PoliticalSpeak: are high-cost drugs good for the world?

Have your say on high-cost drugs! #PolticalSpeak #MSBlog #MSResearch

“I finished ECTRIMS 2015 this year with a pre-planned meeting with a senior pharma executive to discuss an adaptive trial design in progressive MS. This particular pharma executive was once a jobbing neurologist and is aware of what it is like to be at the clinical coalface. He has also done time in a developing country and understands global health politics very well. In other words he is well educated, has lots of experience, and despite working on the other side, some would say the ‘dark side’, he has ‘nous’.”

“Although he liked my ‘Hot Topics’ talk he took me task on my section of affordable drugs (see below). He is of the opinion that high-cost drugs (HCDs) are good for the world; his position was uncompromising and well-rehearsed. I suspect if you work in Pharma you have the arguments supporting Pharma’s position forced down your throat continuously; this analogy conjures up images of feeding ducks to produce foie gras.”

“We debated the issue of HCDs and after an hour neither of us was prepared to admit defeat. However, after more than a week ruminating and considering his arguments I have come around to seeing his point of view. HCDs are good for the world, however, that is only if you take a macroeconomic perspective of the issues. If you take a microeconomic, or MSer-perspective, view of HCDs there are too many caveats that need to be considered to support Big Pharma’s position on HCDs. These caveats, and there are many, will need to be addressed if the current big pharma model is to survive in its current form and get much needed support from larger society.”

“Why are high-cost drugs (HCDs) good for the world? In short HCDs act as a global economic stimulus. More importantly HCDs act as an incentive for innovation. Innovation occurs in many places, but in medicine, and in particular neuroscience it only comes to those who are prepared to take very high risks. The costs of drug development have mushroomed, one could argue out of control. It is now simply impossible to develop drugs without big pharma. The risks of failure, often measured in billions of dollars, are too high for academia, non-profits or even for governments accountable at the ballot boxes to take it on. The product development cycles are typically longer than 10 years and way beyond the life expectancy of any democratically elected government. Why have we allowed drug development to become so costly? That’s a discussion for another day, but there is no mistaking the observation that markets reward industries that are prepared to take on long-term risk, which is why the profits of the pharma industry remain so high.” 

“In general the profitability of an industry is linked to its risk; low risk industries make lower profits than high-risk industries. If we could de-risk drug development we would be able to make it more competitive and the costs of drugs would fall. The reality, however, is the opposite; even relatively well capitalised University spinoff and start-up companies are forced at some stage to partner with big pharma. The costs of late phase drug development are now too high to finance easily outside of big pharma. We need to ask ourselves the question how did we let ourselves get into this position? As we have created the beast we now have to learn to live with it.”

“I have some ideas about how to derisk drug development; to make drug development cheaper. All of my proposals are political. I doubt pharma would be interested in them. I suspect the current model suits them well. Those who walk where others fear to tread will be rewarded many times over; this is why the pharma industry is often compared with the banking industry.”

“Although the profits from successfully launched HCDs are staggeringly high they feed a food chain that is astonishingly broad and deep. Regulatory, contract research, sales and marketing, public relations, advertising, packaging, distribution, medical writing, events organisation, travel, hotels, conferences, lobby groups, charities to name but a few of the industries that feed off the profits, or future profits, of successful HCDs. The Pharma industry also supports education, at both an undergraduate and post-graduate level. Large chunk of Pharma profits support the private pension funds; big pharma shares are generally considered blue chip shares hence their prominence in large pension fund portfolios. Then there is the tax take from big pharma, which is why developed countries compete with each other to keep a large pharma footprint in their country.”

“Medical education: The pharma is probably the biggest funder of continuing medical education or CME. Up until quite recently pharma have been funding CME directly and are now increasingly funding it via third party providers, for example Medscape. Without HCDs CME will need a new funding model.”

“Basic and contract research: A large number of pharma companies are partnering with Universities in relation to basic research. The costs, in particular the overheads, and the low success rate of in house pharma research have led to a large number of pharma companies funding research initiatives within Universities. The idea being is that they will have first refusal on any discoveries. The amount of money that follows contract research is staggering; the NHS is a big recipient of some of this money. This is one of the reasons why the NHS are incentivising us to increase the amount of clinical research we do on NHS patients. Without HCDs the flow of money via this route into the NHS will dry up.”

