Pharmaceutical Benefits Scheme
When I was a kid one of my heroes was Dr Who. Here was an intelligent, slightly nerdy non-hero with poor dress sense outwitting Daleks and travelling through time and space in his TARDIS.
I was reminded of Dr Who when the debate about the Pharmaceutical Benefits Scheme and the recent Grattan Institute report unfolded because it felt like I had just stepped out of the TARDIS and been caught in a rift in the time-space continuum.
That’s because many of the issues raised by the Grattan Institute were considered long ago by both sides of politics and rejected for good reason and because the report largely ignored what has happened in the debate about Australia’s medicines policy over the last 10 years.
The report, and subsequent commentary, had many, many intellectual flaws and factual errors – too many to go into here.
But there are a few of things in the report, and the shrill cacophony that followed it, which struck me particularly because they reflected a complete lack of understanding of what the issues are and the policies that have been put in place to solve them.
The most obvious flaw is that the report appeared largely oblivious to the policies the Howard, Rudd and Gillard Governments had already initiated over the last seven years to bring transparency and market competition to the generics market and ensure that taxpayers and consumers benefited from that competition.
Here are the facts. Since 2006 these policies have meant about 1,400 brands of over 100 off-patent medicines have taken price cuts of up to 83 per cent bringing savings to government and lower prices to consumers.
For example, in April last year the prices of 75 different medicines fell substantially. Many took price cuts in the range 30 to 60 per cent. The highest price cut in April last year was 83 per cent, while consumers saw major price reductions that went to their hip pockets of up to $15 per packet. These price reductions were heralded by consumer groups at the time as an example of good policy making. Further significant price reductions occurred in August and December last year. Last year the Government saved at least $1.2 billion on generic medicines.
Next month another 62 medicines will take a range price cuts, with the highest being 87 per cent for pacilitaxel, a chemotherapy medicine.
Various economic reports commissioned by the medicines industry, pharmacy and the Government over the last five years all show that these policies will save current and future governments up to $7.4 billion while allowing Australians to gain access to the wave of new medicines in the future.
The policies introduced by both sides of politics have achieved major price reductions for medicines. Anyone can go online and find the lists of medicines that treat conditions such as cholesterol, cancer, high blood pressure and depression and see that they have taken price cuts in the order of 60, 70 and 80 per cent. These cuts are real. They have happened.
And more are on the way.
These market-based policies to drive down the price of off-patent medicines were supported by the bulk of the medicines industry. The majority of the industry agreed some years ago that while Australia had some of the lowest prices in the developed world for new medicines, the price Australia paid for generics was too high. In fact, Medicines Australia and its member companies supported policies to make a more competitively priced generics market over the years, despite its members bearing a sizeable chunk of the loss of revenue resulting from those policies.
Why? Because the key issue in Australia’s medicines policy in coming decades will be to ensure that the PBS can cope with a swathe of patent expiries, an ageing population, and a range of expensive new medicines and vaccines that will improve the way Australians are treated for disease. The industry, through Medicines Australia, has worked with governments, pharmacy, doctors and patients over the years to ensure that Australians could have access to a range of competitively-priced generic medicines, whilst ensuring viable supply of those medicines, and giving Australians access to the new therapies in the industry’s innovative pipeline.
And while the Grattan Institute report focused on spending less on generic medicines, the real issue for the future is actually ensuring that new medicines and vaccines can get listed on the PBS and National Immunisation Program in a timely manner. It is becoming increasingly clear to the Australian medicines industry that getting new medicines to Australians on the PBS is becoming more difficult. In recent years we have seen the Government defer the listing of new medicines, the approval rates at the Government’s expert evaluation committee fall, the Government adopting aggressive cost-cutting for new medicines and a new type of post-Cabinet review process for new listings. This is more of an issue for the future of the PBS than what’s happening in pricing in the off patent market.
Another glaring error in the report is its championing of the New Zealand system of funding medicines. Suffice to say New Zealand’s funding system is a basket case. While the Grattan Institute celebrates the zero growth in medicines spending in New Zealand, it ignores the problems that the system brings with it. For example, New Zealanders have to wait three years longer than Australians to access new therapies and many medicines that Australians take for granted are simply not available across the Tasman.
New Zealand has the worst consumer access to medicines in the developed world, provides no consumer choice, and has higher death rates from heart attack than Australia because cholesterol medicines have been delayed. Patients are sometimes forced to switch multiple times between different molecules and brands for cost-cutting reasons rather than good clinical practice.
