Feature / Good medicine

The ABPI’s Alison Clough sets out the pharmaceutical industry’s contribution to health and health services and raises concerns about the UK’s uptake of new medicines

Last month, representatives from the Association of the British Pharmaceutical Industry (ABPI) met with the HFMA for what turned out to be an extremely useful discussion. This was an opportunity for both sides to learn about each other, highlight past successes, dispel myths, explore areas to improve and look at where HFMA and ABPI could be doing more to work collaboratively.

This article looks to share this with a broader audience and spell out the impact of our medicines on improving patient health and the budgetary implications of their use in the NHS.

The context is important. The industry’s medicines continue to save lives and improve the health of millions in the UK. We are an integral part of the healthcare system and our medicines have treated, and continue to treat, diseases including heart disease, mental health conditions including Alzheimer’s, HIV and many forms of cancer. The industry has for decades found treatments that are now so widely used, they are taken for granted. And in the past few years we have developed new medicines for diabetes, liver and kidney conditions and rheumatoid arthritis.

But medicines, particularly innovative medicines, take time and money to develop. Typically it takes 10 to 15 years and just over £1bn to do all the work necessary before a new medicine can be licensed for use. No other industry in the UK spends as much on research and development as the pharmaceutical industry. But if this investment does not continue, finding treatments for unmet clinical need will become increasingly difficult. That’s why the pricing of medicines and the commercial environment is crucial – if companies don’t make sufficient return on developing a medicine, this money can’t be rerouted to finding new treatments for disease.

Market mechanisms

While the industry rightly places importance on return on investment, there are points on which we need to be clear. First, although companies are able to determine the price of their medicine at launch in the UK, they are subject to an overall profit cap across their whole portfolio of products. Second, the Pharmaceutical Price Regulation Scheme (PPRS), the jointly negotiated agreement between government and industry, has delivered three price cuts to the Department of Health since 2005. Third, and perhaps most important, the figures show the NHS gets a good deal from the UK industry compared with continental Europe. In the last published PPRS report to Parliament, the UK was shown to have among the lowest priced medicines in Europe. We spend 0.9% of GDP on medicines – less than the EU average of 1.2%.

NHS spending on medicines is likely to rise though, by about £400m a year (see chart). This is driven mainly by volume growth, not rising prices, as we treat many more elderly people, treat more diseases and help minimise hospital care. Proportionally, the NHS budget spend on medicines has fallen since 1999, down from 13% in 1999 to just under 10% today.

This should come as no surprise considering the UK has one of the most efficient generics markets in the world. The pattern is striking – as soon as a patent expires, the price falls dramatically and generic uptake is huge. Of the prescriptions dispensed, two-thirds are for non-branded medicines and price competition from generics saves the NHS about £7bn a year.

There are more savings to come. Between 2009 and 2014 the NHS will save at least £3bn as patents expire and many firms lose exclusive rights to market specific branded medicines and generic alternatives emerge. The efficient prescription of generics should, in theory, allow the NHS to afford more innovative new medicines. But the reality is often different.

The contribution of the pharmaceutical industry to fighting disease is immeasurable. But we need to keep producing innovative medicines to improve health further and reduce the cost burden an increasingly elderly population will bring. The UK fares poorly compared with Europe for uptake of new medicines – our use of new cancer treatments in the past five years is 33% lower than the EU 15 comparator countries.

The problem cannot be simply explained away by cost – only 10% of the NHS medicine bill is spent on new medicines. Rather, NICE is increasingly rejecting new medicines or placing significant restrictions on their use, which is contributing to slower uptake. And regional or local evaluation groups reassess or second guess NICE guidance, adding to the restrictions on innovative medicines reaching the patient.

This situation needs to be addressed. The problem we see is one of bureaucracy. Slow uptake is not only impacting patient health, it is actually making the development of new innovative medicines more difficult.

There are a number of reasons for this. But one problem is that when innovative medicines are not being used in the NHS, clinical trials – a legal requirement for the development of a new medicine – are much more difficult to conduct. Here’s why: if the ‘gold standard’ medicine is not being used by patients in the NHS, when it comes to trials for new medicine, a comparator is not readily available. That can mean the trial being heavily delayed or it not going ahead.

The experience of UK clinicians with innovative medicines has an impact on other markets, as does a NICE recommendation. The UK must lead the way by using innovations, which will have a positive impact on global use and profits and increase the money available to reinvest in research and development.

If this cycle breaks down, the consequences are worrying. Some say the financial burden of Alzheimer’s could cripple the healthcare system unless innovative treatments are found.

It is also useful to consider the broader contribution the pharmaceutical industry makes to the UK, particularly as the UK struggles through testing economic times. The industry invests more in R&D than any other in the UK – about £12.1m a day.

The pharmaceutical sector makes a greater contribution to the UK economy than any other industrial sector and now contributes £7bn to the trade surplus. It is also a major UK employer, with about 72,000 people, not to mention the many supported indirectly by industry. Its future commercial success will rest on not only the expertise and hard work of its own workforce, but the continued support of the NHS as an engine to foster innovation.

There is much the NHS and industry jointly do already to improve patient health, but looking ahead we can achieve even more by working together. Clinical trials are a perfect example. Industry uses UK hospitals to conduct trials and benefits enormously from the professional insight of staff and from excellent facilities. Of course, hospitals generate significant extra revenue for their operating budgets by helping with industry research at a time when finances are tight.

But only by working collaboratively can industry and NHS overcome the bureaucratic hurdles that so often make clinical research difficult here in the UK. This is true of many of the challenges industry and the NHS face and I am confident we can work closer in future to improve people’s quality of life.