohibitive' price tag, according to leaked documents seen by PMLiVE, with the NHS calculating that it will cost £1bn if the drug was used to treat all patients under its licence. 

But the drug will undoubtedly save many hundreds of millions of pounds in the longer term as the cost of liver transplants and care for advanced hep C patients is more costly than the drug - this is where pharma must advance its value proposition, and the NHS in turn must be willing to look outside of short-term costs for the longer term benefits. 

Article by
Ben Adams

24th April 2015

From: Sales



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