It has been a lively week for the global media debate on the price of medicines. Here in the UK, The Guardian has published, today, a piece claiming that overly ‘exorbitant drug prices’ are the reason cancer patients are denied access to some medicines. It cites an advance copy of new research that claims to have compared the prices of a number of medicines across countries. As the research itself has not been released publicly I’m not able to comment on its methods, data or conclusions. But the Guardian’s article gives rise to a number of issues that I think, from a point of principle, are worthy of comment.
Should all countries pay the same price for medicines?
My straightforward answer to this is, no. There are many reasons why you would expect different countries to pay different prices. The obvious one is wealth. It baffles me that the Guardian is surprised countries like India, Brazil or Thailand would pay less than a well-developed country like the UK. Surely it's just common sense that when it comes to paying for innovation, the poor should pay less than the rich. Beyond the wealth of nations, there are several other issues: differences in clinical practice; disease prevalence, demographics and policy may mean the extent to which a medicine is used in practice will vary. As such, 'the right price' will also vary, depending on all this context. It is also claimed that the UK has been less successful at negotiating discounts than richer countries. I don't understand the basis of this claim but it doesn't square with what I hear from companies.
Doesn't the 5000% price increase of a 62 year old medicine show that pharmaceutical companies can get away with what they want?
Much has been made in the press this
week of a US hedge fund/ 'pharmaceutical company', which in the space of a few days raised the price in the US of an old anti-parasitic treatment by around 5000%, then promptly lowered it again in face of public outrage. Trade associations, for good reason, have a policy of not commenting on individual company or product issues. That said, our friends at PhRMA – the US industry trade association based in Washington DC – tweeted that "@turingpharma does not represent the values of @phrma members". I'm confident in saying the same applies to the ABPI.
As controversial a debate as the Turing case has been, it's important to clarify that there are a completely different set of issues compared to when we discuss the prices of new, on-patent, innovative medicines. For off-patent medicines, there is a need to make sure there is enough competition to drive efficiency and lower prices on the one hand, but to also ensure that competition is sustainable in the long run, on the other. When margins are driven so low that the number of players in the market declines down to one you end up with a monopoly! In such situations we all need responsible behaviour.
How do we make sure the NHS pays fair prices in UK, including for cancer treatments?
I cannot think of any other area of public spending that is under greater scrutiny for value for money than medicines, especially in the UK. If there ever were days when pharmaceutical companies could charge what they want and expect rapid uptake in the NHS they are long gone. NICE's rigorous technology appraisals mean that there are strict checks on whether the added value of new treatments is worth the price being charged. If medicines are too expensive relative to what they deliver, they are unlikely to get used. ABPI, for several years, has been calling for reforms of NICE. This is not because the industry wants to avoid scrutiny but that we genuinely think improvements need to be made to ensure there is a level playing field between different disease areas and patient populations. Even under a reformed NICE, it may be that not all new medicines get through. But we should at least get to a point where we are all confident that medicines for cancer or rare diseases, for example, stand a reasonable chance.
The point, here, is that we have developed some of the most sophisticated methods in the world for checking the value for money of pharmaceutical products. When companies prove themselves by going through these assessments – as, incidentally, the Hepatitis C product that the Guardian article cites has done successfully – the NHS should have confidence that what it is investing in is worth it.
Is NHS spending on medicines out of control?
No. This is an assumed subtext of much media debate on medicines pricing. The truth is that medicines expenditure has been declining as a share of overall healthcare spending in the UK for several years – as it has been across the developed world. On top of that, the Pharmaceutical Pricing Regulation Scheme (PPRS), which is the framework agreement between the industry and the UK government, guarantees precisely what the NHS will be spending on medicines for the 5 year period of the scheme (until 2018). If expenditure goes above agreed levels, the pharmaceutical industry pays back. It is estimated that the industry will pay around £4bn during the lifetime of the agreement.
The reason the pharmaceutical industry signed this deal is that, in a period of exceptional austerity, we wanted to give budgetary certainty to the NHS whilst at the same time allowing the NHS to 'upgrade' the mix of medicine that patients have access to. The fact is that an NHS patient is likely to receive a far older generation of medicine than patients in most other western countries. We think this is wrong and unnecessary. Real effort can and should be made to bring UK prescribing in line with other countries and the PPRS deal means that it will not cost the exchequer a penny more than was agreed.
The future of outcomes focused health reform
The best health systems in the world – including the NHS - are all saying similar things about reform at the moment. New science and new technologies will increasingly enable us to manage healthcare in a more personalised way and in a way that allows us to focus on patient outcomes rather than transactions. This change won't happen overnight, but it is beginning to happen now and it will have important implications for medicines. As the NHS has set out in the five year forward view, as health systems integrate budgets and allow those managing care to optimise all resources as opposed to a series of separate silos, we should see better patient outcomes and reduced cost to the system. The pharmaceutical industry is fully supportive of this philosophy. Such reform, in future, will mean even greater confidence that medicines adding most value will be most used and vice versa. We are also putting significant resource into supporting the transition towards outcomes focused health systems. Through our European trade association, EFPIA, we have launched a major EUR 100m public private partnership to support new ways of working and a new focus on
The debate on medicines pricing is always going to be a controversial one but it is important that the debate is well-informed and balanced. The NHS rightly expects to get good value for money for the treatments it uses. We believe there should already be a good degree of confidence that the NHS is getting a good deal – especially under the current PPRS where the tax-payer's expenditure is fixed regardless of what the system uses. Moving forward, we are fully behind the NHS's efforts to be more efficient, more personalised and more focused on the patient. This should give us even greater confidence in future.