The EU must continue to invest in the pharmaceutical industry, where Europe has been a leader for many years, but where it's becoming more and more difficult to bring products to the market, says Bruno Strigini.
Bruno Strigini is president of MSD in Europe and Canada, with responsibility for the company’s business in the region. He spoke to EURACTIV's Henriette Jacobsen.
During the global financial crisis, 18 out of (then) 27 EU member states made cuts in their healthcare budget. From 2000-2008 there had been constant growth in healthcare spending. How was it the right choice for governments to make cuts in this sector?
It’s clearly a critical time for the pharmaceutical industry. Our environment continues to be very volatile and unstable and the crisis has perhaps exacerbated some of the trends that were occurring previously in terms of the pressure that was put on the industry. If you look back 10 years to 2003, the pharmaceutical market in Europe was growing at about 10%. Today, the market is negative. We are talking of a decline of the total pharmaceutical market of probably 1% and it’s probably even more for the innovative sector of which we are part, because generics continue to grow quite substantially. A lot of the big pharmaceutical companies are actually showing some decline in Europe.
So what happened? Clearly, there was the crisis, but it started even before the crisis because the total healthcare expenditure as a percentage of GDP has been increasing for decades and clearly from an economic point of view that’s an issue for the governments, particularly in an environment like Europe where there is universal access to healthcare and the governments are paying for this. If you have a sector, the healthcare sector, that increases faster than the economy it’s bound to attract the attention of the governments who would want to find some solutions there. Today, if I look at the pharmaceutical industry, which represents roughly 10-15% of the cost of total healthcare, so only a small fraction of the total cost, clearly some pressure has been put on us. The governments are now requiring us to demonstrate greater value for money through the increased use of technology assessment.
So what we have seen in our industry is that there’s a shift of the prescription decision away from the medical doctor to the payer, be it government, region or a [sick] fund. That of course has an impact on how our industry is structured and how it works. We’re starting to see some signs of an economic recovery here and there, but we believe that the pharmaceutical market will continue to be affected by the measures that have been put in place by the governments and the industry as a whole will be affected by this. What are the consequences? Clearly, as we continue to face those measures it will have some impact on our ability to bring innovative products to the market and the strength of the industry because in the long term, it could have an impact on the trends of our industry which is one of the most important sectors in Europe. I would say that the EU Commission, which is looking at developing some strong industries in Europe particularly in the area of high-tech, is interested in having a strong pharmaceutical industry.
How could governments during the crisis have cut differently so that they had damaged the healthcare systems to a lesser extent?
I can certainly tell you that governments have cut tremendously in the pharmaceutical drug area because they consider drugs as a cost rather than part of the solution to the problems that they are facing. Just to give you an idea: Immediately in the two years following the crisis, the pharmaceutical industry contributed more than €7 billion of savings in the five countries that were most affected by the crisis and that was essentially in Southern Europe. I think that rather than only looking at the cost of drugs, what governments should have done, would have been to have looked at the costs of diseases for societies because frankly medicines bring a tremendous value to healthcare systems and they have been a key contributor to the health gains and life expectancy increases over the past 60 years.
Some of the cuts were short-term measures, rather than looking at the clear or true structural issues of the healthcare system, one of which would have been to have a more integrated approach to healthcare. Today, this is not happening probably because the organisation of the budget is too siloed. If we could have an integrated approach to healthcare we could start tackling the structural issues that are more long-term.
I want to bring up a country such as Greece. For many years leading up to the crisis, Greece didn’t pay for its medicines to pharmaceutical companies and then when the crisis hit, these pharmaceutical companies said that this was not going to happen anymore. What was MSD’s experience in Greece?
I don’t want to talk specifically about Greece because frankly that was not only a problem that occurred in Greece. Our position was clearly that the patient comes first and when you are in a situation where governments have difficulties paying, what we did was we sat down and worked with them, as well as the Troika, in order to ensure that eventually we could supply and be paid for the drugs. I’m not sure that you have heard of many issues of product not being supplied over the last three or four years. So in the end true collaboration with either the local governments in the countries where they had difficulties paying or with the Troika meant that we managed to find a solution and the patients received the drugs that they were supposed to receive for their treatment. So I think it worked out well in the end.
