Six months ago, as most countries began lockdown in an attempt to control the coronavirus pandemic, critics of big pharma were suggesting that companies would put profits before philanthropy and look to make a ’fast buck’ out of a worldwide health crisis (see April-June 2020 Column).
Rise in Reputation
But what we are now seeing is a rise in the pharma industry’s reputation. AstraZeneca, Roche, Novo Nordisk and Sanofi have all jumped up the rankings in FutureBrand’s index, which looks at the public perception of the top 100 companies identified by PwC.* At the same time, Gilead has fallen, following reports suggesting that the company had pushed up the price of remdesivir used to treat Covid-19, and agreed to give the US government exclusive access to first stocks of the drug.
Overall, pharma companies are earning praise for working closely with academia and generally letting the spotlight shine on researchers in those institutions rather than grabbing the kudos for the company.
Big pharma firms are also putting their competitive instincts aside in the race for a vaccine. For example, Sanofi and GSK are collaborating on a COVID-19 adjuvanted recombinant protein-based vaccine candidate supported through funding from the US DHHS. As well as agreements to supply the US and UK, they also plan to offer a significant portion of total worldwide available supply in 2021-2022 to COVAX, the vaccines pillar of the ACT-Accelerator, a global collaboration of leaders of governments, health organizations, businesses and philanthropies to accelerate development, production, and equitable access to COVID-19 tests, treatments, and vaccines.
This is only one example of such collaborations, many of which also involve co-operation with governments and charitable foundations.
At the same time, companies appear to be resisting threats of political pressure aimed at pushing through emergency approvals of promising vaccine candidates. Nine firms have signed a pledge to uphold "high ethical standards", suggesting they won't seek premature regulatory approval for Covid-19 vaccines, stating: "We, the undersigned biopharmaceutical companies, want to make clear our ongoing commitment to developing and testing potential vaccines for COVID-19 in accordance with high ethical standards and sound scientific principles."
Publicity about efforts to develop vaccines and treatments for Covid-19 have significantly raised public awareness and understanding of the R&D process. It was striking early in the pandemic how widely it was believed that a new drug or vaccine could be researched, developed, scaled up for manufacture, and subject to rigorous regulatory scrutiny in months rather than years. There was also a lack of understanding that these efforts need the benefit of industry know-how and backing. That has changed, with pharma company efforts now seen as a likely solution to the pandemic.
Activists and politicians calling for pharma R&D to be handed over to the state have suddenly gone quiet. Not least because many governments are perceived to have mishandled the pandemic and have thus lost the trust of their citizens.
The downside, however, could be that, with the public increasingly looking to pharma for a solution, if a vaccine or therapy does not provide that solution, the blame will land on the drug industry.
Emergence of effective vaccines or therapies will throw the spotlight on pricing, especially as the cost of the pandemic and record global debt will put unprecedented financial pressure on healthcare systems. Payers are likely to take an even tougher approach, with more stringent requirements for real world evidence, and companies will be under pressure to provide more extensive data to justify their prices.
AstraZeneca, which is working with academia on the ‘Oxford’ vaccine, says it will not profit from the vaccine, which is priced at around £3/$4 per shot, although it could earn royalties if coronavirus becomes endemic like influenza. As described in my last column, GSK says it will try to strike a balance between generating an economic return and reinvesting in its business over the long-term. It will supply its adjuvant at a “responsible price”, calculated using inputs including benchmarks to previous H1N1 contracts and the costs for production and development. It will make the adjuvant available to the world’s poorest countries, including donations and by working with governments and global institutions that prioritise access, and short-term profits on sales during the COVID-19 pandemic phase will be invested to support long-term global pandemic preparedness.
Other contenders have yet to elaborate on their pricing strategies.
A Changing World
Apart from issues such as industry’s reputation and the eternal pricing conundrum, the pandemic will bring other changes to pharma’s world. There has been much coverage of the shift to digital healthcare and the impact on pharmaceutical marketing. Most companies are already addressing this. At least it is a level playing field, with companies across the spectrum facing the same issues.
Another issue brought to the fore by the pandemic is industry’s dependence on countries such as India and China for raw materials and manufacturing. It is estimated that 50-80% of active pharmaceutical ingredients for small molecule drugs are sourced from these two countries where lockdowns have made an existing drug shortage problem much worse.
Action is being discussed at EU level and in various European countries. For example, President Macron has called for paracetamol production to return to France. In the Netherlands the Economic Affairs Ministry is working on a national action program for the life sciences/health sector, an important pillar of which is strengthening domestic drug production and distribution. The Dutch research-based pharma industry association VIG notes that this accords with its recently released plan to position the Netherlands as a ‘medicine hub’.
However, the sticking point will be the impact on costs, and therefore prices, of switching drug production away from cheaper Asian countries.
Inevitably, whenever medicines and the companies that research, develop and produce them and the benefits they offer society are discussed, there will be debate about costs. At a time when pharma’s contribution towards solving the problems caused by the coronavirus is being recognised, companies should take the opportunity to be upfront and transparent about how they price their products.