David Gallagher - Pfizer Australia - Big pharma perspective: The pursuit of certainty in an unpredictable market


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David Gallagher delivered the presentation at 2014 Future of the PBS Summit.

The 11th annual Future of the PBS Summit marks a wonderful opportunity to review future frameworks and preferred outcomes for pharmacy regulators, pharmaceutical companies and wholesalers, practitioners, educators and consumers.

For more information about the event, please visit: http://www.informa.com.au/futurepbs14

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David Gallagher - Pfizer Australia - Big pharma perspective: The pursuit of certainty in an unpredictable market

  2. 2. Overview o  New medicines and vaccines have been one of the greatest contributors to increased life expectancy in Australia over the last 50 years Ø  Universal access through the PBS has enabled this to occur across the population o  New medicines come from sophisticated and expensive research, extensive and expensive clinical trials and a large manufacturing investment. Ø  Many thousands of drug candidates fall by the way side never getting to market o  The bio-pharmaceutical industry invests its resources in this research, bears the risk and then needs to generate a return over the patent life to continue to invest o  Future advances in life expectancy and quality of life are dependent on innovation which is dependent on society’s recognition and encouragement of that innovation o  Society recognises and encourages innovation through intellectual property rights and a reimbursement environment that supports this o  All of these are critical dependent elements in generating improved health and societal wealth for tomorrow
  4. 4. The  first   vaccine  for   rubella  came   onto  the   market   The miracles of modern medicine Insulin  tested  in   humans   1922 1941 Florey  undertakes   clinical  trials  of   penicillin  the    first   modern  an:bio:c     The  first   effec:ve  cancer   chemotherapy   drug  -­‐  nitrogen   mustard  -­‐  was   discovered   1946 1952 The  first  polio   vaccine  was   developed   1957 Thiazides   diure:cs    for   heart  failure   and   hypertension   1962 Beta  blockers     angina  ,   hypertension     and  heart   failure   1964 The  first  measles   vaccine  released   1970 1972 The  insulin   pump  was   invented   1976 First  H2   blocker   launched  
  5. 5. HIV  now  a   chronic   disease,  not   a  death   sentence   The miracles of modern medicine Eradica:on  of   smallpox   1978 1980 Hepa::s  B  diagnos:c   test  and  vaccine   developed   First  an:-­‐ retroviral  (AZT)   for  HIV  becomes   available  in   Australia   1987 The  first  sta:n   approved  for   use  by  the  US   FDA   2000 Americas,  Europe,   Western  Pacific   and  China   declared  Polio  –   free   2006 The  first  HPV   vaccine  to  be   approved     (Dr  Ian  Fraser)   2013 Several  new   melanoma   treatments  listed   on  PBS   2014
  6. 6. Medicines and vaccines have made a critical contribution to life expectancy for Australians Source:  Australian  Ins:tute  of  Health  and  Welfare,  Australia’s  Health  2012,  Figure  3.6 Source:  Australian  Bureau  of  Sta:s:cs,  Catalogue  3303.0  Causes  of  Death,  Australia,  2010 16% fall in cancer deaths •  Australians have one of the highest life expectancies in the world •  Over the past few decades Australia has achieved significant gain in cancer, infection disease and cardiovascular death rates
  7. 7. Medicines and vaccines have made a critical contribution to life expectancy for Australians 79% fall in cardiovascular deaths 96% fall in the infections disease death rate Source:  Australian  Bureau  of  Sta:s:cs,  Catalogue  3303.0  Causes  of  Death,  Australia,  2010 •  Advances in medicines and vaccines have contributed to the dramatic decline in infectious disease death rates – a 96% fall •  Cardiovascular deaths have fallen from 831 deaths per 100,000 of population in 1968 to 174 deaths per 100,000 in 2010
  8. 8. New medicines are transforming Australian lives Dear Pfizer, I am writing to you a letter of appreciation for the access you gave us from March - October 2013. It is a terrible thing to experience life hanging in the balance and know that your fate is being dictated simply by just being in the right place at the right time, when there happens to be a compassionate use program available. Fortunately for us ....We were in the right place at the right time. But I understand these programs are unsustainable long term, and I truly hope that government funded access be available to patients very soon. It would be nice to know that patients’ lives in the future aren't relying on the stars being aligned, luck and short bursts of company generosity to live, as my husband was.I experienced anticipatory grief, as did our immediate and extended family. And this was not a pleasant experience. Frequent hospital visits were exhausting, parking, petrol, medications, and all associated hospital costs were very stressful. Being able to work, play and live a normal life under the circumstances is an absolute gift that your company gave us through access and was incredibly life changing. The generosity your company has shown us we can never repay....
