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The price is right: drug reimbursement in Europe

EFPIA's director general argues that drug pricing is not a gameshow
EFPIA price is right

When it comes to people's health, gambling is not an option. It is not a gameshow. The Price is Right, the popular television gameshow that originated in the US and franchised globally, captured and entertained millions in the art of guessing the cost of goods. Toasters, microwaves, and even cars and holidays were won or lost on a simple guess of market price.

Market prices of everyday consumer goods drive consumption, and feed the economic Wheel of Fortune, to refer to yet another popular gameshow. This system of consumerism is something constantly projected inappropriately on the valuing and reimbursement of medicines. There are vitally important differences between 'cost' and 'value', differences often lost on policy makers and those who make the final decisions on pricing and affordability of medicines.

Let me explain. A medicine is not a toaster. It is much, much more than a disposable piece of consumer ware. A simple pill might not seem much on its own, or in its packet, but it can be many things including treatment, relief, extra months of life with a loved one, often a cure … and hope. It might be the difference between having to endure or not endure invasive and risky surgery or expensive medical procedures. Nothing you win on a television gameshow will be able to make those claims.

I acknowledge medicines are not just any other consumer good for another reason. Most of the bill is footed by tax-funded governments (such as in the UK or in my home country Sweden) or obligatory insurance schemes. The officials managing 'the people's money' have a responsibility to spend money wisely. But they also have a responsibility and duty to future generations.

At the end of the day pharma research and development is expensive

The price of medicines continues to be a hotly debated topic. During the recent economic downturn the spotlight was even stronger on the industry in justifying the cost and value of its medicines. There is much academic toil over what should be allowed, whether there should be any limits imposed, what the tolerances within industry are, what is 'fair'. The simple fact is that it is not simple. However, I do know the continued vitality of humankind depends on the vitality of a pharmaceutical industry. This is something that should not be gambled away.

Preserving the vitality and productivity of the pharmaceutical industry is not just down to ensuring the right 'value' and conditions are bestowed on its products. This of course allows investments to be recouped and the funding of ongoing research and development. But we do recognise vital reforms are needed to ensure the collective industry works smarter and more collegiately, and more efficiently.

Fundamental shifts have taken place over the last few years, especially in the way companies collaborate and share data with each other, and in the numerous partnerships with governments. In July we announced the launch of an extension of the Innovative Medicines Initiative (IMI), which is a public-private partnership between the European Commission and EFPIA. IMI2 represents a smart investment in healthcare. Not only does IMI support a thriving life sciences sector - a key driver of future prosperity for the EU - it also gives us the collaborative platform we need to harness the potential power of new science in medicines research. By bringing together industry and academia, IMI can help us tackle existing healthcare challenges and improve lives for the patients that we are all striving to help.

There are numerous other examples of where my industry is becoming more open and collaborative to safeguard the best outcome. However, at the end of the day, irrespective of how much collaboration and data sharing goes on, pharmaceutical research and development is expensive. The journey of a medicine from lab to mouth or application takes many years and vast sums. That is cost. However, in recouping that cost, it should be perfectly reasonable for a pharmaceutical company to set a pricing structure that articulates a projected value of that medicine, for example in terms of mitigated medical costs or greater employment productivity. Equally the company has a duty to talk to budget holders so that they can plan ahead. And companies must be open to creative solutions, such as paying for outcomes, or paying over several years if it concerns a hefty up-front investment.

It should also be remembered that the price will come down over time: once the patent has expired, high-quality generics arrive and provide excellent value for money. Over the lifecycle of a product, such as mainstay medicines like metformin, simvastatin or clopidogrel, medicines provide a significant 'social surplus' for societies, beyond compensating the researcher for their creativity and effort. Remember, a medicine is not a toaster. Health is wealth.

So, every time you hear 'come on down', in relation to medicine pricing, remember: this is not a gameshow. Generations to come are relying on us getting the price right now, and on today's payers and companies to sit down and behave like the clever people they are.

29th September 2014

From: Sales, Healthcare

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