Earlier Posts
How to encourage medicines companies to provide new medicines for neglected diseases in developing countries is a complex issue, particularly when those medicines do not have sufficient commercial return.
Some groups have argued that compulsory acquisition of technology and removing intellectual property are options that should be pursued – effectively forcibly taking technologies away from the companies that developed them. However, in the long run, these approaches, which effectively take investment dollars away from developing new treatments, are likely to lead to a reduction in the development of new medicines to treat such diseases.
One reason is that over time shareholders in these companies simply won’t put up with governments or international organisations forcibly taking away the technology they have invested in. They will instead invest in other industries and products.
Instead, governments, international organisations and the international community need to work with industry to find ways to encourage companies to invest in and commercialise new medicines to treat diseases for the world’s poor.
Such options could include temporary patent extensions, or public-private partnerships like the recently announced Drugs for Neglected Diseases Initiative (DNDi). In the DNDi 13 global medicines companies have agreed to share with that partnership confidential information on the details of treatments that have gone through initial testing but not found a commercial use.
Another example is the recent collaboration on neglected tropical diseases led by the World Intellectual Property Organisation and supported by the global medicines industry which opens up information on potential new cures to the public domain.
This article, by a professor of public policy and the director of the Centre for Medical Progress in the United States, looks at these issues and argues that society needs to use ‘carrots’ rather than ‘sticks’ to ultimately achieve a long-term outcome where companies are developing more new medicines for neglected diseases.
Future Pharma
Following the address by GlaxoSmithKline’s global chief executive Sir Andrew Witty at the recent Medicines Australia Parliamentary Dinner I have just listened to a great BBC World Service radio discussion from their World Business Report on the topic Future Pharma.
The program discusses the challenges and opportunities facing the global medicines industry, and the strategies it is adopting to deal with those challenges. It also talks about how innovation in the manufacture of medicines and vaccines, as well as how the industry itself operates, are providing solutions to key technical and competitive challenges.
You can listen to the program online here: http://www.bbc.co.uk/programmes/p00nwqqv
Medicines Australia’s Annual Parliamentary dinner on 29 February.
Two great speeches about Securing Health for Future Generations were delivered to more than 300 supporters of the Australian medicines industry at Medicines Australia’s annual parliamentary dinner on 29 February.
Prime Minister Julia Gillard gave a really enthusiastic endorsement of the importance of the industry in supporting Australian healthcare, the value of the PBS and the constructive relationship between Medicines Australia and political and bureaucratic stakeholders.
“When we talk about the success of Australia’s economy, and our contemporary success is simply remarkable, we celebrate the contribution made by sectors such as mining and manufacturing, and we are right to do so,” the Prime Minister told the audience.
“But there’s one sector that deserves to be up in lights along-side those others and that is the pharmaceutical industry. You are a great Australian success story, and on behalf of the nation, I honour your success tonight.”
She also praised the PBS Memorandum of Understanding between Medicines Australia and the Government.
Sir Andrew Witty, the global chief executive of GlaxoSmithKline, gave an outstanding keynote address about the need for the medicines industry globally to adapt to a changing operating environment access to medicines – particularly in developing countries – and the opportunities for health technology assessment.
Sir Andrew also praised the MoU as an effective instrument for ensuring a predictable policy landscape, and suggested it as a model the rest of the world could do well to adopt.
They were two very fine speeches and I recommend both to you.
Both speeches are available here
Improving Indigenous Health
I had a really humbling experience recently in Alice Springs where I helped present a new state-of-the-art mobile dialysis truck to the remote communities in the Western Desert, on behalf of Medicines Australia.
It was genuinely moving to meet the people who will benefit from this truck, and actually quite thrilling to understand just what a difference it will make to their lives. The occasion also reminded me that Medicines Australia has an important role to play in the community, over and above researching and manufacturing medicines.
The problem for dialysis patients in the Western Desert – and in other remote communities all over Australia presumably – is that when they get sick they have to leave their community to live near a renal dialysis facility in one of the major towns or regional centres. Because there is no access to these facilities in the community, people are often unable to return home even for short visits to family and friends, because the journey is simply too long.
The renal dialysis truck is already travelling to communities throughout the area, allowing patients to arrange to return home to their communities for short visits and to undergo dialysis while they are there.
It’s essentially a modern medical facility on wheels supporting the health of Australians who don’t have access to all the healthcare services they need.
The truck is one of a number of projects Medicines Australia has committed to funding that will help improve indigenous health.
Medicines industry tackling global health problems
One area where it has traditionally been difficult for the medicines industry has been in developing medicines for neglected tropical diseases, such as chagas disease, dengue, leprosy, rabies , yaws, guinea-worm disease, and trachoma.
