Brussels, 27 June 2012: Sir Andrew Witty, CEO of GlaxoSmithKline and President of EFPIA, the body representing the research-based pharmaceutical industry in Europe, called today for a better collaboration between governments, the European Commission and the pharmaceutical industry in order to ensure that pharmaceutical innovation plays a full role in improving the health of European citizens and in supporting a growth agenda for Europe. This follows a letter sent by Sir Andrew on behalf of EFPIA members to European political leaders last week, in advance of the this week’s European Summit.
Speaking at the 2012 EFPIA Annual Meeting in Brussels, Sir Andrew said:
“This is an industry where Europe has the foundations, if it chooses, on which to build a great industry for the future. Europe is a world leader in the pharmaceutical sector, built on decades of investment and on the great foundations of European universities and intellectual leadership.
However, other locations such as the US and certain Asian countries, present increasingly strong competition. In these extraordinary times for Europe, business as usual - cost-containment policies that create market distortions - will drive investment elsewhere and consign Europe to a gradual decline, to the second rank of the new global order. A more vigorous industrial and innovation policy is needed.
Pharmaceutical innovation contributes to economic growth in two key ways. It delivers a healthy population and therefore a more vibrant, productive workforce. And it is a source of huge investment in university research, SME spin-offs, and industry laboratories. EFPIA members spend €27.5 billion per annum on R&D in Europe and provide 660,000 jobs directly. Our sector is by far EU’s most R&D intensive industry.
In the last 12 months, this industry has done many things about which we should be very proud. Last year 49 innovative medicines were approved in the EU covering several disease areas. The European Commissions’ Action Plan against the rising threats from Antimicrobial Resistance has already produced results with the launch of a major programme under the Innovative Medicines Initiative (IMI). We will continue to work with the Commission and other parties to complete the revitalisation of this area of R&D. In another important move, a number of companies agreed goals for eradicating Neglected Tropical Diseases (NTDs) in the world’s poorest countries, and signed up to pledges on drug donations and R&D collaborations.
Our mission is to bring products that change lives to more people around the world. But in Europe that is tough. Many EU Member States use various incentives to attract R&D and manufacturing investment, but then create hurdles and market distortions that prevent innovative medicines from reaching patients. This approach is short-sighted, and fails to strike the right balance between managing budgets and securing current and future patient access to medicines and vaccines. It undermines both patient benefit and the status of Europe as a home for innovation.
A key concern is the cross-border impact of measures taken. Most importantly, the practice of referral to other countries when setting prices for medicines, results in inefficiencies and sometimes in limited supplies. Where the industry has agreed to temporary price cuts to bridge funding gaps (e.g. in Greece or Portugal) other countries not subject to the same financial pressure automatically lower their prices. The impact of a price cut in Greece resonates across the EU and globally – the implications for the R&D-based industry are clear.
Another major impact lies in re-exportation of pharmaceutical products from lower-priced to higher-priced countries. Recent months have seen a significant increase in this arbitrage trade, which is the result of market distortions caused by pricing policies. One immediate impact is a shortage of medicines for patients in countries such as Greece and Romania. There is a genuine risk of supply disruption in several countries.
The way that medicines are assessed is also a major barrier between patients and valuable innovation. Payors must be able to ask questions to establish value for money. But it is impossible for any organisation to answer those questions for every single individual member state and then for every single region within those member states. We are creating a complexity which is unaffordable and undeliverable. We are seeing the impact in France, Germany, the UK and elsewhere, with products denied access to the market or withdrawn from launch by companies.
We need clarity in the value for money question. The answer lies in extensive partnership, collaboration in the design of assessment and reimbursement systems. It’s about flexibility to ensure that companies are able to get a reward for their innovation which allows them to reinvest for the next breakthrough medicine or vaccine.
Europe must ensure that it does not slip into a position where it simply focuses on acquiring at the lowest possible cost and destroys the incentivisation for innovation that leads to breakthrough medicines and delivers high-value jobs.
A more vigorous industrial and innovation policy is needed. Member States and the Commission must focus on how they can help encourage individuals, universities, start-up companies and large-scale industrial organisations to focus on innovation, invest for the future, and create products to fulfil unmet medical need.”
Richard Bergström, Director General of EFPIA, echoed Sir Andrew’s comments at the meeting and also stressed the need for working closely together with governments: “EFPIA members fully understand that in the current financial crisis countries need to take steps to control public spending and restore fiscal credibility. I want EFPIA to play a part in addressing the challenges faced by governments in balancing tight budgets against the need to ensure sustainable patient access to high quality healthcare and treatments. EFPIA companies and national associations are fully committed to working with stakeholders in Europe to ensure that we deliver new medicines and vaccines for our citizens, underpin much of our academic infrastructure in universities, and create and secure important jobs across Europe.”
Richard Bergström, Tel: (+32) 2 626 25 55
About EFPIA: EFPIA represents the pharmaceutical industry operating in Europe. Through its direct membership of 32 national associations and 35 leading pharmaceutical companies, EFPIA provides the voice of 1,900 companies committed to researching, developing and bringing new medicines to improve health and quality of life around the world.
EFPIA members are committed to delivering innovative medicines to address unmet needs of patients and reducing the burden of chronic diseases for Europe’s ageing population. EFPIA believes in close cooperation with its stakeholders to help create sustainable healthcare systems and to develop prompt responses to health threats in Europe.
The pharmaceutical sector directly employs some 660,000 people in Europe including 116,000 working in research and development in 2011. The industry also generates around three to four times more employment both upstream and downstream.
Europe’s research-based pharmaceutical industry generates a substantial trade surplus, estimated at about €48,300 million in 2011 (EU-27), and has contributed significantly to reducing the European Union’s trade deficit in high-tech products. € 27,500 million were spent on research and development in Europe in 2011. Almost a quarter of the EU’s high-tech exports are pharmaceutical product.