Tackling a Decade of Change
Pharma must offer genuine solutions if it is to survive the challenges ahead, says Alistair Grenfell from QuintilesIMS
There has never been a more exciting time to be in the pharmaceutical industry – if you like change, that is. While change is a constant in business, pharma has experienced unprecedented levels over the past decade, says Alistair Grenfell, President, North Europe, Middle East and Africa, at QuintilesIMS.
“At a time when we are seeing a huge amount of innovation in our science and our pipeline – creating great excitement among the healthcare community – we need to acknowledge that our world has changed,” says Grenfell. “If you wind the clock back to 2005 and look at the top 10 selling medicines, only one was a specialist product, where specialist means a targeted therapy for a small patient population. At the end of 2016, seven out of ten best-selling drugs were specialist and the other three – Lantus, Crestor and Seretide – are starting to lose exclusivity.”
While these specialist medicines are successful, they cannot match the sales of yesteryear, he says. “Perhaps with the exception of a few outliers, these drugs generate revenue but not on the scale of the old blockbusters. Industry will need many more of them to maintain revenues.”
Yet, the process of developing new drugs has not changed in decades, says Grenfell. “We have seen significant innovation on the Research side, both in the smaller biotech companies and in the top ranking multinationals but getting that innovation efficiently through Development has been a challenge. There are large opportunities to improve the drug development process – for example, we know that 25% of clinical sites will never enroll a patient to a trial and half of sites that do recruit patients will miss enrollment targets; yet it costs $50,000 to set up a site and a single trial could require 400 sites globally. Pharma has to improve R&D productivity to offset the pricing pressures.”
In order to do that, however, pharma needs to accept that it has a pricing problem. “We don’t do a great job of really listening to the fact that there is an affordability crisis in healthcare. I don’t want to name specific molecules but there are some drugs where the price is prohibitive; I understand the need to recoup investment but industry has to recognize prices are an acute issue. There are some amazing and life-saving medicines out there but there are also instances where the contribution to clinical progress does not match the price. Dealing with [the affordability issue] may mean companies have to learn to live with lower margins in the future or drive greater improvements throughout their cost base. They also need to be more creative with risk-share models.”
Pharma needs to fight negative perceptions, says Grenfell. “Life sciences do not engage across the whole policy debate; we need to communicate that list prices and real net prices, especially in the US, are very different things. If you look at Lilly’s recent results, sales were up 9% but only 1% was from pricing increases, yet if you talk to patients and listen to the press you get a different story. The reality is that ex-manufacturer prices have not risen - companies are driving volume gains to grow revenue. Novo Nordisk did a great thing just before Christmas in publishing their net prices – their price for insulin has barely changed, yet if you listen to political rhetoric, all you hear is price gouging.”
A potential solution is shifting attention away from prices to the holistic benefit of a medicine, he says. “We’re sitting here in the UK where the drugs bill is only 12% of the total healthcare spend, yet every year it gets targeted. Why? The fundamental issue here in Europe is that the savings our innovative medicines bring to the system are broader than just in terms of patient outcomes. We need to talk about keeping patients out of hospital, where it costs £400 per night to keep a patient, similar to a night in a luxury hotel. Part of the problem is that the savings medicines bring are often not realized by the ministries of health, rather the ‘savings’ are seen by finance ministries, in terms of productivity and whole system benefits, whether that is through loss of working days or opportunity costs. The big question is how you draw links between the two.”
Pharma has a vital role to play in helping healthcare systems become more efficient, says Grenfell. “There are many conflicts within health systems; a good example is the use of biosimilars in the UK NHS. Like any other health system, the NHS has the potential to save up to £800m on autoimmune biologics alone through greater use of biosimilars, but savings made through switches in hospitals do not automatically end up back in the hospital‘s budget. Without negotiation and agreement between the payer and provider, resulting in so called ‘gain-share’ agreements, there is little financial incentive for the hospital to switch patients. Hospitals that have entered into gain-share with local payers, are releasing up to £800k per annum and reinvesting that money to support patients with Crohns and IBD with specialist nurse & pharmacist support as well as enabling new patients’ access to these life-changing medicines earlier in the disease pathway.
Engagement with patient groups is something all companies should be doing, he says. “If you do a good job [of working] with a strong patient group, it can make a huge difference, as we saw with the huge outcry at the rejection of Orkambi in the UK. The reaction from patients was absolutely right because this is another important step in the fight to normalize the lives of Cystic Fibrosis patients, and it was lobbying by the patient groups that pushed the government to reimburse Kalydeco at a price deemed fair. Getting patients involved early in the product lifecycle is absolutely vital and I see a genuine intent among companies to get closer to patients, although the challenge remains how to translate that into increased value for shareholders.”
Pharma needs to change the nature of its dialogue with governments and payers. “I talk to many governments in Europe and their biggest issue is being able to forecast their budgets. When an innovative new medicine comes along and severely challenges their health budget – we are talking hundreds of millions of dollars incremental spend in one therapy area in one country in one year– industry should engage in advance, working to help payers manage their budgets through delayed payment or a risk-sharing scheme. If governments choose to bury their heads in the sand, that’s a different issue. Right now in pharma, it’s all about early stakeholder engagement across the board. Get that right and you’ll see the results.”
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