As you are aware we have posted on the political aspects of high costs drugs many times before on this blog and the points below are the factors that you need to consider when undermining the current business model that society and pharma have set-up to feed and support innovation.
Many people, including politicians, are of the opinion that high-cost drugs (HCDs) are good for the world. If you take a macroeconomic perspective high-cost drugs appear to be good for the world. With a micro-economic, single disease, or MS-specific, 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, need to be addressed if the current big pharma model is to survive in its current form and get the needed support from society.
HCDs act as a global economic stimulus and are an important 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 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 we have allowed drug development to become so costly is 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 derisk 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 spin-off, 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.
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.
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, the health economics sector, NICE, etc. 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 chunks 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. In short Pharma is a very important part of a modern knowledge-based economy.
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, and other healthcare systems, will dry up.
Based on the arguments and observations above we are unlikely to see the current model change. I don't think our politicians 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 pwMS in India, or pwMS 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 a scheme, called the Novartis Access scheme, to bring cardiovascular and cancer medication to low-income countries for $1 per month. We need lobby Novartis to include fingolimod on that list for pwMS in low-income countries. May be they will agree to this when fingolimod comes off-patent.
Caveats: the caveats to the value that HCDs bring to the economy at large are many:
Despite the big pharma world we now live in any industry needs regulation and this is why we need organisations such as NICE, and the NHS, 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. Donald Trump has made noises about this and would like the UK to close down NICE as part of the new post-BREXIT deal between the US and the UK.
- There are too many repurposed drugs; these are less risky to develop do they really justify a high price? In reality, teriflunomide could be classified as a repurposed drug.
- Too many me-too drugs; these are also less risky to develop why such a high price? The ocrelizumab vs. rituximab battle comes to mind.
- Too much spent on marketing? Can’t Big Pharma market drugs less flamboyantly? I think they need new ideas.
- Too many expensive and poorly designed market-access phase 4 trials. Who is big pharma fooling? I am aware that these trials work, but some simple legislation could make these irrelevant.
- 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?
- 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 banker-type bonuses.
- When Big Pharma get windfall profits, rather than buying back shares to boost the share price and increase their bonuses, CEOs should invest in new R&D initiatives.
- Flash HQs. Some of the Pharma HQs I have visited are seriously 6* luxury. If my patients saw these they would be horrified at the level of excess and luxury. I am told that Pharma is very competitive when it comes to recruiting and retaining talent; the workplace is an important factor to consider to move, or stay, at a company.
- 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.
- 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? Our experience with the MHRA and generic cladribine suggests so.
The disparity in drug prices between the US and UK 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? In the case of the Big Pharma exodus from the UK we have probably lost more than we have 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 pwMS 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.
So my answer to the HCP who asked me the question about whether, or not, he should be prescribing leflunomide instead of teriflunomide. If your patient lives in a poor country and can't afford HCD then yes. However, if your patient lives in a wealthy country and is covered by insurance then no. Don't you need Pharma to develop drugs to prevent, or slow down, your Alzheimer's disease in the future? How do you think Pharma pay for their R&D? Teriflunomide will come off patent in the next few years and generic teriflunomide will likely be more than 90% cheaper than what it costs currently. This is the deal society has done with Pharma; we give them a period of time to make profits and in return they give us massively discounted drugs in the future.
Please note at Barts-MS we actively support an Essential off-label DMT List, which is 'evidence-based'. We have put this list together over several years to assist neurologists working in resource poor environments to treat their patients with MS. This list can also be used to treat patients who aren't eligible for treatment under local guidelines; for example, we are currently using off-label cladribine to treat patients with active PPMS.