In New Zealand there is a greater risk of medicine shortages, and government medicines agency that has been criticised by local doctors and consumer groups for its lack of transparency and accountability. Small wonder the medicines industry has exited the New Zealand market.
Obviously New Zealand has a different system and can make its own choice about how it provides for its citizens, but I’m reasonably confident Australians wouldn’t put up with this sort of thing.
The policy Australia has today, developed out of constructive dialogue between the stakeholders in the system, is designed to achieve savings in the off-patent market to provide governments with the financial headroom to list new medicines and vaccines in the future.
While policy can and should be debated, that debate should be guided by what is actually happening today.
Dr Who wouldn’t have wanted it any other way.
Measles and Rubella Initiative
Measles vaccination saves kids’ lives. It really is as simple as that. Vaccinating kids against measles stops them from dying. Sometimes in the world of medicine there are new treatments for disease that have complex interactions, or a medicine may demonstrate a benefit but the evidence is still being collated. In new areas of disease or with radically new treatments it can sometimes take time before the full benefits of a treatment become clear.
That’s simply not the case when it comes to vaccinating kids against the measles. And to prove it, the World Health Organisation recently released new data showing the global impact of widespread childhood immunisation against measles.
Put simply, almost 400,000 people each year around the world who would otherwise have died from measles- many of them children – no longer do. According to the WHO, between 2000 and 2011 the number of annual global deaths from measles fell from 542,000 to 158,000. Or looking at it another way, back at the beginning of the 21st century over half a million people each year died from measles. Today it is less than a third of that. It is a significant achievement.
The reason for this is quite simply that there are a lot more people being immunised against measles than there were in 2000. For a number of years the WHO has been rolling out a comprehensive plan to immunise millions of children around the world for measles. And it has worked. In developing countries around the world governments, the WHO, UNICEF and organisations the Bill and Melinda Gates Foundation are working to boost immunisation rates through the Measles and Rubella Initiative to prevent kids getting measles. The new data from the WHO shows that vaccination works, saving millions of lives in developing countries.
Ironic, then, that at the same time in Australia there are still pockets in the community who are opposed to vaccinating their children against measles. We’ve seen covert pressure groups spreading biased information, a dodgy claim about side effects that has been comprehensively repudiated by the international medical community still being quoted, and most recently a children’s book written that, almost unbelievably, extols the virtues of kids getting measles.
The new data from the WHO shows up all of this nonsense. The almost 400,000 people each year who no longer die from measles, many of them children, as a direct result of improved worldwide use of measles vaccines just fly in the face of the arguments of those who want their kids to get measles. It is paradoxical that while in many of the world’s poorest countries there is an ongoing effort to ensure all kids are immunised to stop child deaths from measles, we have people in this country who are seemingly happy to choose exposing their kids to measles ahead of a vaccine to prevent it.
So while I can understand some parents’ concerns about vaccines, the side effects are few and far between and, when compared to the death rates and other complications from catching measles, there is just no comparison. This is why the Australian Government, the Australian Medical Association, the World Health Organisation and a host of other Australian and international public health organisations advocate for parents to vaccinate their kids against measles.
Vaccination for measles works in preventing childhood deaths. If it’s good enough for developing countries, then it is good enough for Australians.
For more information on the WHO’s new figures, you can find their media release here: http://www.who.int/mediacentre/news/notes/2013/measles_20130117/en/index.html.
You can find out more about the Measles and Rubella Initiative, a joint WHO, UNICEF, Red Cross joint project here: http://www.measlesrubellainitiative.org/portal/site/mi/menuitem.d6e080882e034463c1062b10133f78a0/?vgnextoid=36e00528ce421210VgnVCM10000030f3870aRCRD&vgnextfmt=default.
Global funding for R&D increases despite GFC
A new international report funded by the Bill and Melinda Gates Foundation has shown that global funding in 2011 for research and development in neglected diseases was $3.05 billion.
The latest G-FINDER survey , reporting on global investment into new medicines and vaccines for neglected diseases, showed that year-on-year funding was almost half a billion dollars greater than in 2007, despite the impact of the global financial crisis.
It reports that the global medicines industry is increasing its research effort into neglected diseases at a faster rate than contributions from other sectors like governments and not-for-profit groups. Investment by the global medicines industry increased by almost $200 million since 2008 as rates of both public and philanthropic funding had decreased overall since 2007.
