Drug prices.. Renewed skirmishes between governments and pharmaceutical groups

Drug prices.. Renewed skirmishes between governments and pharmaceutical groups
Drug prices.. Renewed skirmishes between governments and pharmaceutical groups
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If there was some kind of truce on drug prices between Big Pharma and politicians during the coronavirus pandemic, it ended last week in spectacular fashion.
The two US groups, Eli Lilly and Apvay, have pulled out of Europe’s tougher pricing regime – after NHS spending on branded medicines in 2022 returned the industry £3.3bn in cost reimbursement, about 26.5%. cent of UK sales.
Drugmakers are also considering whether to withdraw from an agreement with the French government, according to a person familiar with the discussions.
The pharmaceutical industry had hoped that its role in producing the vaccines and medicines that helped lift the lockdown would prove its economic value to politicians who have often accused it of putting profits on patients.
But Thomas Quiney, director general of the International Federation of Pharmaceutical Manufacturers and Associations, said governments have moved from appreciating rapid innovation during the pandemic to needing to “squeeze” drugmakers because of financial pressures they are under in other ways. He added that the industry was disappointed after politicians trying to attract investment, as well as the more difficult business environment, coalesced against it.
Each side has reason to negotiate seriously. The pandemic has put health care systems under pressure to use their budgets to deal with a backlog of patients, while inflation has increased costs for almost everything. In the pharmaceutical industry, companies are facing price constraints for the first time in the United States, which is their largest market.
Under the UK’s most recent pricing agreements – agreed in 2019 and due to expire this year – if the NHS bill for medicines rises more than 2 per cent a year, the drug industry has to pay the difference. Whereas other countries governed by similar agreements tend to share the additional costs.
The pandemic has led to a growth in demand for medicines to treat patients with COVID-19 and other conditions. But this is not the only reason for the high costs: the high prices of new drugs for cancer and rare diseases are also other factors. For example, the National Health Service has agreed to prescribe certain expensive treatments, but they give great results, such as Zolgensma from Novartis, which treats spinal muscular atrophy, and Orkambi, which is manufactured by the American biotechnology company Vertex, to treat cystic fibrosis.
But in fact, even before the pandemic, the UK government was expecting the NHS’ drug bill to rise significantly in 2022 and 2023, in part because it hoped to increase access to new treatments.
According to Richard Torbett, chief executive of the Confederation of British Pharmaceuticals, the government’s original predictions were “unrealistic” and their accuracy only proved by chance due to the pandemic. He noted that the United Kingdom spends a lower proportion of its gross domestic product on health care than most other countries in the Organization for Economic Co-operation and Development, and it spends a smaller portion of the health care budget on medicines.
Elsewhere in Europe, governments are trying to control spending on medicines in similar ways, with refunds, curbing price hikes, and assessing whether a drug is good value for money as it is judged by adding years of life. good, or by comparison with other treatments.
Finally, Germany has increased the mandatory discount it expects on the selling price of medicines to 12 per cent for 2023, and France plans to cut its spending budget on medicines by about 13 per cent.
Meanwhile, the US is undergoing the biggest price change in decades — the US pays about 2.5 times the average price for a drug than a group of 32 countries, according to the RAND think tank.
Starting next year, the federal government will, for the first time, have the power to negotiate the prices of some of the most expensive treatments purchased by Medicare, the taxpayer-funded healthcare scheme for retirees.
It also set an annual cap of $2,000 on “out-of-pocket” costs – expenses paid by patients – for Medicare’s 64m beneficiaries, and said it would fine drugmakers that raise prices above inflation.
For their part, drug companies under pressure in some of their biggest markets say they will have no choice but to cut back on investment — and the well-paying jobs and growth that politicians love — if they can’t come up with better price deals.
Eli Lilly said Europe’s focus on spending cuts was “harming” its ability to research and development, clinical trials and attract manufacturing investment. Germany-headquartered Bayer told the Financial Times it would shift the focus of its pharmaceutical business to the US, accusing Europe of being “very anti-innovation”.
But Mark Rodwin, a law professor at Suffolk University in Boston who has written a number of papers on drug pricing systems, said those involved in the UK Department of Health did not see the issue as a “serious concern”, in part because it could It makes financial sense for companies to conduct their research in the United Kingdom and the United States.
Quinney, of the International Federation of Essential Medicines Industry, said industry warnings should not be dismissed as “sheer rhetoric”. He pointed out that investment decisions in research and development are driven by the scientific base of the country, while pricing policy affects the overall investment A recent report of the European Industry Group showed a widening gap in investment in research and development between both the United States and Europe in the past 20 years, while China has become an alternative base important for research.
“The choice is yours,” Quinney said. “Not only are there great scientists in the US who can’t be outdone, but you also get a return on investment in a challenging environment.”
The industry is also concerned about the decline in research and development productivity. Deloitte found that the average drug development cost rose to $2.3bn by 2021, while the average annual peak sales per drug fell to $500m, continuing a declining trend in the past decade that was interrupted only briefly during the height of the pandemic.
But total drug sales are expected to grow at an annual rate of 6 percent between 2022 and 2028, according to data research firm Evaluate Vantage, and the world’s largest drug companies currently have $1.4 trillion in deal-making financial power, including cash and debt, according to the report. for EY.
Rodwin said the biggest threat would be if pharmaceutical companies stopped selling some types of drugs in Europe. So far, the drugs have mainly been withdrawn after European health authorities raised questions about whether they were of good value. Last year, Boston-based Bluebird Bio pulled Zintiglo, its one-off gene therapy for the blood disorder beta-thalassemia, from the European market, after failing to convince the German government to cover its $1.8m price tag. The company recently launched the same drug in the US for $2.8 million.
Andrew Obenstein, chief executive of Bluebird, noted that European payers still think of prices as if all patients required repeat prescriptions for chronic illnesses.
“It ended up being a negotiation that really only reflected historical drug price negotiations and not a reflection of the value of the treatments. So what happened was very disappointing,” he told the Financial Times.
When European health authorities go to negotiations, they will have to come to terms with the pharmaceutical industry, which is no longer focused on producing the daily pills.
And while drugmakers used to make a few per-patient gains in a large market, they increasingly focus on charging more for small subsets of patients, such as those with rare diseases or in oncology, with a specific mutation in their tumour.
In contrast, governments are not giving their health systems more money to deal with this change.
Alistair McGuire, head of health policy at the London School of Economics, said European countries had tightened their policies because of high prices. “The growth rates in prices, especially for oncology drugs, have been very noticeable. They have gone up in a very short period of time.”
The UK’s Department of Health said it achieved a record number of access agreements under the latest voluntary agreement, and is open to ideas about how the new scheme might work. The industry had introduced new models, such as paying only if the treatment worked, or paying a flat fee for any amount of medication needed.
Torbett, of the British Pharmaceutical Industry Association, acknowledged that it is difficult for anyone to plan for innovation. He said: “The problem with the public sector or anyone making the budget is that all of a sudden they say we can do something for patients that we couldn’t do before. But we have to find the money for that.”

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