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Pharma in the Dock Again

Happy New Year

Despite evidence of the pharma industry’s R&D pipeline continuing to generate a stream of breakthrough new medicines for unmet medical needs, its reputation appears to have reached a new low.

Pharma’s reputation has sunk to “new low”, according to a recent Gallup poll. The pharmaceutical industry came bottom of a Gallop US poll covering all the main business sectors. Pharma fell even below the federal government and the tobacco industry. Among those questioned, 58% had a “totally negative” view of the pharmaceutical industry. The main issue is drug pricing – widely perceived as price and profit gouging – and this has been aggravated in the US by the opioid crisis. The healthcare sector fared little better, coming third last.

Surveys in other countries echo the Gallup findings. In the UK, Portland Communications’ Total Value Index Framework ranks the pharmaceutical industry as the least successful business sector in demonstrating its value to society as a producer of goods and services, despite coming in the top three for actual value as opposed to perceived value.

Pharmaceuticals and healthcare have emerged as a major issue in the run-up to the UK general election. The pricing debate has been fuelled by a long, drawn out and very public battle between the UK NHS and Vertex over pricing of the company’s cystic fibrosis drug Orkambi, a dispute that portrayed the industry in a very poor light. It has now been resolved by negotiation and compromise between the company and NHS England, but the damage has been done and a bad press over this has obscured more successful pricing negotiations on other major breakthrough products.

A few instances of bad publicity are undermining the reputation of an industry that is now producing game-changing cancer treatments – for example, tumour agnostic drugs such as Roche’s Rozlytrek (entrectinib), Bayer’s Vitrakvi (larotrectinib) and Merck & Co’s Keytruda (pembrolizumab), and CAR-T cell therapies such as Novartis’ Kymriah (tisagenlecleucel). Also, pushing of ‘me too’ drugs is a thing of the past and there is now a much clearer distinction between the provision of breakthrough medicines and the sale of ‘me toos’ at very low prices, with the latter helping to offset the cost to payers of innovative new products. Even in the case of follow-on biologicals/biosimilars, the research-based industry has accepted that prices must drop in a crowded and competitive marketplace.

Given trends such as these, why is the research-based industry’s reputation so frequently trashed?


One of the main problems is widespread ignorance on the part of the public, patients, politicians, and even healthcare professionals about the pricing/reimbursement process and how companies must negotiate with payers to provide their products at considerable discounts before they can be prescribed. As I mentioned in my last column, perhaps the time has come for industry to be much more open about this, and to look again at how medicines are priced and at price transparency before they are forced by payers to do so.

Ignorance about how the pharma marketplace functions is another issue – exemplified by UK Opposition leader Jeremy Corbyn saying that a Labour government would force drug firms to provide affordable medicines for the NHS by using compulsory licensing to ensure that generic versions of patented medicines are made available at a lower cost to the health service, and would set up a state company to market these products.

More positively for industry, Lord Darzi, a highly respected academic surgeon and former Labour Health Minister, has been quick to challenge Mr Corbyn. In an article in The Times newspaper, he attributes the history of drug innovation from the discovery of penicillin to monoclonal antibodies to a “robust alliance between world-leading scientists in our great universities and a vigorous pharmaceutical industry”. Forcing pharmaceutical companies to surrender their intellectual property … would discourage them from launching new medicines and slow the research pipeline, curbing the flow of innovative drugs, and even increasing the price of medicines as companies first in the field with a new drugs would have to factor in the potential additional risk of compulsory licensing, Lord Darzi argues.

He also points out how the NHS is protected from rising drug prices by a 2% cap on what it spends on brand medicines. I wonder how many of industry’s critics are aware of that cap.

Companies and industry associations need to enter the debate with arguments like these, rather than simply repeating the R&D costs narrative – especially as it appears impossible to put an accurate figure on these costs, and in any case it may lead to tricky comparisons with sales and marketing expenditure.

Champions needed

While champions like Lord Darzi will be welcome, industry needs more of its own champions to speak out. It was encouraging to see Merck & Co’s CEO Kenneth Frazier, in an interview with Yahoo Finance, accepting that criticism over pricing and opioids is having a negative impact on the industry and conceding that some of the proposals in the US to reduce pharmaceutical prices are legitimate (although others would harm innovation). At the same time, as well as pointing out how the company’s Keytruda reduces the risk of dying from untreated non-small cell lung cancer by 50%, he highlights Merck’s work in the developing world, noting the Ebola vaccine and how the company’s genetically engineered hepatitis vaccine is being provided free of charge in China. Pharma company contributions to health in the developing world often go unnoticed.

Access to Medicine Foundation

In this respect, I wonder how many people are aware of the Access to Medicine Foundation in Amsterdam*, which tracks what pharma firms are doing to promote access to medicines in low- and middle-income countries. It recently reported that, compared with 10 years ago, pharma firms are taking seriously the problems people in these countries face when accessing healthcare. For example, R&D pipelines have more than doubled in the past five years for 47 high-burden and priority diseases, and access-oriented licensing has expanded for such diseases. However, the Foundation does warn that only some companies are tackling the risks of unethical sales behaviour and only a handful have consistently supported international trade agreements aimed at ensuring the poorest people can benefit from medical innovations.

Opportunity gap

In the developed world, industry is clearly failing to get across the message that medicines offer value for money. Portland Communications points out an “opportunity” gap where the pharma industry is “failing to convince the general public and influential groups of the total value it brings to society”. I would suggest that this gap needs to be filled not by slick PR operations but by those closest to the innovative process.

As this will be the last column of 2019, I’d like to wish you all the Compliments of the Season and a Healthy and Prosperous 2020!

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