Healthy Skepticism Library item: 6362

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Publication type: news

Zehr L.
Drug law carries high price: Glaxo
Globe & Mail, Business 2006 Oct 25

Full text:

From: Globe & Mail, Business, October 25, 2006

PHARMACEUTICALS

Drug law carries high price: Glaxo
Cut revenues could lead to less investment
LEONARD ZEHR

BIOTECHNOLOGY REPORTER

Ontario’s move to rein in runaway prescription drug costs through Bill 102 will slash revenues in the life sciences sector by $500-million to $1.5-billion over the next three years, with likely cuts in research, manufacturing and investments in the province, warns the president and chief executive officer of GlaxoSmithKline Inc.

“This is not a threat, it is a commercial reality,” Paul Lucas told the Economic Club of Toronto yesterday. “Our ability to invest is directly linked to our ability to sell.”

Bill 102 would allow the provincial government to use its massive buying power to press pharmaceutical companies to discount their products and make it easier for druggists to replace brand-name drugs with generics.

“We believe that this bill will create a fundamental restructuring of the biopharmaceutical market in Ontario, and consequently Canada,” Mr. Lucas warned.

“The government mistakenly believes that we can continue to invest in Ontario despite anti-innovation health policies and the resulting financial setback,” he said.

As a result, Glaxo and the industry now have to consider realigning “our cost structure because we are now in a low-cost commodity supplier relationship with the government.”

Glaxo in the past year, for example, has expanded its manufacturing plant in Mississauga at a cost of $56-million, contributed $21-million to Ontario universities and hospitals for research and development and clinical trials, and shipped more than $2-billion of medications around the world from its plant.

The merits of Bill 102, which has become law and is now being implemented, have not been judged in the context of an overall economic assessment beyond health, Mr. Lucas said.

He called on the government of Premier Dalton McGuinty to step back from the legislation and conduct a full economic and health care outcome impact analysis in the context of an industry life sciences strategy that has been submitted to the Minister of Research and Innovation.

“The Ministry of Health needs to recognize the biopharmaceutical industry as partners and an ally in seeking better patient care rather than a contractual supplier,” he added.