“Based on the arguments and observations above we are unlikely to see the current model change. I don’t think or MPs or MEPs have the appetite for it. This is why initiatives we have launched such as the Big Pharma Alternative and others we support such as off-patent drugs bill are unlikely to succeed. This means we have to approach the problems that HCDs create differently. We need to think about how we make access to HCDs equitable; why shouldn’t MSers in India, or MSers without health insurance, not have their disease managed appropriately. Rather than pointing fingers and stamping our feet we should all get around the table and think about solutions to these problems. For example, Novartis has recently announced a scheme, called the Novartis Access scheme, to bring cardiovascular and cancer medication to low-income countries for $1 per month. Why didn’t we lobby Novartis to include fingolimod on that list for MSers in low-income countries? Is it too late to change the list?”

“Caveats: My caveats to the value that HCDs bring to the economy at large are many and have been covered on this blog ad nauseum. The following is a starter list:

1. Too many repurposed drugs; these are less risky to develop do they really justify such a high price?

2. Too many me-too drugs; these are also less risky to develop why such a high price?

3. Too much spent on marketing? Can’t Big Pharma market drugs less flamboyantly?

4. Too many expensive and poorly designed market-access phase 4 trials. Who is big pharma fooling?

5. Why do drug prices rise with new competition? Surely in a true market, competition should result in prices falling? Are Big Pharma running a cartel?

6. Executive pay. Is there any way of making pharma executive pay less of a hot potato? When people with chronic disease are dying from lack of access to medication what do you think it looks like to society when executives get these banker-type bonuses.

7. Flash HQs. Some of the Pharma HQs I have visited are seriously 6* luxury. If patients saw these they would be horrified.

8. Poor efficiency. Some of the pharma R&D budgets are ridiculously high for what they deliver. Surely there are efficiency gains to be made? However, I would expect that any gains made on the R&D side would not be passed onto the consumer.

9. Paying the regulators. Why have governments allowed their regulatory agencies to become dependent on pharma subscriptions to function. Does this not create a conflict of interest? Are not the regulators working to a big pharma agenda?”

“Despite this big pharma world we now live in any industry needs regulation and this is why we need organisations such as NICE to demand value for money and to keep Pharma on their toes. What NICE however has created is a large disparity between what drugs cost in say the USA and the UK and Europe. At present the USA is subsidising drug costs across the world and this is unsustainable in the long-term. It has also led to a brain drain. As a result of the capping of profits in Europe big pharma are closing-up shop and moving their R&D and operations to markets that pay. NICE is almost certainly one of the main reasons behind the Big Pharma exodus from the UK. I suspect it is too late to do anything about it. What you gain on the swings you lose on the roundabout? Unfortunately, in the case of the Big Pharma exodus from the UK we have probably lost more than we gained.”

“Despite pharma politics and HCDs it is up to us the neurologists and healthcare professionals who look after people with MS to be their advocates. We have to make the case for them be it to Pharma, EMA, NICE or NHS England. What upsets me most when we have made the case successfully and have green lights flashing from all parties we are still so slow at adopting innovation. There is little point in innovating if we simply deny people with MS the benefits of the innovation pipeline. Instead of celebrating new NICE approved treatments that can really make a major difference to MSers’ lives we debate price and take our eye off the ball. We need to focus on research that addresses the unmet need and adopt innovations that address previously unmet needs.” 

“Please have your say.”

My ‘hot topics’ talk from ECTRIMS that triggered the HCD debate.”

CoI: multiple

23 thoughts on “PoliticalSpeak: are high-cost drugs good for the world?”

  1. arms sales are good for some economies but look at the mess that iraq has created. Foie gras tastes nice if you can afford. it society is now rejecting foie as cruel. Pharma foie will be the same if they dont care about the ducks

  2. If you think HCD are good for the world then you've lost touch with what the goal of pharmaceuticals are. The industry was originally developed to cure diseases started by scientists who were interested in this cause. The focus has snice been shifted to making money and testing the system to see how high a drug can be priced at.If HCD's were good for the world then you would not have rationing that seems to be going on in the UK as has been discussed on this blog many times. In addition it seems in the UK the Satu quo is "wait and see" when the rest of the world has concluded an MSer needs to be on a DMD asap.So no, HCD are not good for the world.

  3. "Why do drug prices rise with new competition? Surely in a true market, competition should result in prices falling? Are Big Pharma running a cartel?"This is my biggest question, which I've been asking for years now. Everyone trumpets the efficiency of the market economy, yet it singularly fails to operate in areas like pharma, where the strategy is always charge what everyone else does/what the market will stand/jack up the price as the drug approaches the end of its papent life to squeeze out the last drops of profit. In this case, does Big Pharma run a cartel? Yes. The US government seems to be finally waking up to this after well-publicised recent cases of egregious price gouging by pharma opportunists, however, I suspect the well-funded pharma lobby will already be putting spokes in the wheels to make sure the status quo continues to exist.