These diseases have generally people in some of the poorest countries in the world.
Historically, the problem for companies is that it is difficult to make investments in developing treatments for such diseases commercially viable. The normal commercial model of developing a medicine, where it costs around $1.5 billion and 15 years to develop, has not worked as well for developing treatments for these types of diseases.
However, over the last decade or so medicines companies are increasingly developing new frameworks and tools, often in partnership with other non-commercial organisations to indentify and commercialise new treatments.
For example, recently the global pharmaceutical industry was one of a number of sectors that partnered with the World Intellectual Property Organisation (WIPO) to release a new public database WIPO Re:Search. The database will provide open access to researchers for the scientific information held within medicines companies about potential medicines that might treat neglected tropical diseases.
You can find out more about this initiative at http://www.wipo.int/research/en/
The International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) also has information about what the global industry is doing in this area. This is available at http://www.ifpma.org/global-health/neglected-tropical-diseases.html
Another organisation, the US Global Health Initiative also has good information on what medicines companies are doing for treating diseases in developing countries
Finally, there is a recent article in Forbes magazine that lists five ways that the global pharmaceutical industry is more and more working on its own and with others to develop medicines for treating neglected tropical diseases and bringing them to market. This article can be found at http://www.forbes.com/sites/sarikabansal/2011/11/09/neglected-tropical-disease-pharmaceutical-companies/
While it’s a difficult area, the medicines industry is increasingly finding new ways to develop these treatments and get them to the people that need them most. It is another example where the medicines industry is tackling the world’s health problems.
Off-Patent Medicine price cuts
The latest round of price cuts to off-patent medicines on the Pharmaceutical Benefits Scheme shows the Memorandum of Understanding between Medicines Australia and the Government is working well.
The MoU set out to provide industry with a more predictable pricing and policy environment, while delivering the Government substantial PBS savings.
The price disclosure cuts announced recently have done that, and the Government will realise millions of dollars in PBS savings because of them.
Importantly, the savings give the Government the financial headroom to bring new medicines on to the PBS. The Health Minister Tanya Plibersek has acknowledged this as a key benefit of the price-disclosure process. Indeed, it is the reason why Medicines Australia agreed to a series of price reductions that will save the PBS at least $1.9 billion.
You can go online http://www.comlaw.gov.au to check out the magnitude of price reduction for each medicine.
The announcements of the price cuts followed the Government’s Mid-Year Economic and Fiscal Outlook which forecast that PBS expenditure would be $1.8 billion less than expected over the next four years.
And of course there will be more annual price disclosure cuts to off-patent PBS medicines in the future.
All of which adds up to a manageable PBS which effectively removes the case for further reform.
And that is precisely the point of the MoU!
National Press Club Address
I gave an address to the National Press Club earlier this month where I suggested that The Australian Medicines Industry offered Australia significant strategic and economic advantages in a post-mining boom future.
At a time when Australia is debating the future of manufacturing in this country, we have, right under our noses, an industry that already delivers so much to the community and economy through jobs, skills, wages, exports and R&D.
It is an industry that has an excellent industrial relations record and generates good exports, foreign investment, high-skill, high wage-jobs and some of the best scientific minds in the world.
It is an industry that has a low carbon footprint for the economic growth it generates.
It is a perfect industry for a country that is trying to develop a smart, high-wage, high-skill, innovative, low carbon economy.
If we are serious about building on the industrial capability we already have in this country, we should be backing Australia’s medicines industry and encouraging it to reach its potential.
We have the people, the skills, the ideas, the research, the infrastructure, the companies, the history and the critical mass to take the next steps and make Australia a key niche player in the global medicines industry.
I strongly believe that can develop this great industry even further into one of the central high-tech industries to help set up a post mining-boom future in Australia.
The cost of medicines to the community
There has been a lot of debate recently on the cost of medicines to the community. Discussion has focussed both on what the Government spends on subsidising prescription medicines through the Pharmaceutical Benefits Scheme and on what individuals are spending on their medicines.
In terms of what the Government spends through the PBS, we’ve seen various comments from Ministers over many years expressing concern about the growth in government spending. Most recently we’ve seen the current Australian Government indefinitely deferring the listing of some new medicines on the PBS.
Meanwhile, a recent study has shown that, amongst other things, that consumers in Australia today are paying an average of $134 a year on prescription medicines compared with $16 in 1971.
So, Australian governments and patients have been spending more on prescription medicines over the last 40 years. But what’s forgotten in all of this is that the benefits of medicines have also grown enormously over that time.
It’s hardly surprising that more is spent on medicines today compared with 40 years ago if there are many more medicines available today to treat many more diseases than there were back then.
