Wouldn’t some of the challenges pharma faces on value, including battles with NICE, be solved simply by the government allocating more money for health?
It’s a fair question. I think the industry accepts that resources are not finite and that there must be some way of managing this. Pharma isn’t against having a process whereby the Department of Health (DH) or NICE makes judgements about spending limited funds on certain things. That said, what’s emerged out of recent controversies around NICE is that it is too blunt an instrument.
To base recommendations solely on arbitrary amounts of money – the £20k–£30k-a-year figure hasn’t changed in six years, regardless of inflation or, what was until recently, the UK’s notable economic success – is too blunt. The process is not a science either, but an art. It’s a bit of a black art, actually, as you can get different numbers coming out of the same calculations.
The industry has called for more transparency in this process, but one also has to question whether there is a need for greater judgement too.
The recent controversy over the kidney cancer drugs highlights the UK’s general failure to appreciate the concept of need. In other European countries, those four cancer drugs are reimbursed, and at higher prices than they would be here, because it is recognised that someone with just a few months to live has a greater need for treatment than some others. This is something we need to bring into our process. Anyone reading the press coverage of the UK’s ‘no’ decision on the kidney cancer drugs would probably scratch their heads. I think the evidence suggests that the UK is a bit out of step.
But, as you’ve said, the money is limited and therefore spending in one quarter means cutbacks in another; and specialist cancer drugs are notoriously costly to develop, and therefore to purchase.
If NICE had deemed all four of those kidney cancer drugs cost-effective as well as clinically-effective, and every eligible patient had been prescribed them, it would have cost the NHS around £25m per year. Now frame that figure within the context of the recently agreed PPRS deal, which saves the government between £400m–£500m per year, and you see that there’s something wrong with this equation.
Pharma already signed one agreement with the government in 2005, which led to a 7 per cent price reduction, and now it has just signed another that will decrease prices by around 5 per cent. This makes it clear to me that the industry is playing a full and responsible role in recognising that the government doesn’t have a bottomless pit of money. Unfortunately, this is often lost in the media debates, which vigorously attack the industry over access to medicines, claiming it ‘ought to do more’.
We have been very responsible and responsive in working with the DH to find win–win solutions. I believe the government needs to think more widely about the concept of value in medicines. There is huge value in keeping people out of hospitals and stopping them from having heart attacks and strokes. Medicines should be seen as an investment in the health of society, not just as a cost. This is something that still needs to be debated with the DH and with NICE.
You recently called for a public debate over these and other issues regarding the evaluation of medicines to the NHS and society. The Observer interview with NICE chairman, Sir Mike Rawlins, in August 2008, was an example where the views of a key stakeholder were expressed openly for public digestion. Was this what you had in mind?
The Sir Mike Rawlins interview in the Observer certainly threw a few stones at the pharmaceutical industry, which I don’t think is helpful. We need a relationship with NICE that is more adult than that. I can understand Sir Mike’s frustrations and some of the things he said, but I feel what is needed is a sensible discussion, including various other stakeholders, in order to find resolutions to the problems.
I actually think that NICE and the people in NICE do a good job in what they’re asked to do; however, I feel that what they’re asked to do is too restrictive. Rather than being critical of the folk inside NICE, I am critical of what they’re being asked to do and the means by which they are expected to do it.
In the interview, Sir Michael said pharma was driven by ‘perverse incentives’ linked to shareholder returns, which accounted for the high prices asked for some products. Do you take these criticisms on board, and do you think this is also the public’s perception of UK pharma?
I think some of the criticism is not particularly helpful; for one, Sir Mike’s comments around chief executives’ salaries, which are set by shareholders and in what are often global companies. I am sure that some of the issues raised against pharma in general are worth investigating and discussing, but I’m equally sure that many are somewhat biased and probably don’t merit too much consideration.
I welcome discussion, and if genuine criticisms are made, let’s face up to them. However, a controversial debate is only a good thing if it means the discussion can take us forward. The industry has nothing to hide and should be speaking openly about how it operates – we should always be holding up the mirror to make sure we develop trust and credibility.
