AN INNOVATORS VIEW THE PURSUIT OF CERTAINTY IN AN UNPREDICTABLE MARKET DAVID GALLAGHER, MANAGING DIRECTOR, PFIZER AUSTRALIA
May 06, 2015
AN INNOVATORS VIEW THE PURSUIT OF CERTAINTY IN AN UNPREDICTABLE MARKET
DAVID GALLAGHER, MANAGING DIRECTOR, PFIZER AUSTRALIA
Overview o New medicines and vaccines have been one of the greatest contributors to
increased life expectancy in Australia over the last 50 years Ø Universal access through the PBS has enabled this to occur across the population
o New medicines come from sophisticated and expensive research, extensive and expensive clinical trials and a large manufacturing investment.
Ø Many thousands of drug candidates fall by the way side never getting to market o The bio-pharmaceutical industry invests its resources in this research, bears the
risk and then needs to generate a return over the patent life to continue to invest o Future advances in life expectancy and quality of life are dependent on innovation
which is dependent on society’s recognition and encouragement of that innovation o Society recognises and encourages innovation through intellectual property rights
and a reimbursement environment that supports this o All of these are critical dependent elements in generating improved health and
societal wealth for tomorrow
I . THE VALUE OF INNOVATION
The first vaccine for rubella came onto the market
The miracles of modern medicine
Insulin tested in humans
1922 1941
Florey undertakes clinical trials of penicillin the first modern an:bio:c
The first effec:ve cancer chemotherapy drug -‐ nitrogen mustard -‐ was discovered
1946 1952
The first polio vaccine was developed
1957
Thiazides diure:cs for heart failure and hypertension
1962
Beta blockers angina , hypertension and heart failure
1964
The first measles vaccine released
1970 1972
The insulin pump was invented
1976
First H2 blocker launched
HIV now a chronic disease, not a death sentence
The miracles of modern medicine
Eradica:on of smallpox
1978 1980
Hepa::s B diagnos:c test and vaccine developed
First an:-‐retroviral (AZT) for HIV becomes available in Australia
1987
The first sta:n approved for use by the US FDA
2000
Americas, Europe, Western Pacific and China declared Polio – free
2006
The first HPV vaccine to be approved (Dr Ian Fraser)
2013
Several new melanoma treatments listed on PBS
2014
Medicines and vaccines have made a critical contribution to life expectancy for Australians
Source: Australian Ins:tute of Health and Welfare, Australia’s Health 2012, Figure 3.6 Source: Australian Bureau of Sta:s:cs, Catalogue 3303.0 Causes of Death, Australia, 2010
16% fall in cancer deaths
• Australians have one of the highest life expectancies in the world • Over the past few decades Australia has achieved significant gain in
cancer, infection disease and cardiovascular death rates
Medicines and vaccines have made a critical contribution to life expectancy for Australians
79% fall in cardiovascular deaths
96% fall in the infections disease
death rate
Source: Australian Bureau of Sta:s:cs, Catalogue 3303.0 Causes of Death, Australia, 2010
• Advances in medicines and vaccines have contributed to the dramatic decline in infectious disease death rates – a 96% fall
• Cardiovascular deaths have fallen from 831 deaths per 100,000 of population in 1968 to 174 deaths per 100,000 in 2010
New medicines are transforming Australian lives Dear Pfizer, I am writing to you a letter of appreciation for the access you gave us from March - October 2013.
It is a terrible thing to experience life hanging in the balance and know that your fate is being dictated simply by just being in the right place at the right time, when there happens to be a compassionate use program available. Fortunately for us ....We were in the right place at the right time. But I understand these programs are unsustainable long term, and I truly hope that government funded access be available to patients very soon. It would be nice to know that patients’ lives in the future aren't relying on the stars being aligned, luck and short bursts of company generosity to live, as my husband was. I experienced anticipatory grief, as did our immediate and extended family. And this was not a pleasant experience. Frequent hospital visits were exhausting, parking, petrol, medications, and all associated hospital costs were very stressful. Being able to work, play and live a normal life under the circumstances is an absolute gift that your company gave us through access and was incredibly life changing. The generosity your company has shown us we can never repay....
