Economic crisis: time of risk or opportunity for pharma?
EFPIA, the European Federation of Pharmaceutical Industries and Associations, a group of 31 national associations and 44 pharmaceutical companies in Europe, says investing in healthcare and a strong pharmaceutical industry is a prescription for economic recovery and a real opportunity to bring healthcare systems into the 21st century.
The group is urging European governments to avoid using the global economic crisis as yet another excuse for cutting healthcare and pharmaceutical expenditures.
Speaking at the 2009 EFPIA General Meetings in Seville, Spain in May, Arthur J. Higgins, CEO of Bayer HealthCare and president of EFPIA, said there is a real risk that resources devoted to both health and innovation will be negatively affected by the economic downturn. The consequences of such short-term thinking to the health and wealth of European citizens will be felt long after the current economic recession is over, he said.
Colin Mackay, director of communication and partnership for EFPIA and a speaker at eyeforpharmas upcoming Patient Relationship Marketing event in London on June 9th and 10th, says the challenges are different in Europe than for other regions. Once governments start to address the repayments theyre going to have to make for their investments in failing industries like banking and autos then theyre going to start squeezing. Healthcare is on average in Europe 9-10% of GDP and its going to be a target. Although pharmaceuticals are only around 17% of total healthcare costs, theyre always seen as a popular target for cuts.
Mackay predicts downward pressure on pricing and slowed market access. Slowing down the speed at which new drugs enter the market is seen as a way to put the brakes on cost, he says.
Europes aging population will make digging out of the economic crisis a bit tougher than it may be for other industrialized regions. Our social security systems are under pressure because the demographic mix is out of kilter; compared to our major competitors, we have a much higher proportion of older workers. Combined with falling birth rates in most EU countries, we have a big challenge to meet future funding he notes. It is inevitable that we will need to find ways for our workforce to work longer, but thats also going require investment. You have to provide the kind of prevention that will reduce the incidence of the chronic diseases that take people out of the workforce. If you dont, it will slow economic recovery in Europe.
Improved communication
To address the current economic situation proactively, Mackay says he believes pharma must communicate more on several levels. The EFPIA president, Arthur Higgins, said in his speech in Seville that we need to change the perception of pharma, he says. And he doesnt mean the ongoing reputation issue - he meant the fact that pharma is still seen is a cost driver, rather than a value driver.
According to Mackay, in Europe pharma is a significant force in driving the economy. The industry is about 3.5% of total EU manufacturing and employs almost 650,000 people directly and nearly 2.5 million indirectly.. If you start squeezing that as a way to contain costs, youve actually squeezed part of your engine to recovery, he warns.
By punishing the pharma industry, Higgins says, policy makers are compromising their ability to invest in developing life-saving drugs and undermining a strategic industrial sector that is a cornerstone of Europes knowledge-based economy. Mackay agrees and says as the crisis deepens and the full extent of the fallout becomes apparent, there is a risk that if the industry is squeezed, we may see Europe lose ground to the US and Asia in developing new drugs.
Europe also must take a hard look at how it pays for healthcare in the future, Mackay says, and empower patients to make choices about their healthcare and its costs. As Arthur Higgins has pointed out, we empower people to make choices about other major expenditures in their lives and we must do the same when it comes to how they want to spend money on their healthcare, he says. Yes, most of the cost of healthcare is covered by governments in the EU, but its still the patients money paid through taxation. We need to have a long, hard look at how we make that funding sustainable. Its a mid-20th century model in the 21st century.
Higgins agrees patients should accept more responsibility for their healthcare costs, while ensuring affordability and equal access to healthcare for everyone. This should include a greater role for private health insurance.
Headroom for innovation
Higgins also stressed that the savings from the more efficient use of off-patent medicines and generics must be reinvested in new and innovative drugs, providing headroom for innovation.
The industry doesnt know when it embarks on the R&D process whether a particular molecule will be funded or not, or whether its going to meet a healthcare priority of the future, Mackay says. We need to make sure that priorities are defined for the medium and long-term, so that we can target our research effectively. If we can find a platform that allows us to do that one thats multi-stakeholder, non-siloed and driven with the benefit of Europe in mind, rather than for the benefit of individual companies.
Governments should consider pharmaceutical expenditure in the overall context of healthcare, including breaking out of a silo budget approach and recognizing the benefits medicines bring to healthcare systems.
Mackay suggests that pharma and government officials should find a way to sit down and discuss the size and scope of costs cuts that they need to make and allow the industry their input. Its easy to say if you cut this or that, youll achieve a x% savings, but are they the right places to do so? The industry can add a great deal of value in determining where money can be saved effectively. Cuts should not be imposed; they should be discussed and agreed, where we can at least help do it in an effective way.
Common ground: patient compliance
Patient compliance may be good common ground on which to begin, Mackay says. Its probably the single area where we all can agree and where we can all do something, he urges.
Mackay admits that one of the problems is there is not yet enough evidence that adherence programs actually deliver long-term. However that doesnt mean that we should not try, he says. In the current financial crisis, activities like improving adherence could make a big difference; there is a spectacular amount of waste involved. Mackay suggests. Certainly if youre medication is expensive and youre suffering financially, you might be tempted to take shortcuts to save money. That could be disastrous Everyone governments, pharma, clinicians and pharmacists say adherence programs are a good idea, but there dont seem to be any real, coordinated initiatives to drive this.
The last word, Mackay says, should go to Arthur Higgins, who aptly points out that healthcare is not a luxury to be squeezed in times of crisis, but instead must be seen as a primary need that cannot be allowed to fail. And it will take the pharma industry and policy makers working together to deliver modern and sustainable healthcare fit for the 21st century.
Colin Mackay will be speaking at eyeforpharma's Patient Relationship Marketing conference June 9-10 in London. For more information or to register, visit the conference website .