From : Mr. P.F.J.H.A. Salden; Mrs. R.A. Meines-Westra

Memorandum

The Hague, 7 September 2004

Reference : PS/BS/2004-01412

Direct Tel. No. : 070-3132290

Direct Fax. No. : 070-3132233

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FAO :

From : Mr. P.F.J.H.A. Salden; Mrs. R.A. Meines-Westra

Re : Comments on the WHO report - Priority Medicines for Europe and the World

Introduction

On the initiative of the Dutch Government, a study has been carried out in conjunction with the WHO into the need for a Europe-wide R&D agenda that addresses the needs of EU citizens. The result is a report entitled Priority Medicines for Europe and the World, which will be discussed during a symposium organised by the Dutch Ministry for Health Welfare and Sport, to be held on 18 November in The Hague. At various stages of this study, comments made by a number of research-based pharmaceutical companies, such as AstraZeneca, Aventis, GSK, Pfizer, Roche, Schering and Servier, have all been instrumental in moulding the WHO report. Dutch researchers have also deliberated on this report, particularly within the context of fundamental and clinical drug research. Nefarma has leaned on the comments made by these above-mentioned groups as a basis for formulating its own response.

The first draft of this report has been available since 31 August 2004. Structurally, its content covers an extremely wide range of issues. The report contains:

1. A list of 16 priority diseases for which the WHO believes there are gaps in pharmaceutical provision.

2. General remarks highlighting: the need for combination drug therapies at fixed dosage regimens; the need for more basic research among the elderly; more efficacy/ safety data on children; the need for more studies on (pregnant) women.

3. A chapter entitled “New Approaches to Promoting Innovation”, which contains a number of recommendations.

Comment

The same selection of diseases

After reading the WHO report, it becomes apparent that it covers all “major” diseases as defined by the pharmaceutical industry itself. Generally speaking, the pharmaceutical industry

is already carrying out research into these diseases. The table below gives a list of all diseases specified by the WHO, together with R&D activities currently being performed in these areas. The difference between “active” and “very active” relates to the number of companies involved in any given therapeutic area.

Noticeably absent

Conspicuous by their absence are diseases such as asthma, schizophrenia and osteoporosis, which are considered to be problematic in the Western world, yet are only cursorily mentioned in the report. Much research is currently being performed by the pharmaceutical industry in these therapeutic areas, too.

Rare disorders

Not named in the above-mentioned list of 16 top priority indications - yet which appear elsewhere in the WHO report - are orphan diseases. Within the pharmaceutical sector, orphan drugs are considered to be the second most important research priority. Rare disorders cover a broad spectrum of 5,000 to 8,000 different life-threatening and/or severe chronic illnesses, affecting not more than 5 persons per 10,000 EU citizens. Roughly speaking, this approximates to around 30 million Europeans. There are also 25 million such sufferers in the USA. There is a problem often associated with these diseases: i.e. the low profitability ratio for developing and marketing new drugs. Special regulations governing marketing authorisation of drugs have therefore been developed, firstly by the US Authorities, and subsequently by the European Union. These “incentivisation” measures are designed to make research in these areas more attractive to pharmaceutical companies. The increase in the number of orphan drugs is indicative of how successful these measures have been.

Drugs to treat diseases in developing countries

Tropical diseases - which are ranked third in priority by the research-based pharmaceutical sector - are given due consideration in this report. Several of these illnesses appear on the list of 16 top priority diseases. Many people in developing countries are afflicted by tropical diseases. However, their spending limit is often so low that investments into developing drugs to treat such illnesses are invariably unprofitable. Nevertheless, many (major) pharmaceutical companies are actively researching into target applications in the treatment of tropical diseases. For example, several pharmaceutical companies now have special laboratories dedicated to malaria. Every year, there are 500 million malaria cases worldwide, around 1 million of which are fatal.

