Transcript A Pfizer Perspective on the Role of Procurement in Driving

A Pfizer Perspective on the Role of
Procurement in Driving Innovation
Dr Richard Torbett
Director, International Policy Development
This presentation is not for distribution or publication without Pfizer’s permission
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We have a common agenda with
Governments
Our common agenda is clear …
•Governments have significant
challenges ahead
• An ageing population;
•Spiralling public debt
•Persistent unmet medical need
•Ever-more demanding ‘consumers’
•It is more important than ever that
pharmaceutical R&D is carried out in the
right areas and that the resulting
medicines are affordable.
…but procurement must be fit for purpose
•Important to assess to what extent the
lessons from the procurement literature
are generalisable to all types of
innovation
•Not all pharmaceutical markets work in
the same way as vaccines
•Some features of a procurement-based
approach may undermine aspects of
competition and security of supply in
some markets
•We can learn from innovative
procurement but it needs to be tailored
appropriately
It is in everyone’s interest that Government sends the right signals…
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A risky, complex and lengthy route to
producing a medicine
15
Medicine
10
5
years
Idea
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…where attrition and costs are high…
Compound Success
Compound
Success
Rates by Stage
Rates by Stage
Years
00
Discovery
(2–10 Years)
22
4
Phase I
66
20–80 Healthy Volunteers Used to
Determine Safety and Dosage
88
Phase III
10
10
1,000–5,000 Patient Volunteers
Used to Monitor Adverse
Reactions to Long-Term Use
12
12
Additional Post-Marketing
Testing
14
14
16
16
Preclinical Testing
Laboratory and
Animal Testing
5,000–10,000
5,000–10,000
Screened
Screened
250
Enter
Preclinical Testing
Phase II
100–300 Patient Volunteers
Used to Look for Efficacy
and Side Effects
Regulatory Review &
Approval
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Enter
Clinical Testing
1
Approved by Regulators
Net Cost: $0.8-1.3 Billion
Invested Over 15 Years
Sources: 1) Increased Length and Complexity of the Research and Development Process. Chapter 1 in: PhRMA Pharmaceutical
Industry Profile 2003. 2) DiMasi, JA, Hansen, RW, Grabowski, HG. The Price of Innovation: new estimates of drug development
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costs. Journal of Health Economics. 2003; 22:151-185.
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…and our path to market is complex and
global
(Part of the original New Drug Application for atorvastatin)
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There is no, single, ‘procurer’
Regulatory Approval Process
Safety
Efficacy
Quality
4th Hurdle
Prescription
Value for
money
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Public procurement as an innovation policy
instrument : pros and cons
Potential advantages
Potential disadvantages
•Reduced market uncertainty for
investors, increasing net
present value of investment
•Potential to put a cap on
innovation (at the level
envisaged by the procurer)
•Encourage private investment
where high fixed costs relative
to returns make it otherwise
unattractive
•Potential to forestall
competition
•Address market failure where
social benefit of innovations
does not accrue to the inventor
•Public procurers may not be
best equipped to judge future
innovation (and will incur
significant cost in the attempt)
…but for each industry the picture may be different
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Public procurement in pharmaceuticals
Most pharmaceutical sales in Europe are to public payers
However, active public procurement policies may pose particular
risks in the innovative pharmaceuticals market:
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Population-based procurement can harm the treatment
options available to individual patients and curtails physicians’
prescribing authority.
Exclusionary public procurement systems (e.g. winner-take-all
tenders) can undermine long-term competition and create
supply risks.
Inflexible procurement rules or systems may be unable to
appropriately reflect the dynamic nature of competitive
innovation.
Pharmaceutical innovation is generally
delivering in priority diseases
In many priority disease
areas, pharmaceutical
innovation is successfully
delivering new treatments
and driving competition
•Highly competitive markets in key
therapeutic areas and drug families:
as of 2008, 10 statins, 15 NSAIDS, 15
beta blockers…
•This plurality creates more effective
treatment options and helps
government through competition
•New generation of treatments being
approved and in pipeline for cancer,
dementia etc.
•Scientific advances in identifying
biomarkers promise further progress
in patient-specific care.
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And our R&D pipelines are generally aligned
with what Governments tell us they want
Total R&D
expenditure by
therapeutic area (20
biggest firms)
Source: CMR
Contrary to popular belief, the medicines
bill is not ‘out of control’
An example from the UK – Total Expenditure on Healthcare versus Pharmaceuticals
£mn
NHS
Pharmaceuticals
c. 80% of increased spending on medicines due to volume
increases, not price
Source: PPA, ONS, DH, NAW, ISD, IMS dataview
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Dos and Don’ts for procurement in
pharmaceutical markets


Work with the industry to identify broad disease
priorities – and stick to them for the long term
Commit to national plans to improve treatment in
priority areas
Commit to support the uptake of innovative
medicines
Prejudge scientific progress by ordaining productspecific requirements or narrow therapeutic aims
Limit the treatments available to individual patients
through rigid population-based public procurement
systems
Limit competition by excluding firms from the market
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A role for public procurement in
pharmaceutical innovation
For some disease areas
in which social need
does not translate
To sufficient effective
demand, more active
public procurement
strategies
could play a role in
creating the necessary
conditions for
innovation
For example:
•Orphan medicines
•Anti-microbials
•Vaccines against pandemic
or bioterrorist threats
•Diseases of the developing
world?
As long as the dos and don’ts are adhered to – there could be a role for
procurement in some areas
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…But there are no magic bullets
However, in all pharma
markets, innovation is
dependent on a broad
range of regulatory and
environmental factors:
there is no magic bullet…
•More streamlined clinical trials
•More sophisticated regulatory
systems recognising the
differences between medicines
and disease areas
•Payers willing to reward
innovative medicines, including
incremental innovation
•Strong intellectual property
protection
•Competition through all phases of
the medicines lifecycle