Celgene boss: Chronic diseases will bankrupt Europe if incentives are dropped

Mark Alles: "I think there is broad recognition that the incentive structure delivering innovation in the form of new medicines was well regarded by the members of the European Union." [Cancer Support Community/YouTube]

Alzheimers, diabetes, cancer and other non-communicable diseases will bankrupt Europe if we don’t keep the incentive frameworks alive and well, Mark Alles told EURACTIV.com in an interview.

Mark Alles is the chief executive of Celgene, a global biopharmaceutical company.

He spoke to Sarantis Michalopoulos in a telephone interview.

Do you feel that the member states are reviewing incentives in order to achieve better prices and speed up the introduction of generics and how does the pharma industry view this? Is it a challenge to innovation?

I think there is broad recognition that the incentive structure delivering innovation in the form of new medicines was well regarded by the members of the European Union. Member states understand that these incentives have led to many of the innovation and new medicines which the member states now enjoy, in fields like hepatitis C, cancer and other diseases.

There is broad recognition that the incentive structure has been quite successful, leading to a kind of economic vitality, better patient care, and those things that all of us want: access to the best medicines for the best outcomes.

I think it is quite natural that at this point in time the EU is looking at whether these incentives continue to create an innovative environment, or given where the world is today, is it time to rethink some of the frameworks? And of course, it makes sense to look at it inclusively, not just one little segment but as a whole, and without a view to whether or not something needs to change for the purpose of reducing pricing or some other economic value.

It is simply to say, is the system working the way it was intended, and should it be revised based on the reality of today and new technologies of the future?

Inevitably there are those elements of the system that look at this as a way to potentially limit faster access to generic medicines. That connection is clearly part of the debate. But as an industry leader, and CEO of Celgene, I look at cause and effects, I think these are related topics, but I don’t think one is directly responsible for the other.

Pharmaceutical expenditure has been stable at 15% over the last few years, however, we see the member states insisting on reducing it. What other ways are there to bring down drugs pricing, if not SPCs or IPs?

The system of how technology is assessed across the member states is actually quite effective.  We talk about drug pricing, and we forget that each of the member states has a very effective way of looking at cost-effectiveness within the cost of their own budget, and how healthcare is delivered by the member states. There is widespread recognition that we’re talking about making sure that patients have access to the most effective medicines, and that it is sustainable.

Innovation on medicines has created a discussion about if we reduce the cost of medicines, is that going to improve the sustainability of healthcare systems? It is a natural discussion. But the fact is that net prices across Europe have only increased on average by about 2% per year, and have remained essentially stable as a percentage of healthcare spending essentially over 30 years.

It is a convenient argument to say the cost of medicines is driving the increase in healthcare spending, but in fact, that’s just not an accurate assessment of why the stress is in the system. Healthcare spending is going up at an annual rate which is not being driven by the cost of medicines. And the generic side of this is exactly what we want to see happen.

It is kind of interesting to me that the innovative companies like Celgene actually create a medicine cabinet for generics. What we’re trying to do today as innovators is to make sure there is a generational benefit to the world to paying for innovative medicines for their patented life and let them have the generic medicines for as long as they have great value.

This innovation cycle is actually the best art, the most economic value of the whole system. Now we definitely need to find models that reflect what’s happening through technological development.

When we think about the reimbursement model that has been deployed in Europe and elsewhere for the last 30 years, these models haven’t kept up with the technological developments. That’s why we think about incentives and access and sustainability all the same time. Celgene and other companies have been thinking very deeply in different therapeutic categories, in different technological approaches, how do we rethink the reimbursement model so that the most innovative, the most expensive technologies are actually paid for in a different way.

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You are more in favour of value-based, outcome-based approach regarding reimbursement?

That’s the point. When you think that with new technologies we are creating cures for patients with hepatitis C and we’re offsetting the costs of liver transplantation over a lifetime of immune suppressive therapy – that model of cure is not something that the global reimbursement systems are set up to pay for.

In cancer, when you have a therapy that is inducing a 100% response rate in incurable blood cancer, that’s a different proposition than what reimbursement systems have been set up for over the last decades.

Of course, the outcomes are much greater, and patients’ access has to be guaranteed for these new therapies, but the reimbursement model and the budget are not set up in a way to deal with that.

We have got to come up with ways with the stakeholders to come up with new models.

Do you pay for benefits over a number of years as opposed to look at an annual budget? That’s the pressure that exists right now. The budgets look at one year at a time, where the epidemiology of certain diseases is over a number of years and generations of patients.

What is your plan for the manufacturing waiver?

It undermines the very fabric of intellectual property and it undermines the innovation cycle. When it comes to predictability, one of the major incentives that have created companies like Celgene around the world is a framework where the SPCs opportunity created the predictability for innovators of what risks to take market by market and how to engage over time with the reimbursement cycle.

If that comes under pressure because of end run around innovation and patent protection, it creates uncertainty that is quite dangerous for the European Union.

We don’t support it and we see it as a very slippery slope of undermining intellectual property and innovation. New reports are coming out that refute the analysis that was done on job creation and economic benefit. I think in the end, the analyses will be less robust than what has been provided so far.

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We see that a number of member states have decided to form alliances in order to have joint negotiations with the pharma industry on drug pricing. How does the industry view this?

I think it is consistent with the notion that as innovation continues to deliver life savings and life-extending medicines, different markets and countries will look at different models for reimbursement. We can only support that.

We are part of a system that needs to evolve and we think that smaller countries coming together if that’s their common interest, it’s difficult for us to say we’re against opportunities for those markets.

We think it’s going to be more difficult in execution, because they are sovereign countries that have different budgets and healthcare systems, but at the same time it’s part of this evolving reimbursement landscape, which is consistent with the idea that it costs more to develop innovative medicines, that patent protection is important, and with that comes an ecosystem of giving and take to be able to afford and be able to guarantee access over time.

We can’t be inconsistent in our thinking. Small countries coming together and lobbying for common opportunities, we would embrace that, we are part of that evolution.

Let’s talk about big data in healthcare. What is your message to EU leaders regarding this issue?

There is no turning back. The world is going to be dominated by big data ten years from now. Healthcare systems, the use of electronic medical records, the way we connect patients’ care to all electronic data sources including payment side, pharmacy side, insurance side – it will all be connected electronically.

We are moving towards a world where big data and digital technologies will create efficiency that we have to have to sustain the healthcare system. So these technologies are powerfully evolving to making these systems more effective, more affordable, and we are participating that in many ways.

We represent an innovation cycle where our goal is to make sure that our children don’t die of the diseases that kill us today. So what we are trying to do is to make sure that the incentive structure that has been so profoundly strong in Europe, evolves to deal with the reality of innovation, but doesn’t evolve to kill it and put us in a position where we’re not taking care of future generations. Alzheimer, diabetes, cancer, other diseases will bankrupt Europe if we don’t keep the incentive frameworks alive and well.

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