  4. "In general the profitability of an industry is linked to its risk; low risk industries make lower profits than high-risk industries. If we could de-risk drug development we would be able to make it more competitive and the costs of drugs would fall".There is no competition. There is a pharma cartel making the price higher and higher year on year. and MS is a luxury commodity in their eyes The MS companies are taking the low risk strategy of repurpose to patent approach. Is this innovation or profiteering?

  5. Gavin1) It is worth considering MD's arms industry parallel.2) The industry has many pitches to play on, MS DMTs are only one, and should big bonuses dry up here because more people are cured (which may happen to some on Alemtuzumab, other induction treatments, or HSCT) the focus will move to new markets (see example below). Merck took a huge write off for their erratic decision to drop Cladribine in 2011. Did this lead to redundancies? Yes. Did it kill the industry? No. Companies review their assets & strategies, and move to new pastures…3) If we were able to prescribe to all pwMS drugs that address the inflammatory component effectively and safely at a moderate cost, the industry would be encouraged to put more effort into R&D and develop drugs for neuroprotection & repair on the backbone of an affordable 'anti-inflammatory platform'.4) "Although the profits from successfully launched HCDs are staggeringly high they feed a food chain that is astonishingly broad and deep. Regulatory, contract research, sales and marketing, public relations, advertising, packaging, distribution, medical writing, events organisation, travel, hotels, conferences, lobby groups, charities to name but a few of the industries that feed off the profits, or future profits, of successful HCDs. The Pharma industry also supports education, at both an undergraduate and post-graduate level…"I don't agree with significant chunks of this. As a clinician with a focus on the well-being of people with diseases I need some explaining why – certainly in publicly funded healthcare systems, where *everyone*, from factory worker to barrister and banker (well hopefully:-) pay their taxes to support the system – a food chain should be maintained that puts R&D on the same level as, for example, marketing, event organisation, hotels, and lobby groups(!). Remember, we are talking about *healthcare*, not cars, furniture, luxury goods, whatever. For example, I do not agree with the principle of *growth = excellence* when it comes to regulation. This should be entirely ruled by the *need for regulation*, not by the need for growth to feed those doing regulation! It is by no means unequivocal if say the MHRA considers it a success when their revenue from the industry for regulatory purposes goes up. They praise themselves that 100% of fees for medicines regulation is paid by the industry, but that leaves not only me wondering is there a degree of dependency on the industry? Paul Flynn, MP sponsored a respective motion in parliament recently enough http://www.parliament.uk/business/publications/business-papers/commons/early-day-motions/edm-detail1/?session=2012-13&edmnumber=1197. And where does this leave the debate on repurposing, where we know if generics are to have a chance for a license the system of regulation must change. Will anybody at the MHRA be interested in such change when the organisation lives quite comfortably off the fees that the big hitters are able to pay? Will, for that matter, the branch at NICE dealing with health technology appraisals (HTA) be interested given re-purposed drugs *that remain generic*(!) may be cheap as peanuts, and hence not require any HTA input, meaning no business for NICE? We won’t change all (or even any) of the above in a stroke, of course not. And I acknowledge your ‘list of caveats’, but I think the above underpins my unease with the general trajectory of this post. I do hope you continue supporting a further reading & referral to committee of the repurposing Bill which should enable a higher profile and public debate on these issues.

    1. DrK I think you have hit the nail on the head. The regulators are part of the food chain and hence are dependent on Pharma to survive. Even NICE makes a significant chunk of its income from Pharma subscriptions. Unless there is a clean break between funding the regulators and industry the status quo is likely to to stay the same. I will add this to my list of caveats.

  6. Bring on the end of fingo…..because until a generic small molecule hits the streets the sharks will be frenzy feeding. However where you have sharks you have Remora who can live off the scraps.If you get rid of big pharma sharks, people can still make money just not in excessive amounts. Once the kill is dead and eaten they will be off to find their next prey.Pharma know they can keep their biologics going for years, and is probably why we see an endless stream of antibodies, and any generics can come in but they are only for a few quid less. They will have brand loyalty too. How many people have switched from betaseron to extavia? According to the web "Extavia is essentially a rebranded Betaseron, for which Novartis gained distribution rights when it acquired Chiron in 2005" We know that people buy £3 Neurofen rather than the £0.30 Ibruprofen so they are paying £2.70 for a bit of coloured cardboard and a brand.Fingo I believe is the first drug to exit patent…I wonder how long the lawyers will keep it going. Copaxone was invented in the 1970s and its patents only just expired….when generic small molecules hit the streets the MS bubble will burst….Will they ever hit the streets. However by this time they will be selling progressive DMT and they will throw in relapsing DMT in a 2-4-1:-)

    1. Be careful what you ask for. Dre's stance on pharmacology is well known here. Dre hates drugs. Dre says let MS do it's thing without medical interference.