  9. 9. Economic value •  Employment. Over 15,000 people employed directly in the Pharmaceutical sector* •  Exports. Total exports in the 12 months to the end of February 2014 $3.44Bn** •  Productivity, welfare and tax. Mitigating the impact of avoidable illness • *=  source:  ABS,  Cat.  5368.0,  Interna:onal  Trade  in  Goods  and  Services   • **=source:  IBIS  World,  Pharmaceu:cals  Products  Manufacturing  in  Australia,  December  2013   Recent  studies  conducted  by  a  team  led  by  Dr  Deborah  Schofield,  from  the  NHMRC   Clinical  Trials  Centre  and  School  of  Public  Health  at  the  University  of  Sydney.  Dr   Schofield  indicate  that  persons  out  of  the  labour  force  due  to  avoidable  illness  had   significantly  lower  incomes  ,received  significantly  higher  support  payments,  and   paid  significantly  less  tax  than  those  employed  full-­‐:me  or  part-­‐:me.     This  results  in  an  annual  na:onal  loss  of  income  of  over  $17  billion,  an  annual   na:onal  increase  of  $1.5  billion  in  spending  on  government  support  payments,  and   an  annual  loss  of  $2.1  billion  in  taxa:on  revenue.#     #  Schofield  et  al.  BMC  Public  Health  2011,  11:418    
  11. 11. Enablers of innovation 1.  Excep:onal   research  and   science   2.Interna:onally   aligned  IP   standards   3.  A  robust  and   stable  pricing   and   reimbursement   pathway  
  12. 12. Good research and science is a long & unpredictable process Source:  Source:  Medicines  Australia  Factbook  2013  
  13. 13. The journey is only getting longer and harder Aspirin (21 atoms) Growth Hormone (3,000 atoms) Immunoglobin antibody (25,000 atoms) Bike (10 kg) Race car (1,000 kg) Fighter Jet (10,000 kg) SMALL MOLECULE SMALL BIOLOGIC LARGE BIOLOGIC SIZECOMPLEXITY
  14. 14. 2. Internationally aligned IP standards 1.  Excep:onal   research  and   science   2.Interna:onally   aligned  IP   standards   3.  A  robust  and   stable  pricing   and  reimburse   pathway  
  15. 15. Why is it so important? •  Patents are essential for securing investment capital to fund innovation and development Patients and Society •  Creates a robust policy environment to enable innovationGovernment Innovative Pharma/ Biotech industry •  Through the appropriate protection of IP there will be continued investment in new medicines/therapies benefitting all
  16. 16. but...resist supporting the infrastructure that enables it (patent term restorations, data exclusivity etc) We want innovation... THE CONFLICT •  “No matter how brilliant a new idea or discovery is, it can never flourish unless someone takes a bet on it” •  “Free and open knowledge without the profit motive sounds like the quickest way to help the world, but this often slows down the ability for knowledge to help” •  “ To change the world through innovation, having the best academics, researchers and scientist only get you half way. In Australia it’s what we do after we find a discovery or think of a new idea that lets us down” The Australian, Ben McNeil, 28th August 2013 , ARC QEII Research fellow, UNI NSW THE DANGER
  17. 17. •  Evergreening - the constant renewal of a patent through incremental innovation. •  A false and misleading concept - No later patent can be issued for the same invention, and no later granted patents can extend the term of an earlier one. •  Generic companies are free to use the information in the original patent for their own commercial gain upon its expiry. •  Merits of the innovation can only be decided by patients and medical professionals. •  Incremental innovation is just as important to development in medicines as major scientific breakthroughs (antibiotics, statins, ACE- inhibitors, antiepileptic drugs, anti cancer agents, treatment for HIV and diabetes) Misconceptions at play I.  Follow-on patents
  18. 18. •  Duration of standard patent 20 years – ‘effective patent life’ of 15 yrs •  Enacted in 1998 – PTE up to 5 years. Why? -  In recognition of the unique nature of regulatory requirements for pharmaceuticals to gain market approval -  To provide an effective patent life more in line with that available to inventions in other fields of technology; and -  To ensure Australia remains competitive. However.... •  Average ‘effective life’ for pharmaceutical products remains between 11 & 12 yrs •  Breadth of Australian PTE limited in comparison to EU, UK and US (additional paediatric extension) Misconceptions at play II.  Patent term extensions
  19. 19. •  5 years, among the lowest among OECD (and other developed) countries Misconceptions at play III.  Data exclusivity Source:    Frost  &  Sullivan,  The  Impact  of  Australia’s  Data  Exclusivity  Regime  on  Australia’s  Healthcare  System,  2013;     and,  Interna:onal  Federa:on  of  Pharmaceu:cal  Manufacturers  and  Associa:ons,  Data  Exclusivity:  Encouraging  Development  of     New  Medicines,  2011.  
  20. 20. Misconceptions at play III.  Data exclusivity Benefits for Australia’s Economy -  Australian biotech companies currently face a competitive disadvantage to the US and EU. -  Extending data exclusivity would bring Australia in line with global best-practice, giving Australian companies the opportunity to compete more effectively for global R&D investment dollars . Benefits for Australian Patients -  Early access to medicines via clinical trial programs. -  Without equivalent data exclusivity and IP, patients are delayed access with companies launching in countries with superior IP protection first. -  Data exclusivity encourages investment in researching further indications of existing medications.
