Healthy Skepticism Library item: 14142

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Publication type: news

Grogan K.
Pharma industry rejects NICE chief's profiteering claims
PharmaTimes 2008 Aug 18
http://www.pharmatimes.com/WorldNews/article.aspx?id=14152&src=EWorldNews

Full text:

The chief of the UK’s drug cost-effectiveness watchdog has torn a strip off the pharmaceutical industry saying that the
latter’s desire for higher profits are driving up prices, a claim drugmakers have been quick to deny.

In an interview with The Observer, Sir Michael Rawlins, chairman of the National Institute for Health and Clinical
Excellence, spoke out after his organisation had once again come in for criticism. Less than a fortnight ago, critics
attacked NICE over its decision that kidney cancer patients on National Health Service should not be treated with four
drugs – Roche’s Avastin (bevacizumab), Bayer’s Nexavar (sorafenib), Pfizer’s Sutent (sunitinib) and Wyeth’s Torisel
(temsirolimus) – because they are not cost-effective.

Claiming that kidney cancer drugs could be produced for about a tenth of their current cost, Sir Michael told the
newspaper that “we are told we are being mean all the time, but what nobody mentions is why the drugs are so expensive”.
He noted that part of the problem is that the pharmaceutical industry “is looking at a very bad period in the future
because a lot of their big earners are going off patent” and many companies “are looking at a 30% or 40% reduction in
the next five years unless they come up with new drugs”. Part of the cost “is cushioning against that”, he said, adding
that “the share price is very important to a pharmaceutical company”.

Sir Michael went on to claim that drugmakers have enjoyed double-digit growth year on year “and they are out to sustain
that, not least because their senior management’s earnings are related to the share price”. He added that “it’s not in
their interests to take less profit, personally as well as from the point of view of the business. All these perverse
incentives drive the price up”.

The NICE chief went on to say that “the other thing we have to pay for is the costs of marketing” and these are
generally “about twice the spend on R&D”. He added that “traditionally the pharmaceutical industry will admit that they
actually charged what they think the market will bear. The wiser ones are recognising that that model is no longer
available”.

However, Richard Barker, director general of the Association of the British Pharmaceutical Industry, responded quickly
to Sir Michael’s claims and suggested that the fault lies with the way NICE goes about its business. He said that
“pharmaceutical companies invest an average of more than £500 million over more than a decade to bring new medicines to
patients”. If they do not earn a reasonable return on this spend, “their investors will not support this, and the supply
of modern medicines that enhance and save lives will dry up”.

He went on to say that “what NICE fails to mention is that the medicines in question are in common use elsewhere in
Europe, where prices are typically higher than they are here in the UK”. Mr Barker concluded by saying that “NICE has an
important job to do, but they need to adapt their approach for cancer medicines, rather than lay the blame on the
process and economics of pharmaceutical innovation”.