    2. Dre's views are so complex. He says stuff that is so brilliant, then he'll say stuff that is shockingly anti-human. It's like one minute I want to marry him, the next I want him castaway.I don't get Dre is what I'm saying.

    1. Max Faulkner, when he was writing for us, had grave concerns about TTIP. he argued it would be used to harmonise the price of HCD between the USA and Europe. Another possible reason for the Europeans to be sceptical of TTIP.

  7. I am pleased to see this post has generated debate; that was its aim. There are many issues way and above us at stake and this is what lies ahead of us with any political process that is trying to change the status quo. The most important point I want to make is that even when the NHS negotiates discounted prices on HCDs (as much as 5x lower than in the USA) and assesses them as being cost effective (green lighted) there is still a very low uptake of these drugs in the UK. Why? This to me is the bigger, and more tragic, issue I am not sure lowering the price of these drugs further is going to necessarily change this.

    1. (Insert company of your choice here)…"are nothing but entities bent on exploiting market anomalies, but the rank arrogance of their gouging exacerbates the overall public perception of the pharma industry as a club of robber-barons. Greed has jumped the shark, and the pharma industry as a whole is going to eventually suffer some pain as a result."

    2. “Jump the shark”: An American idiom that initially referred to a television show (Happy Days originally where the Fonze jumped a shark on water skis) that signals its impending decline by resorting to some gimmick or story device that undermines its own premise or credibility. It has gradually been broadened to indicate a moment of excess in any industry or endeavor that constitutes a tipping point, after which decline/deterioration can be expected."

  8. Generic fingolimod hopefully will go a long way to lowering drug costs, but not until 2019, tecfidera not until late 2020s.Why can't any government consortium or charity get it together to get cladribine registered? FDA already had the marketing application when they issued CRL. Wouldn't they rethink it today? Could only need a CMC + maybe a bioequivalence study from such a group. Politicians could make it happen. Seems like a slam dunk (spot kick) right? If they have so little initiative & talent that they can't do even that then we can only depend on pharma and high prices for the advances we desire.We still need new drugs to be developed. Unfortunately for us present MSers the clock is running out.PS – interesting article on pricing (they raise prices b/c they can):http://www.forbes.com/sites/matthewherper/2015/10/13/four-reasons-drugs-are-expensive-of-which-two-are-false/

  9. Re:PoliticalSpeak: are high-cost drugs good for the world? .I'll play devil's advocate, without the reward of profits who will wade through the expansive and expensive sea of clinical trials? Academia?Are they are necessary to spur innovation and drug discovery…..yes they are. Will pharma suffer from its greed in price gouging? Not as long as there is back door politics. It is the new "military industrial complex" that was born during the Cold War. God bless free market Capitalism and pharmaceutical oligarchy.

  10. I think this debate has been framed in a way that suits pharma. Yes, we have to admit that they do some good. But that's hardly the point. There is a world of difference between "doing some good" and "doing what is best". I don't think we should ever accept 'not entirely awful' as an outcome for such an important issue. They profit (enormously) on the basis of a social contract that we designed to achieve an outcome. This system exists for benefit of society, not vice versa. The current system isn't achieving the outcome and it has to be up for review. Pharma does not operate as part of a truly free market and anyone who argues otherwise is either wilfully ignorant or intends to mislead. The cost of their drugs is determined by how we value our lives, but they exert this awful leverage from a position that we grant to them. Forgive me for not thinking we should be thankful for the scraps off the table that this ugly feast generates.A social contract is grounded in limits, and the incentives created here clearly need to be reviewed.- Medical trials cost too much? Fine, look at ways to reduce this.- Pharma helps to pay for the education of our specialists with the money that we pay them (after they take a handsome cut) and they retain access any innovation? Gee, if only there was an obvious solution to that staring me in the face. – Tax take? yeah, lets not even go there.Yes, my life has been improved by the taking of several high-cost drugs. But the fact that there is some benefit being derived from their activities doesn't give them carte blanche. The cost of the drugs is not some immutable force of nature!

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