  21. 21. “Patents aren’t the oppressive force that they’re often claimed to be. In reality they are often part of a strategy that fosters innovation and promotes the search for new technologies that benefit us all.” IP Australia May 2012 The 2013 Review of Health and Medical Research stressed that there is an urgent need for the Australian government to ensure the strength and stability of Australia’s IP system. McKeon Review - Strategic Review of Health and Medical Research – Better Health through Research
  22. 22. Enablers of innovation 1.  Excep:onal   research  and   science   2.Interna:onally   alighted  IP   standards   3.  A  robust  and   stable  pricing   and  reimburse   pathway  
  23. 23. 3. A robust, stable pricing and reimbursement pathway The partnership with both Labor and Coalition Governments has ensured the sustainability the PBS and savings are accumulating Simplified price disclosure will deliver further savings from 1 Oct 2014 96% fall in the infections disease death rate
  24. 24. Australia – Right level of investment? 0.0   0.5   1.0   1.5   2.0   2.5   3.0   Hungary   Greece     United  States   Japan   Canada   France   Belgium   Germany   Ireland   OECD31   Australia   Pharmaceu)cal  Expenditures  as  a  %  of  GDP   Public   Private   Source: Expenditure on pharmaceuticals per capita and as a share of GDP, 2011 – Health at a Glance OECD Indicators 2013
  25. 25. PBS Expenditure – Where to from here? 0   2   4   6   8   10   12   0.57%  0.59%   0.56%   0.57%   NaPonal  Commission  of  Audit,  April  2014   AUS$BN   0.58%  
  26. 26. The Market View from IMS 2 Source:  IMS  Health  Market  Prognosis  (Published  March  2014).     IMS  forecast  is  built  upon  GDP  forecasts  as  well  as  our  assessment  of  specific  pharmaceu:cal  dynamics   and  demographic  impacts   Australia  Pharmaceu)cal  Market  Forecast  2013-­‐2018  (at  actual  prices)       Retail  +  Hospital     0.0% 0 1.0% 1.5% 10 5 -1.0% -0.5% 0.5% 15 13.8   Growth  (%)   2018 (f) 14.0   2017 (f) Sales  (Billion  AUD)   2016 (f) 13.9   2015 (f) 13.7   2014 (f) 13.6   2013 (a) 13.7   Retail  +  Hospital  sales   Retail  +  Hospital  growth CAGR  2013-­‐2018   Retail   -­‐0.1%   Hospital   2.7%   Total   0.5%   Annual Growth(%) 2013   -0.6% 2014   -0.5% 2015   0.3% 2016   0.8% 2017   1.0% 2018   0.8%
  27. 27. The generics are predicted to grow faster than all other categories including OTC 2 Source:  IMS  Health  Market  Prognosis(Published  March  2014),  2014-­‐2018  Australia  (*)  at  ex-­‐manufacturer  price  levels,  not   including  rebates  and  discounts   Segment  Sales  +  Forecast  (AU$  -­‐  ex  manufacturer)   Non-­‐generics:  Sales  of  ‘protected’,  ‘no  longer   protected’  and  ‘never  protected’  products     Generics  :  Sales  of  generic  products   Other:  Sales  of  OTC,  non-­‐categorized  and  other   products                  2013-­‐2018  CAGR   Non-­‐generics  -­‐1.8%   Generics    5.5%   Others    1.4%   Total      0.5%   0%   100%   80%   60%   40%   20%   %  share  of  audited  market   2018   52%   23%   25%   2017   53%   22%   24%   2016   54%   22%   24%   2015   55%   21%   24%   2014   56%   20%   24%   2013   58%   18%   24%   2012   60%   17%   23%   2011   64%   14%   21%   2010   66%   14%   20%   Generics  Others   Non-­‐generics  
  28. 28. However access is an issue Source: Wonder Drug Consulting Jan 2014
  29. 29. Positive progress, more work to be done •  Health Minister Peter Dutton has kept pre-election commitments –  Increasing the PBS listing Cabinet threshold to $20million –  Listing the backlog of medicines previously recommended by the PBAC •  The recent reinvigoration of the Access to Medicines Working Group (AMWG) •  Consultation is important for certainty.
  30. 30. The question of sustainability Financially   Meet  future  health   needs  of  Australians   Timely  and   affordable  access  
  32. 32. What does uncertainty produce ? •  Reduced R&D spend •  Reduced innovative medicines •  Reduced foreign direct investment •  Reduced employment •  Poorer health outcomes •  Loss of economic value
  33. 33. Certainty delivers a virtuous circle 1.  Excep:onal   research  and   science   2.Interna:onally   aligned  IP   standards   3.  A  robust  and   stable  pricing   and   reimbursement   pathway  
  34. 34. Summary o  New medicines and vaccines have been one of the greatest contributors to increased life expectancy in Australia over the last 50 years o  The bio-pharmaceutical industry invests the resources over the long term, bears the risk and then generates a return over the patent life o  To continue to see similar advances in life expectancy and quality of life society needs to recognise and fairly reward pathways of innovation o  That desirable and beneficial outcome will only occur in the right regulatory, intellectual property and reimbursement environment o  This can be achieved delivering sustainable improvements in healthcare within a sustainable PBS
  35. 35. Patients are relying on innovative medicines to address a broad range of health issues