European Pricing Talks: A lot of Smoke—or is it Fire?

Is it wrong for European pharma executives to worry about the risks of ever-tighter price controls on their products? Should they lightly dismiss signals of public and political concern over rising drug bills, disregarding them as merely exaggerated rhetoric from radical hotheads? Is the climate of suspicion, distrust, and even open hostility toward industry profits just more of the same old thing, merely a continuation of the criticisms that have rumbled on since the 1970s? After all, despite nearly half a century of recurrent image problems, some would argue that the underlying profit-driven business model of the industry has survived very well.

That contentious relationship between prices and profits received yet another sharp twist during exchanges in mid-June in the UK parliament. The debate also revealed much about the evolution of thinking among the political class of what will remain-with or without Brexit-of one of Europe’s leading research centers and an influential player in the world drug market. The arguments turned specifically upon the non-availability of Vertex’s cystic fibrosis treatment, Orkambi, through the UK’s national health system. But the debate served as a significant surrogate for opinions on a much wider range of issues. As one MP expressed it: “The problem is not that there is not enough money, but that big business is not willing to spend it.”

Long-standing resentments among staunch anti-capitalists are crystallizing into more analytical assessments of the dilemma inevitably posed by public payment for private-sector development. How can some concept of fairness be factored into the system is now a respectable question. Having a dig at the drug industry is no longer the preserve of the far left, the equivalent of a call to the barricades. Greater momentum is perceptible in the growing curiosity-even skepticism-among a much wider class of commentators about the rights and wrongs of the current calculus.

 A Conservative minister of state told MPs in the House of Commons that the debate made the case “that Orkambi and other drugs for people with cystic fibrosis should be available on the NHS at a price that is fair and affordable,” and added: “The government and I share that view.” Parliamentary Under-Secretary of State for Health and Social Care Seema Kennedy freely acknowledged “how absolutely desperate sufferers and families are for access to treatments.” What is needed is “a permanent solution for everybody living with cystic fibrosis.”

UK’s lightning rod

Orkambi offers a pertinent example-almost an epitome-of the dilemma. It is a breakthrough innovative medication offering unique relief to sufferers. It is already available in countries such as Austria, Denmark, France, Germany, Luxembourg, the Netherlands, Italy, Greece, and the US. But Vertex and the UK reimbursement agency NICE have been unable, even after three years of talks, to agree on a price­-in a country with a disproportionately large market. Cystic fibrosis affects about 10,500 people in the UK-a far higher figure than in other countries, and representing 12% of the global cystic fibrosis population (the UK represents just 2% of the world population). If a country with a high standard of living, a legendary national health service, an evident unmet need, and a long tradition of supporting and embracing innovation cannot resolve this, what hope is there for wider resolution, the argument runs.

 And clearly patience is running out, and sympathy for the innovator is wearing thin. “Shocked and angry” opposition health minister Sharon Hodgson called Vertex “spiteful,” accusing it of wanton destruction of out-of-date stocks at the same time as reporting a 40% rise in revenues and a doubling of net income in the most recent

quarter. And “by refusing to play fair with NHS England, Vertex is holding lives at ransom,” she said. Thelma Walker pointed out that Vertex “is not struggling to make ends meet. It is a $43 billion company. That is about the same as the GDP of Bolivia or Tunisia.” Karl Turner branded Vertex “a perfect example of predatory capitalism.”

 Even self-declared free-market liberal economists such as Conservative MP Paul Scully-who led this debate-fears that drug prices are reaching a tipping point: “I recognize that private companies must be allowed to deliver fair profits for their shareholders, which will further research and future investment, but they are sailing close to the wind if they are profiteering from human suffering,” he said.  “The market clearly needs to be looked at in relation to big pharma and how it can hold the NHS over a barrel,” he warned, in a message that will resonate beyond the corporate headquarters of Vertex.

Vertex stands accused of persistent obfuscation, and a resistance to supplying evidence to back its pricing demands. “Vertex is willing to accept only its own valuation of Orkambi,” said Kennedy.  

The chair of the parliament’s health and social care committee, Dr. Sarah Wollaston, reported that when she wrote to Vertex and NICE about the failure to make progress, “Vertex assured me that it had contributed ‘substantial new evidence.’” But, she went on, “I subsequently heard from NICE that it had received only ‘an overview of the clinical evidence,’ rather than genuine engagement.”

The minister concurred that “unfortunately, it has continued to refuse to accept the process or has suggested unacceptable conditions on the NICE value assessment of its product, which would render the outcome meaningless.” “Vertex must reengage with the NICE process,” she insisted, pointing to an “unprecedented” proposal by NHS England to grant reimbursement ahead of a positive NICE recommendation, to help Vertex to demonstrate the value of its medicines with real-world data collection, and to offer “significantly increased prices.”

For its part, Vertex, in a statement provided at the end of June, said it remained “highly committed to the negotiations with NHS England” and welcomed the attention of MPs on the issue of securing access to Orkambi, sharing “their urgency to find a solution.” The company added that it would continue to provide medicines through its compassionate use program.

Balancing options

The parliament debate featured repeated calls for breaking down Vertex’s monopoly by resorting to compulsory licensing or circumventing it via the deployment of large-scale clinical trials.

One of the new intake of MPs in the current Commons, Clive Lewis, urged compulsory licensing, “given that we are dealing with people’s lives, the quality of their lives, and a company that is quite simply being intransigent, and greedy.” In addition, such a move “would send a message to those pharmaceutical companies-that global pharma industry-that if they are going to be greedy and put people’s lives at risk, despite being made fair offers, this option could be used by our government.”

“Unless Vertex changes its approach and behaves responsibly, I have a moral obligation to look at these other options,” said the minister. And plenty are being explored. Rachael Maskell argued for a national value-based rebate to reflect the difference between the asking price and what the health service is willing to pay-with the “incentive” that manufacturers of more effective drugs at affordable prices “would not need to pay a rebate, but those that charged more would pay a higher rebate.” And if a manufacturer failed to supply a product when its production costs meant it could do so without making a loss, “it could lose its patent.”

“That would provide the required leverage,” she went on, adding: “We need to hold discussions about this, not just across the sector, but with the European Medicines Agency; the impact could be greater with more countries on board.”

A united front

These are remarks that echo a new consciousness among European national authorities and governments of the merits of acting together to combat the power of the international pharma industry. It is the same consciousness that is leading to new forms of cooperation, ranging from the resolution adopted at the May World Health Assembly on greater transparency on drug pricing to a proliferation of smaller-scale joint exercises such as the first joint health technology assessment to emerge from the agencies of Finland, Norway, and Sweden (FINOSE), or to Bulgaria’s signature in mid-June to the nascent European joint procurement agreement for medical countermeasures-the 25th country to sign up.

The classic “divide and rule” approach of the international industry to negotiations with individual national authorities has survived so far. Concessions have been made from time to time. The question that industry strategists now face, however, is whether the world is changing around the industry so far and so fast that its traditional approaches may not survive much longer. 

Reflector is Pharmaceutical Executive’s correspondent in Brussels