At the moment, the EU does not have many competences on health, but could the EU do something in order to help member states get better health systems?
I think that is more of a political question than one that could be addressed to someone like me. What I can tell you is that I know that when we work with the EU… What we are trying to do there is to resolve again the question of competitiveness of Europe. That question has been asked during the last few years and some people are very pessimistic about the competitiveness of Europe.
Let me tell you first and foremost that I don’t share this pessimistic mindset that sometimes seems to prevail in Europe. I strongly believe that there is a strong future for the industry in Europe and I’m talking about the healthcare industry here because Europe is and will remain a strong and essential player on the international stage. Europe is a leader in innovation. Our region mixes great wealth and a very productive and innovative industry. Also our educational systems are very good in Europe. So all the ingredients are here to have a strong industry. And frankly, Europe was where the pharmaceutical industry was invented and I think that we are an innovative powerhouse and we have a bright future ahead of us.
The EU’s role is clearly to try to promote a strong industry, working with the local governments. But I don’t think that we should be complacent because Europe has traditionally been used to competition from the US and Japan. Today, we see that a lot of the competition is coming from the emerging markets. For example, China is now number two in the world when it comes to the number of scientific publications and number three when it comes to the number of patent applications. So we should make sure that we continue to invest in innovation for the future generations. It’s particularly important in an industry like ours where it takes 15 years to develop a new drug. The science is becoming more diverse and challenging. We have been very successful until now, but it’s becoming more difficult to bring products to the market because the science is becoming more complex.
When it comes to budgets, everyone is thinking short-term. What we do in terms of pharmaceutical research is long-term. Short-termism is not helping products to the market. 20 years ago, 21% of clinical products made it to the patient. Today, it’s down to 15-16%. That’s why we all need to work together. So what can the EU do to remain competitive in a market where there is more competition and where it’s more difficult to develop a product? I think Europe is ambitious in this area and frankly I believe that the current challenges can be resolved, but if we want to resolve this, there are three things we need to do: We need to have things like the right tax incentives, strong intellectual property – that’s a given. We also need to make sure that the healthcare systems evolve and adapt to new technologies, and that governments value innovation and are willing to pay for it.
Finally, we need to promote public-private partnerships to resolve the issues that I mentioned before in order to bring more innovative products and for that we need to have very strong political will to ensure that there is this collaboration between academia, state-funded research and the private sector.
But what about the patients, where do they come in? At the moment, the EU is discussing the clinical trials directive because the EU is unhappy with the pharmaceutical companies not being transparent enough when it comes to the results of their clinical trials, only publishing the positive results and this is not good for patients. So how can we make sure that we keep the industry in Europe and at the same time make sure that the drugs are safe enough for patients?
It has always been our intention and our will and we have always worked diligently in order to ensure that our medicines are safe for the patients. I can assure you that this is our number one priority. When it comes to clinical transparency, as you know, the industry has been working with the authorities in order to be extremely transparent and there is some work being done which is going to be implemented towards next year. But we are clearly focused on greater transparency.
Regarding health inequalities, this is something the Commission is talking a lot about at the moment. The universal healthcare is not really working in some countries where some patients can’t get any treatment. Is there a role which the pharmaceutical companies can play to make sure we don’t have health systems in Europe that a running in two different tracks?
I think it’s a political question again. Governments will have to work together with the Commission to try to resolve that issue. You are absolutely right that it has been highlighted particularly by the EU Commissioner for Health as one of his flagship initiatives to try to resolve this problem. What I can tell you is that we are in our company working with the governments to try to find some solutions there. For example, we have been working on EU initiatives in the area of health literacy to ensure that people are more knowledgeable about their health, particularly in those countries. We are also part of some programs about access to innovative medicines in some of those countries and we have a very large CSR program as well. I would say that we are working with the authorities, but as I said it’s a much bigger problem that can’t just be addressed by pharmaceutical companies. We are part of the debate, but I don’t think it’s an area that we can solve alone.