Forty years ago there were no statins to reduce cholesterol, no antivirals to treat HIV, and no medicines for multiple sclerosis. There was nowhere near the number or types of effective treatments for arthritis, asthma, mental health or cancer that there are today.
Forty years ago half of the PBS consisted of painkillers and antibiotics. Today, the medicines that governments and patients pay for through the PBS treat a raft of illnesses for which there were simply no treatments in 1971.
While patients and governments are spending more on medicines today than 40 years ago, they are getting more benefit from this spending.
The same study actually also showed that by international standards, Australians are not paying a large share of their income on prescription medicines. While Australians pay 0.43 per cent of their income on medicines, this is about the mid-range across industrialized countries. In other countries like France, Canada and the United States people spend more of their income on medicines than Australians do.
There is no doubt that how we afford to pay for medicines is an important issue – both for government and for individuals.
But we risk not seeing the wood for the trees if we don’t also take into account of the benefits of spending on medicines.
Forty years of benefit to the community from technological development in medicine is not something to sweep under the carpet.
Growth of Asian economies and opportunities for Australia
The growing economic dominance of ‘emerging’ markets in the global economy is being reflected in the medicines industry, both internationally and in Australia.
Internationally, pharmaceutical companies are restructuring their operations to focus on the growth of markets in Asia, Latin America, Eastern Europe and the Middle East.
The share of high-growth emerging economies in the global medicines market, such as China, India, Brazil and Russia, is expected to increase from 12 per cent in 2005 to 28 per cent by 2015.
As incomes and middle classes grow in these countries, they are demanding access to effective prescription medicines, as well as developing their own industrial capability to research and manufacture them.
China, for example, is rapidly expanding both in supplying and demanding quality prescription medicines, while India is one of the largest suppliers of generic medicines to the United States.
The impact of these changes is being felt in Australia as well, as the influence of the growth of Asian economies to our north takes hold. As with many Australian industries, the growth in Asia presents both challenges and opportunities for the medicines industry.
In recent years, several Australian pharmaceutical companies have lost manufacturing production to countries like China, Singapore and Indonesia, while the potential for new competitors from the Asian region in the Australian market is possible.
Competition from Asian markets is also putting Australia under pressure as a location for clinical trials for new medicines, although recent initiatives by the Australian Government should help retain such trials here.
Growth in Asia is also presenting opportunities. AstraZeneca has kept open its manufacturing operation in North Ryde, Sydney, by winning new contracts to supply the growing Chinese market with respiratory medicines.
Already around 40 per cent of Australia’s medicines exports go to Asian markets. Other Australian-based companies are also supplying research, advisory and regulatory services to their Asian-based affiliates.
Recently Astellas became the first Japanese pharmaceutical company to open offices in Australia. Astellas has already been partnering with Australian researchers to develop new medicines in areas such as cancer treatment, and as part of its Asian expansion strategy the company has now decided to invest in its own offices in Sydney.
Such changes show how shifts in the balance of global economic activity influence the Australian medicines industry.
The extent to which the Australian industry can further capitalise on the opportunities and manage the challenges of growing emerging markets will depend on several factors. These include the competitiveness of Australian operations, the skills and capabilities of the people working in the Australian medicines industry, investment decisions made by globally-oriented businesses, and the degree of support and predictability provided by the government policy environment in Australia.
Dip in pharmaceutical exports
The news that Australia’s pharmaceutical exports have started to fall is disappointing, but not completely unexpected.
After growing over a number of years to around $4 billion since September 2007, Australia’s annual pharmaceutical exports have stabilised around that level. They have seen little growth since that time and most recently have recorded their first fall below $4 billion since May 2009.
If this trend were to continue it would confirm a warning Medicines Australia made several years ago about the fragility of Australia’s pharmaceutical export performance. The pharmaceutical export success Australia enjoys today has been built on investments made over the previous 20 years under the impetus of various industry incentive programs.
The $4 billion in annual export earnings is based on a handful of manufacturing plants that are facing increasing competition from alternative sites in other parts of the world.
Medicines Australia warned in 2001 that the closure of a couple of these plants could jeopardise Australia’s export success. Several recent announcements of plant closures in the industry combined with the high Australian dollar and challenging domestic policy environment have made it more difficult for Australian pharmaceutical manufacturers to maintain their presence here.
The Australian medicines industry has a great track record of building its export base to the point that today it is the leading high-technology manufactured exporter. Australia earns more in exports of medicines than it does from cars or wine. The long-term challenge for the future is to build on this success to secure future export growth for the industry and prosperity for Australia.
Page updated: April 2012