Posted by Phillipa on February 17, 2012, at 21:11:47
Not sure what this means. All I see is cost cutting for the world. Phillipa
From Reuters Health Information
Drugmakers Reconsider Europe as Crisis Saps Returns
By Ben HirschlerLONDON (Reuters) Feb 15 - Europe's debt crisis is not only making its citizens poorer, it is also reducing their access to cutting-edge medicines.
Cash-strapped governments have slashed drug prices, racked up close to $20 billion in unpaid bills for treatments and are becoming increasingly reluctant to pay for innovation.
So disillusioned drugmakers are cutting back operations in Europe and launching more and more drugs elsewhere -- trends that look set to accelerate as they question the case for clinical research in countries that may never pay for their inventions.
The frustration is evident at pharmaceutical giants like Britain's GlaxoSmithKline and Germany's Bayer, both of which have deep manufacturing and research roots in their home markets.
"Europe has unfortunately slipped in terms of its willingness to pay for innovation," GSK Chief Executive Andrew Witty told analysts last week.
"We're now at a point where we have to take the view and I think face the reality that really it's about the U.S. and, excitingly anew, it's about Japan in terms of where innovation should be driven."
It is not as if the United States and Japan are pushovers.
There was protest from Big Pharma on Monday about plans for $364 billion of U.S. healthcare savings over 10 years that industry said could cause massive job losses.
Witty argues, however, there is a widening gulf between attitudes in Europe, which is "stuck in a bad place," and those in the United States and Japan.
Modern drugs for complex diseases like cancer can cost tens of thousands of dollars but may transform outcomes for patients.
The United States in 2010 accounted for 61% of all sales of new drugs launched during the preceding five years, while Europe made up just 22%, according to IMS Health, which tracks prescription drug sales and trends worldwide.
Witty's comments will resonate, since the boss of Britain's biggest pharmaceuticals group is also the influential head of the European Federation of Pharmaceutical Industries and Associations (Efpia).
"He doesn't speak up in public unless it's needed. Everybody in the industry thinks the same way -- this is a problem that is growing by the day," Richard Bergstrom, director general of the European lobby group, said in a telephone interview.
"The euro crisis has triggered the worst in the national governments. That is what really frustrates CEOs. People in governments don't seem to realize the risks they are taking, both in the short term with supplies and longer term with innovation."
Strains between drug companies and European governments -- facing a daunting challenge to rein in rising costs of care for aging populations -- have been building for years.
The industry has long complained about cost-effectiveness watchdogs like Britain's National Institute for Health and Clinical Excellence (NICE), which sets an extra hurdle for reimbursement after a drug has been licensed for use.
NICE argues such benchmarking of value for money is vital.
GSK and patient groups were exasperated by a NICE decision last September not to recommend Benlysta (belimumab) for reimbursement -- under which its cost would have been covered by the state health system -- even though the GSK medicine is the first new treatment for lupus in a half-century and has been widely adopted elsewhere.
Concerns are also growing about economically strong Germany, the world's third-largest market for pharmaceuticals, where IMS logged sales of $44 billion in the 12 months through September 2011.
Bayer CEO Marijn Dekkers thinks medicines have become an easy target for governments, as exemplified by Germany's 16% mandatory rebate on all prescriptions.
"We are going to lose 16 cents with every euro of sales. It feels good short term, but for society it has consequences for the future," he said in a February 7 Wall Street Journal interview.
There are deep misgivings, too, about Germany's new system for setting drug prices, which allows for reassessment -- and potentially big price cuts -- a year after launch.
The new legislation prompted Eli Lilly and Boehringer Ingelheim to scrap plans to market their diabetes drug Trajenta (linagliptin) in the country last September.
France, the world's No. 4 market with sales of $41 billion, is also increasingly "picky" in rating drugs for reimbursement - another sign of a tough line in health departments across Europe, according to drugmakers.
There is fierce resistance among governments, too, to plans being drawn up by the European Commission for next month that would shorten timelines for approving new drugs, Bergstrom said.
Meanwhile, the shockwaves from price cuts in southern Europe, the epicenter of the euro zone crisis, are still rippling through stronger economies.
The common practice of cross-referring to prices in other countries means that exceptional price cuts in Spain or Greece -- where the latest austerity package will spur further cuts in drug spending this year -- will trigger knock-on cuts elsewhere.
Any Greek devaluation following a potential exit from the euro would take reference pricing into uncharted territory.
By comparison, the U.S. market is a better bet, even with healthcare reform, and Japan is a surprise bright spot. Green lights for a run of new drugs means 48% of GSK's Japanese sales in 2011 were of products launched in the last five years.
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