We need an adult relationship with NICE, the NHS and DH, as well as with academia and other stakeholders, and this will only be achieved if there’s trust from all sides and we have sensible, open conversations. I can’t stress this enough because, to me, trust and communication ought to be the basis for how we move forward together.
We have made mistakes in the past and we can’t change those, but from now on we must make sure that what we do is acceptable, transparent and done in a way that elicits support from society. It’s important that the industry acts in the spirit – and to the letter of – the ABPI Code.
Regarding your question about perception, I think perhaps the pubic doesn’t understand, what a hugely successful industry life sciences is for the UK (due in part to the way some media reports things).
The £4bn-a-year we spend on R&D dwarfs what other sectors spend, and the £3.5bn trade surplus is enormously important to the economy, not to mention the employment we create and related benefits we give to society.
The fruits of our business also represent around 90 per cent of all modern medicines so, all-in-all, I think our business is a real jewel in the crown, as well as immensely important for UK PLC. Perhaps we don’t get this message across effectively enough.
The public are understandably led by press coverage eliciting negative emotions around the issue of ‘denied access to expensive – but vital – medicines’. Do you suppose a more sensitive and transparent value based pricing model will appease critics, while supporting UK pharma’s growth?
The concept of value-based pricing is quite appealing intellectually, but the reality is it’s very difficult to do in general, and extremely difficult to do in cancer. It requires that pharmaceutical companies understand the full value of any particular product relatively early on in its lifecycle.
After developing a new product for late-stage cancer, perhaps for a particular variant, it can take many years to discover that the medicine is also safe and effective in treating early-stage disease, or other types of cancer. For example, it took around three decades for aromatase inhibitors to become recognised and available as a safe and effective treatment for early-stage (as well as late-stage) breast cancer. Therefore, pricing based on the ‘value’ of any particular product is tricky when it’s almost impossible to state the true value of a drug to the NHS and society.
Now that we know statins can save about 10,000 lives a year, should we go back and pay the developers more money for them? What about PPIs all but eradicating the need for ulcer surgery? The value of that is enormous, but it took us a while to realise the true potential.
Some companies are taking responsible steps, such as Novartis with the Lucentis arrangement. But I think we need to do more work on the concept of value-based pricing in general; it’s not a simple problem to solve.
Why did you want to be president of the ABPI?
Rather than just sitting on management boards, I wanted to try and help the industry. I think the industry’s in a difficult time: the markets are turbulent and our pipelines have not been as productive as we would like. I see it as a challenge and one I hope my leadership experience will help me approach effectively.
The first thing I did was to commission a survey of the members, which gave me a very clear sense of what people felt, and my priorities.
What are your key priorities?
They’re based on three central issues: the first is access to medicines – patients in the UK should have universal access to new medicines, it should not be dictated by postcodes. I know this will be improved by the forthcoming NHS Constitution.
Secondly, as we’ve said, value is very important – I want to build on Nigel Brooksby’s manifesto: the right medicine, right patient, right time, so people understand our value to patients (safe and effective medicines), the NHS (keeping patients out of hospital and preventing exacerbations) and the UK (our notable contribution to the economy).
Thirdly, though perhaps this should be priority number one, trust and credibility – of course people make mistakes occasionally, but for me trust is a vital facet in what we do and I ask every employee in every pharma company not only to work to the letter of the ABPI Code, but also to act in its spirit.
There is an additional priority based on feedback from the survey of ABPI members I commissioned. We know we have some great strengths, but I think we could be leaner, more agile and, in some areas, more effective. Members want to see us engaging more actively, as a group. As president, I am accountable to the members and, as such, we will try as an association to reflects their needs and achieve the things they wish for.
What do you hope readers will take away from this article?
My messages are very simple: it’s crazy that in this very wealthy country patients don’t always have access to modern medicines. We need to rectify that. We need to recognise the fact that the value to patients and the NHS of these medicines is huge. NICE is currently too blunt an instrument and perhaps needs to be reformed; we need to debate that. The way pharma operates must elicit trust from all stakeholders; we need to ensure that.
To anyone who would criticise us, I say come and talk to us directly. By all means put the difficult topics on the table, but let’s find solutions and constructive ways forward.
The Author:
Chris Brinsmead spoke to freelance pharmaceutical writer Rob Skelding in October 2008.