I’m very encouraged that the role of the global industry in tackling neglected diseases is being acknowledged by organisations such as the Gates Foundation.
The evidence in this new report points to an ongoing concerted drive to eliminate or control some of the most terrible diseases afflicting the developing world, and the medicines industry is central to that effort.
The G-FINDER report shows that between 2007 and 2011, funding shifted away from the so-called “top tier” diseases such as HIV/AIDS, malaria and tuberculosis, to diseases such as dengue, diarrhoeal diseases, bacterial pneumonia and meningitis, and salmonella infections.
The Medicines Industry
I was in Geneva recently attending meetings at the International Federation of Pharmaceutical Manufacturers and Associations. The IFPMA is the organisation that represents the global research-based medicines industry.
I was fortunate to hear John Lechleiter, IFPMA president and global CEO of Eli Lilly, speak about the impact that medical innovation has had on lives worldwide. He talked about how medical advances in the last century, including in medicine development, have transformed basic expectations of human life that have prevailed since the dawn of civilisation. Some of the points he made included that:
- Around the world, life expectancy has on average increased more than 50 per cent in less than a century, with developing countries showing the most rapid gains. A child born in 1955 could expect to live only 48 years; by 2025 world-wide life expectancy is expected to rise to 73 years.
- An analysis undertaken by Columbia University found that launches of new medicines accounted for 40 per cent of the increase in life expectancy during the 1980s and 1990s in 52 countries – that is five months for every additional year.
- In the last century scientists have discovered and developed 19 distinct antibiotics that have saved more than 200 million lives.
- In the past decade alone, vaccines for measles, polio, and diphtheria, pertussis and tetanus, have saved the lives of an estimated 2.5 million children under the age of five each year.
The medicines industry is continuing to strive for new medicines to tackle complex and tenacious health issues with a large number of medicines currently under development including nearly 900 potential medicines for cancer, more than 200 for cardiovascular disorders, and around 200 for diabetes, 80 for HIV/AIDS and 300 for rare diseases.
Listening to John Lechleiter talk gave me the chance to reflect on the hugely positive contribution that our industry has made and continues to make to lives around the world. If you would like to see the speech, it is available for viewing here I highly recommend it.
An ageing population that are becoming well-educated on Healthcare Issues
I had an interesting discussion with some colleagues at an industry conference recently, about an ageing population that is becoming increasingly well-educated on healthcare issues.
These are people who are taking control of their own health by improving their health literacy. Trends show that ageing Australians are internet savvy and are increasingly doing their own research on health issues on the internet, talking regularly to their doctor and exercising more control over their health than probably any other previous generation.
Bernard Salt, the famous Australian demographer, has written extensively on what he calls the ‘Big Tilt’ that is now starting to happen as the Baby Boomer generation start retiring in droves.
One of the consequences of this he has identified is that the Baby Boomers will be well educated, wealthy, informed, internet-savvy, demanding key services, and politically active.
This is the generation that grew up burning their bras for women’s rights, inventing the concept of ‘free love’ and marching in the streets protesting against the Vietnam War.
And they’re all now retiring, with money, knowledge, influence and votes, outnumbering all other generations, and they want to make sure they get access to all the medical and health treatments as they head into old age.
Stand back, I say.
This generation is going to want access to all the latest treatments, but also be more discerning, more demanding of influence and information, and demanding more scrutiny in the future.
That’s going to present opportunities and challenges for medicines companies as public demand for healthcare dramatically expands.
Medicines industry tops $4bn in exports
New data published by the Australian Bureau of Statistics shows that The Australian Medicines Industry earned more in exports than any other hi-tech manufacturing sector in 2011-12.
The ABS figures show that the medicines industry exported more than $4 billion worth of medicines for the year – nearly $300 million more than the previous year.
At a time when many local manufacturing industries are under enormous pressure from a high Australian dollar and weak global economic conditions, I think it’s a result that speaks volumes for the fact that the Australian Medicines Industry continues to contribute to economic growth.
While the majority of other manufacturers were losing ground last year, medicines industry exports actually grew by 7 per cent. Just as a comparison, The Australian Medicines Industry’s exports were double those of the wine industry and a staggering $1.3 billion more than the car industry.
