LONDON (Reuters) – Europe is undermining drug innovation by cutting
prices, raising barriers to new medicines and “freeloading” off others in Asia
and the United States who are more willing to pay, the boss of Pfizer
<PFE.N>, the world’s largest drugmaker, said.
European governments are sacrificing the long-term future of science in
their countries for the sake of short-term budget cuts, chief executive Ian
Read told Reuters on Monday.
“There is a disconnect in Europe between the marketplace for
pharmaceuticals and the desire of European governments to have innovation and
research,” he said in an interview.
“Europe is not paying its fair share of innovation.”
Tensions between large drug companies and European governments have
been rising for several years as administrations across the region face the
challenge of curbing the rising costs of healthcare in a tough economic times.
Governments are by far the biggest buyers of medicines in Europe, allowing them
to dictate prices.
The common European practice of cross-referencing to medicine prices in
other countries means that exceptional price cuts in Spain or Greece will
trigger knock-on cuts elsewhere.
Modern medicines for complex diseases like cancer can be hugely
expensive and many governments in Europe have also put other mechanisms in
place, such as the country’s cost-effectiveness watchdog the National Institute
for Health and Clinical Excellence (NICE).
Read hit out at governments who have slashed drug prices and racked up
close to $20 billion (12 billion pounds) in unpaid bills for medicines, largely
in southern Europe, saying their increasing reluctance to pay up for innovative
therapies would come back to haunt them.
“The pharmaceutical industry requires a vibrant marketplace. It’s a
high-risk business … and a high-risk business needs the potential for high
returns. So in the end, European leaders are sacrificing the long term for the
short term,” Read said.
GlaxoSmithKline Plc <GSK.L> chief executive Andrew Witty said
last month he now ranked Europe behind the United States and Japan as a market
where he would want to launch new products.
POLISH PRICES FOR
GERMANY?
Pfizer’s Read singled out Germany for particular criticism, pointing to
Berlin’s recent decisions to extend drug price freezes from 2010, which were
initially designed as an emergency measure, and to use a basket of countries
including Poland and Greece as a benchmark for how much it will pay for drugs.
“What is the fundamental message there? They are saying … investment in
innovation is at a level that Greek prices can support,” Read said.
“That’s not a recipe to create an innovative industry that can compete
on the world stage.”
Read, who took over as Pfizer chief executive in December 2010 after
the abrupt departure of his predecessor Jeff Kindler, said he’d like to see
governments taking a longer-term view and engaging on the issue of who should
pay for the research and development costs of cutting-edge medicines.
Since Germany is one of Europe’s wealthiest countries, Read questioned
whether referencing its prices to Greek or Polish levels would offer drugmakers
a fair return.
“These are the questions I’d like politicians to look at in a
fundamental way,” he said.
Asked whether such discussions should take place as part of World Trade
Organisation talks, he said they were not on the agenda at the moment, but
probably should be.
“Eventually I think it will have to be. The risk of freeloading is so
great in an industry with sunk costs,” he said.
Kate Kelland and Ben Hirschler
(Editing by Elaine Hardcastle)
euronews.com
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