The table below illustrates what kind of consequences face the industry as a result of the huge variations in spending limits of patients in the Third World and developed countries. On the basis of indicative prices[1]for high-active drugs to combat HIV/ AIDS, price differences have been examined by means of the indicator ‘value for money’. This indicative ‘value for money’ price is based on differences in cost for a given health gain due to treating a HIV/AIDS patient in Mali compared with a patient in the United Kingdom. Price per annum varies from $168 to $16,381. For this category of disease, the pharmaceutical industry – within the framework of ‘corporate social responsibility’ – considers it a moral necessity to develop these drugs for both population groups. However, assuming that the industry would go along with this theoretical pricing regimen (which is presently totally hypothetic) it certainly means that suitable measures should be taken to combat parallel trade from poorer to wealthier countries. The report concedes as much on page 73.

GNI = Gross National Income

Special patient groups T

he WHO report dedicates several chapters to the problems associated with developing drugs for special patient groups, such as the elderly, children and (pregnant) women. The industry is praised for developing drugs for children and the elderly, although several comments are made on the (legal) complications inherent in conducting such trials.

“New Approaches to Promoting Innovation”

In this section, a clear call is made to the industry to initiate more public/ private sector partnerships to cater for “neglected diseases”. Over the last two decades, this issue has been the focus of much debate. However, the industry has been too unforthcoming in making the facts known, resulting in a distortion of the true picture. The industry’s main objection focuses on the element “Determining value for innovation and setting prices”. The report talks of “differential pricing”, whereby drug prices in each country are determined according to the following formula: (Anticipated increase in life years gained) x (Gross National Income per capita). The industry holds no great store with this particular price-setting method, due to the huge price variations that result between different countries. This method will invariably lead to a massive increase in parallel imports and exports, accompanied by an obvious decrease in the availability of drugs in certain countries. Under the heading ”Barriers to Innovation in Pharmaceutical Research and Development”, problems in the R&D process are brought to the fore. It is suggested that these problems might be solved by the creation of a European Technology Platform, where all stakeholders such as the EMEA would be accommodated. Indeed, innovating companies within the pharmaceutical industry are actively supporting this initiative. This same chapter argues strongly in favour of “head-to-head comparative trials”, which have been widely accepted in the field of drug research for quite some time (e.g. research involving new-generation statins). Moreover, responses by individual patients to a certain drug are put into better perspective with this kind of trial. Further on in the report, recommendations are made to electronically prescribe drugs, and to set up a post-marketing database, thus allowing Phase IV/ pharmacoepidemiological studies to be performed. This is an interesting proposal that has already been adopted by a few countries. However, it must be remembered that there are differences in ethical and cultural values, which vary between the USA and Europe. Furthermore, privacy issues must also be borne in mind.

Conclusion

The general question raised by the research-oriented pharmaceutical industry is as follows: Is this WHO report the right response to the underperformance of the European Union and the United States in terms of developing new drugs? Public and private sector partnerships for issues such as “neglected diseases” are considered by the industry to be good examples of synergy between Government and the industry. Furthermore, we believe that the European Union should continue to encourage such partnerships. Unfortunately, many of these plans will be doomed to failure, if the EU and national governments insist on pursuing their “industry bashing” policy. To put it succinctly, the industry must be supported in creating such partnerships, if they are to exist at all. Moreover, as the OECD rightly states in its recent report “Towards High-Performing Health Systems” (May 2004), that in order to ensure future innovation in healthcare, optimal drug prices should not only take into account the value of any given drug, but also R&D costs. For a realistic approach to work, arguments that benefit the common good of the population must be weighed against economic arguments voiced by the industry. Finally, if a really initiative drug is developed, governments need to allow it rapid access onto the market for the benefit of the patient; this at a keen price that reflects the actual amounts invested in bringing it to market.

WHO Report

Priority Medicines for Europe and the World

Nefarma Comments

Nefarma supports EFPIA’s comments on the WHO Report “Priority Medicines for Europe and the World”.

In addition Nefarma would like to ask extra attention for the following matter:

It is an interesting concept that the price of a medicine should be based on its value at a level that approaches the cost-effectiveness threshold which is related to the GNI. However, it presupports a system of closed borders and is also incompatible with the wide spread use of international price referencing.

1

[1]Calculated via a theoretical model assuming that care interventions may be considered cost-effective if they buy a year of healthy life for less than the national average per capita gross national income