Those exports are manufactured all over Australia, by Australian employees who supply countries all over the world. GlaxoSmithKline Australia, for example, recently improved capacity at its Melbourne manufacturing plant to supply markets in Asia. The company is also a major global supplier for influenza medicines.
AstraZeneca Australia has an agreement to supply the Chinese market with asthma medicines manufactured at its plant in Sydney.
Leo Pharma exports active ingredients for skin conditions manufactured at its facility on the Gold Coast.
IDT Limited, an Australian-owned company based in Melbourne, exports active ingredients for cancer medicines to companies all over the world.
And Australia supplies a quarter of all poppies required to make medicinal opiates, largely sourced from Tasmania.
These are stories worth celebrating. The Australian Medicines Industry is a high-skill, high-wage, science-based, innovative, low carbon footprint industry, an equal opportunity employer and a huge export earner. All of that amounts to a fairly important contribution to our nation’s economy.
Sporting heroes are role models for us all. So I was alarmed by news reports this week of prescription pill popping by elite athletes and claims that adverse effects from medicines cost us gold at the Olympics. It seems to me that a knee-jerk reaction by sports administrators calling for a ban on the use of some sedatives by athletes at competitions somewhat misses the point.
Insomnia is a significant medical condition that impacts the lives of many Australians who suffer it every day.
Fortunately here in Australia there are several treatment options for the management of insomnia. Doctors are best placed to advise their patients and discuss appropriate treatment options, which could include medicines with established efficacy and safety profiles for the short-term treatment of insomnia. Such medicines are backed by clinical studies and real world experience over many years in Australia and internationally.
However, the instruction ‘medicines should only be taken as directed’ means what it says.
Prescription medicines are not lollies, and should never be used to counteract the effects of highly caffeinated ‘energy drinks’ and should never be combined with alcohol. Critically, if any unexpected side-effects are experienced, patients are strongly advised to consult their doctor at the earliest opportunity. Elite athletes, more than the rest of us, are trained to treat their bodies as a temple, listen closely to their bodies and report any subtle changes that could affect their performance to their coaching and medical team. To disregard such signals after use of a prescription medicine on one occasion is a mistake. To continue to do so is downright dangerous.
Recently we’ve seen sportspeople champion Respect (for other athletes). This should include respecting the appropriate use of medicines. You can check out Medicines Australia’s publication Quality Use of Medicines and the medicines industry [LINK]. http://medicinesaustralia.com.au/files/2012/05/MA_QUM_External_Reduced.pdf
At the end of the day athletes, like the general public, should always follow the advice and instructions of their doctors.
We often hear talk about technological development and innovation in medicine and treat them as throw away lines, without thinking about the different ways this occurs. Like in many industries, the way that new medicines are discovered and developed can vary, yet each has a valid role to play in driving innovation, improving human health and progressing society.
One way new medical technologies are discovered is through breakthrough treatments. These are relatively radical inventions or game-changing treatments in areas where technological development has provided treatment options in areas where previously none existed.
An early example is penicillin which was introduced in 1940. It was the first antibiotic and radically changed the treatment of infection, meaning that a whole range of previously potentially life-threatening infections could be treated with a simple medicine.
There are other more recent examples like treatments for HIV/AIDS. Thirty years ago there were no treatments for AIDS whereas today there are many treatment options that have radically and dramatically improved survival rates for people with HIV/AIDS.
Vaccines for diseases like cervical cancer are providing new prevention treatments that simply didn’t exist a few years ago. Similarly in treating leukaemia there have been some major technological breakthroughs in recent years that are now benefitting leukaemia patients. These are examples of game-changing technologies that have been breakthroughs.
Then there is what’s called incremental innovation, where technological improvements that benefit society are achieved not by a radical breakthrough, but through gradual, progressive improvements over many years as we learn more about diseases and the technologies that treat them.
A classic example is medicine to treat cancer. Often, new cancer treatments individually extend a person’s life by a number of months and often there are debates about whether the high cost to society of an individual cancer medicine is worth the extra few months of life that treatment provides.
But what’s been happening here has been a process of gradual, incremental innovation. We know that individually many new cancer medicines have incrementally added benefit by extending a cancer patient’s life by a matter of weeks or months. But as each individual cancer medicine has been an incremental step forward in treatment, collectively the development in technology has extended the life expectancy for cancer patients.
