In a speech last week at the FT Global Pharmaceutical and Biotechnology conference in London, AstraZeneca CEO David Brennan urged the crowd to keep a careful eye on balancing the need to contain costs with fostering an environment that promotes medical discovery. As it was noted by various media sources last week, “healthcare reform would lower AstraZeneca’s results by $300 million and next year’s by twice that much.” Despite this significant loss, Brennan played a key role in negotiations with lawmakers that eventually led to that $80 billion promise of cost cuts from the pharmaceutical industry, and based on his speech, he still remains supportive of health care reform efforts.
Mr. Brennan explained that one of the unique parts about US healthcare is that it does not have a system like other countries; rather it has a healthcare market. The market, he noted, is diverse and a complex, with many constituents playing a role. Moreover, he recognized that the total value of the health care system in the US, $2.2 trillion, is the equivalent of the UK’s total GDP. While this shows a very large market, Brennan added however, that many other countries around the world that are growing fast, and competing with the US for research and development investment and jobs. This point is significant since 85% of the world’s population lives in emerging economies and their health needs are increasing and changing.
The benefit of having emerging health markets, according to Brennan, is that countries are sharing their knowledge of allocating health resources and expertise in health care. To that effect, he acknowledged the role he played in health care reform discussions as chairman of PhRMA, and the issues he brought to the table on behalf of pharmaceutical companies.
Accordingly, he recognized that as the next phase of health care reform sets in, it is “vital that the industry stays at the table” and discusses and puts forth issues it can support as the health care system changes. One of the main goals he asserted is that industry needs to “remain focused on the central goal of getting the right medicines to the right patients in an affordable way.” To do so, Brennan explained that policymakers implementing health care reform cannot “lose sight of what is in the interests of patients.”
However, he noted that health care spending growth is on a decline in light of health care reform. He cited a report from the National Commission of Fiscal Responsibility and Reform, which noted that proposals from the health care reform legislation will likely further increase downward pressure on the industry.
As a result, Brennan emphasized the need for pharmaceutical companies to be flexible as the health care system in the US changes. He acknowledged that FDA will play a vital role in ensuring that new medicines will reach patients in a timely and cost effective way. Consequently, in making such a recognition, he noted that a “well funded and well managed FDA is essential to meet the challenges of health care reform.”
He emphasized the importance of having a stronger FDA because the industry knows it essential for patients and the industry to have a regulatory watchdog “with a full set of teeth.” Brennan also noted the role FDA will play in comparative effectiveness research to improve America’s understanding of the full cost of particular treatments, not just the drugs. Interestingly, Brennan cited a study from Columbia University to illustrate this point, which found that although “replacing an older medicine with one 15 years newer increased drug costs by an average of $18, it reduced hospital and other non-drug costs by $129.”
Nevertheless, Brennan recognized that reform in the US will be a challenge for pharmaceutical company business models. He noted that pricing pressures around the world in both developed and developing economies are a factor, and that there is a huge volume of unmet need in the world. To address these problems, companies need to “maintain a relentless focus on the research that will bring new drugs to patients.”
However, Brennan pointed out the difficulty of achieving this goal. For example, he noted how President Obama called for health care cost containment and a cure for cancer in our lifetime. Despite this noble and desirable goal, Brennan explained that such an initiative is difficult given that US reform at this point is focusing on short run cost savings, that may prove expensive in the long run. He noted that a pharmaceutical industry with increased burdens and an overly cautious FDA or weakened intellectual property regulation could all undermine the US’s ability to attract health research and investment.
Conclusion
Ultimately, Brennan’s speech demonstrates the willingness of the pharmaceutical industry to meet the goals of US health care reform, especially the goals of bringing cures for diseases, discovering and developing new treatments, and getting them into patient’s hands in a cost effective way. It seems like a reasonable solution that the efforts to implement health care reform should seriously consider the role industry plays in improving the lives of Americans, and take into consideration the unique challenges and obstacles reform could pose for companies.
The last thing we need at this point in our economic woes and as jobless numbers remaining at an all time high, is for the government to drive out more jobs, more revenue, and even worse, the smartest and most talented scientists and researchers. Implementation of health care reform, as Brennan emphasized, needs to encourage collaboration between the government and industry to achieve the goals of both in furtherance of a stronger, safer, and better health care system.
If the US wants to see a cure for cancer or other medical breakthroughs, health care reform will need to create and maintain a system that “supports a strong, vibrant and competitive research based pharmaceutical industry.”