Between 1988 and 2000 for example, the average life expectancy for cancer patients increased by around four years, largely due to the availability of new treatments, with substantial social and productivity benefits. For more on this, see: http://www.mendeley.com/research/economic-evaluation-war-cancer-1/).
Incremental innovation like this is still vital for technological development and human health, the four-year improvement in cancer patients’ life expectancy shows this, even though such innovation is often dismissed or criticised as being a waste of time and resources.
It’s sometimes asserted that such innovation is designed to prolong a treatment after everything that needs to be discovered has been discovered. And yet, in most industries this cycle of innovation – an initial breakthrough development followed by gradual innovative improvement is quite normal. It’s just a part of business and an important part of ongoing technological development.
There are many examples in other industries where this cycle is normal and valued by everyone. The original Boeing 747 started service in 1969 – the year I was born – but over the subsequent 43 years it has undergone progressive incremental improvement. Similarly the Dyson vacuum cleaner with its bagless cyclone technology was a major breakthrough in vacuum cleaners and has subsequently been improved on over the years since it was introduced on the market in 1991. Even the iPad can be considered a breakthrough technology in terms of how it changed the way personal electronic devices and tablets are used, while it too has subsequently been refined and improved in increments. Not many people doubt that these subsequent incremental improvements in technology were worthwhile and the same must be said of technological development in medicines.
Another area of medical innovation is where quite old existing treatments are found to have new benefits. While some medicines have been around for years and are used for one or more accepted treatments, there are occasions when scientists discover new uses for those medicines.
A classic is aspirin, which has been used for over 100 years to treat headaches and pain, has also been used in the last 30 years to prevent heart attacks and strokes, and has more recently has been suggested as a way to treat skin cancer http://www.news.com.au/technology/sci-tech/taking-painkillers-lowers-risk-of-skin-cancer-by-15-per-cent-says-study/story-fn5fsgyc-1226373435138
Chance or serendipity can also play a role in discovering effective uses for medicines. One treatment for erectile dysfunction was discovered by chance. During its initial clinical trials as a treatment for angina it didn’t prove effective enough, but an unanticipated side effect was that it did treat erectile dysfunction.
So the process of how new medicines gets developed can vary widely and that’s a good thing. Having different types of innovation driving the development of new treatments has provided great benefits to humanity over many years. You can read more about how innovation in medicines occurs at the Australian Medicines Industry website: http://www.ausmedindustry.com.au/explore-how-we-work/making-medicines/
CEO Sleepout (3)
Well, I did St Vincent de Paul CEO Sleepout for another year. It wasn’t the temperature of Canberra’s weather that was the problem, but the wind and rain. The wind gusted up to 50km/h during the night in Canberra and it started raining early in the morning.
It turns out so far collectively the chief executives of Australia have raised over $4.75 million for Australia’s homeless people. A great job, but more would be good.
I learnt a few things along the way. One thing is that homelessness often doesn’t just exist by itself. Typically if you look below the surface you’ll see the reasons for it can include drug addiction, domestic violence, economic misfortune, mental illness, etc. There are over 100,000 homeless people in Australia.
I managed to survive the sleepout, despite the rain starting at 3am. I also learnt a tip for the unwary: don’t build a cardboard shelter in a drain. I went to sleep around 11pm and was woken at 3.30am when my cardboard shelter started flooding from the rain running into the drain next to my bed. I was lying in puddles of water which my sleeping bag was kindly absorbing before transferring the water to me. The rain kept coming and then my shelter collapsed from the weight of the water. It was then I finally retreated to the safety of a nearby underground carpark with numerous other CEOs.
I was, however, lucky because at the end of the night I could jump in my car, drive to my warm house, have a warm shower and have a nice breakfast with my kids in the morning. As I learned, there are many thousands of homeless people around Australia who don’t have that luxury and have to sleep every night outdoors even if it is cold, wet and windy like last night.
So if you are interested, I am still keen to raise more money and am looking for sponsors. You can sponsor me at: http://www.ceosleepout.org.au/ceos/act-ceos/profile/?ceo=2035
Medicines industry champion recognised in Queen’s Birthday Honours list
It was a great weekend for the Australian medicines industry, with the news that one of our greatest and longest-serving champions and advocates, Will Delaat, has received an AM in the Queen’s Birthday Honours List.
A cursory glance at Will’s biography reveals just how richly deserved this gong is. His record in the industry is a litany of achievement, a colossal contribution to the industry that has spanned five decades.
Will spent more than a quarter of a century at Merck Sharpe & Dohme Australia, the last 11 years as managing director, and sat on the board of Medicines Australia from 1998 more or less until his retirement last year. For seven of those years he was chairman, and it was in that role that he showed to me his boundless passion for the Australian medicines industry and steely determination to shape a policy environment in which it could flourish.
In particular, Will was a champion for National Medicines Policy, for increasing rates of organ donation, and for ensuring access to medicines for all Australians.
He led the industry through major reforms of the Pharmaceutical Benefits Scheme, including the negotiation of the historic Memorandum of Understanding between Medicines Australia and the Australian Government that have resulted in a sustainable, well-managed PBS with low expenditure growth.
Over many years, Will has been instrumental in driving numerous significant policy changes that have improved the commercial environment for the innovative medicines industry in Australia, and ultimately delivered better access to medicines for all Australians.
Small wonder, then, that his leadership and vision for the Australian medicines industry is so well recognised by those in industry, government, the health sector and the wider community.
In 2009 Will was presented with the Pat Clear Award, the Australian medicines industry’s top honour. At the Medicines Australia Parliamentary Dinner earlier this year he was personally acknowledged by the Prime Minister, who presented him with a special token of achievement. How entirely fitting, then, that Will completes a distinguished trifecta with an AM for service to the pharmaceutical industry through roles with professional organisations, to the development of medicines policy and reform, and to the community.
CEO Sleepout (2)
It was the dog that saw him first.
Just this morning my dog and I were going for an early morning, pre-dawn run along a bike path in the suburbs of Canberra. It was dark and cold and we were just running into an underpass under a street when suddenly my dog veered to one side in surprise. For a second or two I couldn’t work out what he had seen until I saw a guy just by the side of the path propped up against the wall of the underpass. He was sitting on a few milk crates, with a blanket and a couple of rubbish bags full of clothes. He was sleeping against the wall and we had clearly disturbed him as we had run past.
The guy was quite clearly homeless, having spent the night sleeping on his milk crates by the underpass. For a moment I was fearful, partly because you’re not used to seeing a homeless person suddenly appear in the gloom, especially in the leafy suburbs of Canberra. When I ran past the same spot about half an hour later he had gone and taken his few possessions with him.
As I continued running, it dawned on me that I had actually seen several homeless people in Canberra while doing my regular running circuit around our area in Canberra over the years. There was the guy a few years back who, for about two weeks, every morning I’d run past his old car parked in the reserve under some trees. Sometimes he would be asleep in the back of his car with a blanket pulled over his head. Other times he would be getting ready to drive to wherever he went during the day. Then there was the other guy who I ran past one morning while running through a tunnel at 6am. He had a little fire he’d lit on the floor of the tunnel in an effort to keep warm in Canberra’s winter and we exchanged a brief “G’day” I ran on, only realising a little later that he’d obviously spent the night in the tunnel.
It was a timely and stark reminder of why I am doing the CEO Sleepout this year. In my relatively quiet morning run over the last few years I had come across three homeless people. Last time I did the Sleepout a couple of years ago, there were about 100 CEOs sleeping out in Canberra. Ironically, St Vincent de Paul estimate that on any one night, there are about 100 people sleeping out in Canberra. That basically meant that there was one homeless person in Canberra for every CEO sleeping out. It was quite instructive.
Amazingly, according to the last Census, in Australia there are about 105,000 people counted as homeless – that’s enough people fill the Melbourne Cricket Ground to capacity with a few thousand left over. On any one night, there are over 50,000 people sleeping on the street – almost enough to fill Etihad Stadium in Melbourne. According to the Australian Institute of Health and Welfare, 54 per cent of homeless people seeking supported accommodation are turned away.
So if you’re inclined and you haven’t already, have a think about sponsoring me on the Sleepout:
CEO Sleepout (1)
So, I have decided to undertake the 2012 CEO Sleepout.
The CEO Sleepout is organised by St Vincent de Paul to raise money for and awareness of homelessness in Australia. It is a great cause and is a good way for leaders in the corporate, government and community sectors to give something back to society. This year’s CEO Sleepout will be held around Australia on the night of 21 June.
Essentially, the activity is as the title suggests: chief executives and other community leaders spend a night sleeping outdoors on the ground and are sponsored by their peers, colleagues and the broader community for doing so. Typically there are hundreds of CEOs sleeping out in cities around Australia.
I decided to do this year’s CEO Sleepout with some degree of trepidation. This is largely because I will be doing the Sleepout in Canberra, as I did a couple of years ago. I have spoken with a number of my colleagues from the medicines industry who are doing the Sleepout this year in Sydney, for example. There are a number of chief executives from companies in Australia’s medicines industry who will be taking part, and for that I am especially pleased.
However, it has to be said that unless you’re doing the CEO Sleepout in Canberra you are, basically, well ….. soft. Lacking the same commitment and fortitude as those of us brave souls who will be sleeping outdoors at night in Canberra in late June. Not really, fair dinkum. Really only doing it mildly. Taking the easy option. Gutless.
Already I can hear the incredulous questions of ‘Why?’ rising from the much larger coastal cities of Brisbane, Sydney, Melbourne, Perth, etc.
Well, here’s a few statistics to help support my case that doing the CEO Sleepout in Canberra is actually a much more of a noble cause than my colleagues in Sydney:
- The average minimum temperature in Canberra in June is 0.7 degrees, compared with a much gentler 9.3 degrees in Sydney.
- The same average for July in Canberra is -0.7, compared with a positively balmy 8.0 degrees in Sydney.
- The lowest recorded minimum temperature ever in Canberra was -10.0 degrees compared with a positively tropical 2.1 degrees in Sydney.
So, suffice to say, the prospect of sleeping outdoors in Canberra on the night of 21June carries with it the very real possibility that Yours Truly may well freeze my proverbial off unless I am well prepared and undergo extensive training.
I hope to do some serious planning and training over the next few weeks in the lead up to CEO Sleepout and will endeavour to keep interested readers abreast of my progress on this blog.
If you are interested in sponsoring my participation in this year’s CEO Sleepout, you can find my public fundraising webpage at http://www.ceosleepout.org.au/ceos/act-ceos/profile/?ceo=2035
Alternatively, you can just go straight to the CEO Sleepout homepage at http://www.ceosleepout.org.au/
If you are at all interested in sponsoring someone for the CEO Sleepout, I would encourage you to pick me!
As well as helping homeless people around Australia, you will also help provide some comfort to me as I am lying on the ground on the night of 21 June in the dead of Canberra’s winter.
You can also follow me on Twitter at @shaw_brendan where I’ll try to make some insightful, witty comments as I go …. fingers crossed.
Stay tuned for more.
How to Make a Competitive Nation
Professor Stephane Garelli from the IMD’s World Competitiveness Centre in Switzerland has released a great short online video that lasts a little over three minutes.
In it he succinctly summarises his thoughts on How to Make a Competitive Nation, something that is very topical in Australia at the moment given the debate about the future of Australia’s economy and both the Government and Opposition looking at how to encourage high technology innovative industries inthis country.
Based on his years of research into international competitiveness at the IMD, Professor Garelli highlights five things that nations need to do to be competitive:
- Rules on public finance – have good rules and constraints on public finance to enforce balanced budget finance
- Make things – a country has to make things and have industries that produce productive goods and services
- Export – countries that succeed are ones that export and earn income
- Diversify your economy – the very competitive nations in the world are very diversified, like Switzerland, Sweden and Denmark
- Develop medium sized enterprises – many countries have large companies at the top and lots of small companies at the bottom, but developing medium sized companies develops depth in the corporate sector.
For Australia, this video, by an international expert, points to a few strategies policy makers and politicians could look at to help ensure Australia maintains its current economic position and consolidates its competitiveness for the long-term future if and when the resources boom ends.
While Australia stacks up pretty well internationally, on some of these measures Australia arguably could improve, in areas such as diversifying our economy and improving the environment for growing small enterprises into medium sized companies.
As I’ve said previously, Australia’s medicines industry can actually help in this task in diversifying our economy. We already export almost $4 billion a year in medicines to countries around the world, more than the car and wine industries, and we are an industry that makes things here in Australia, be it vaccines, medicinal opiates, influenza medicines, ingredients for cancer medicines or asthma medicines.
But we can do more. We have the potential to do as countries like Switzerland have done, and use the medicines industry to diversify our economy into more high technology products and services and build our innovation and export base. What we need is a strategy to develop Australia’s innovative industrial sector and have the medicines industry feature as a key part of that.
New medicines for neglected diseases in developing countries
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.
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: May 2013