Economic value • Employment. Over 15,000 people employed directly in the Pharmaceutical sector* • Exports. Total exports in the 12 months to the end of February 2014 $3.44Bn** • Productivity, welfare and tax. Mitigating the impact of avoidable illness
• *= source: ABS, Cat. 5368.0, Interna:onal Trade in Goods and Services • **=source: IBIS World, Pharmaceu:cals Products Manufacturing in Australia, December 2013
Recent studies conducted by a team led by Dr Deborah Schofield, from the NHMRC Clinical Trials Centre and School of Public Health at the University of Sydney. Dr Schofield indicate that persons out of the labour force due to avoidable illness had significantly lower incomes ,received significantly higher support payments, and paid significantly less tax than those employed full-‐:me or part-‐:me. This results in an annual na:onal loss of income of over $17 billion, an annual na:onal increase of $1.5 billion in spending on government support payments, and an annual loss of $2.1 billion in taxa:on revenue.# # Schofield et al. BMC Public Health 2011, 11:418
II . THE ENABLERS OF INNOVATION
Enablers of innovation
1. Excep:onal research and
science
2.Interna:onally aligned IP standards
3. A robust and stable pricing
and reimbursement
pathway
Good research and science is a long & unpredictable process
Source: Source: Medicines Australia Factbook 2013
The journey is only getting longer and harder
Aspirin (21 atoms)
Growth Hormone (3,000 atoms)
Immunoglobin antibody
(25,000 atoms)
Bike (10 kg)
Race car (1,000 kg)
Fighter Jet (10,000 kg)
SMALL MOLECULE SMALL BIOLOGIC LARGE BIOLOGIC
SIZ
E
CO
MP
LEX
ITY
2. Internationally aligned IP standards
1. Excep:onal research and
science
2.Interna:onally aligned IP standards
3. A robust and stable pricing and reimburse
pathway
Why is it so important?
• Patents are essential for securing investment capital to fund innovation and development
Patients and Society
• Creates a robust policy environment to enable innovation Government
Innovative Pharma/Biotech industry
• Through the appropriate protection of IP there will be continued investment in new medicines/therapies benefitting all
but...resist supporting the infrastructure that enables
it (patent term restorations,
data exclusivity etc)
We want innovation...
THE CONFLICT
• “No matter how brilliant a new idea or discovery is, it can never flourish unless someone takes a bet on it”
• “Free and open knowledge without the profit motive sounds like the
quickest way to help the world, but this often slows down the ability for knowledge to help”
• “ To change the world through innovation, having the best academics, researchers and scientist only get you half way. In Australia it’s what we do after we find a discovery or think of a new idea that lets us down”
The Australian, Ben McNeil, 28th August 2013 , ARC QEII Research fellow, UNI NSW
THE DANGER
• Evergreening - the constant renewal of a patent through incremental innovation.
• A false and misleading concept - No later patent can be issued for the same invention, and no later granted patents can extend the term of an earlier one.
• Generic companies are free to use the information in the original patent for their own commercial gain upon its expiry.
• Merits of the innovation can only be decided by patients and medical professionals.
• Incremental innovation is just as important to development in medicines as major scientific breakthroughs (antibiotics, statins, ACE- inhibitors, antiepileptic drugs, anti cancer agents, treatment for HIV and diabetes)
Misconceptions at play
I. Follow-on patents
• Duration of standard patent 20 years – ‘effective patent life’ of 15 yrs
• Enacted in 1998 – PTE up to 5 years. Why? - In recognition of the unique nature of regulatory requirements for
pharmaceuticals to gain market approval - To provide an effective patent life more in line with that available to
inventions in other fields of technology; and - To ensure Australia remains competitive.
However.... • Average ‘effective life’ for pharmaceutical products remains
between 11 & 12 yrs • Breadth of Australian PTE limited in comparison to EU, UK
and US (additional paediatric extension)
Misconceptions at play
II. Patent term extensions
• 5 years, among the lowest among OECD (and other developed) countries
Misconceptions at play
III. Data exclusivity
Source: Frost & Sullivan, The Impact of Australia’s Data Exclusivity Regime on Australia’s Healthcare System, 2013; and, Interna:onal Federa:on of Pharmaceu:cal Manufacturers and Associa:ons, Data Exclusivity: Encouraging Development of
New Medicines, 2011.
Misconceptions at play
III. Data exclusivity
Benefits for Australia’s Economy - Australian biotech companies currently face a competitive
disadvantage to the US and EU. - Extending data exclusivity would bring Australia in line
with global best-practice, giving Australian companies the opportunity to compete more effectively for global R&D investment dollars .
Benefits for Australian Patients - Early access to medicines via clinical trial programs. - Without equivalent data exclusivity and IP, patients are
delayed access with companies launching in countries with superior IP protection first.
- Data exclusivity encourages investment in researching further indications of existing medications.
“Patents aren’t the oppressive force that they’re often claimed to be. In reality they are often part of a strategy that fosters innovation and promotes the search for new technologies that benefit us all.” IP
Australia May 2012
The 2013 Review of Health and Medical Research stressed that there is an urgent need for the Australian government to ensure
the strength and stability of Australia’s IP system.
McKeon Review - Strategic Review of Health and Medical Research – Better Health through Research
Enablers of innovation
1. Excep:onal research and
science
2.Interna:onally alighted IP standards
3. A robust and stable pricing and reimburse
pathway
3. A robust, stable pricing and reimbursement pathway
The partnership with both Labor and Coalition Governments has ensured the sustainability the PBS and savings are accumulating
Simplified price disclosure will deliver further savings from 1 Oct 2014
96% fall in the infections disease
death rate
Australia – Right level of investment?
0.0 0.5 1.0 1.5 2.0 2.5 3.0
Hungary
Greece
United States
Japan
Canada
France
Belgium
Germany
Ireland
OECD31
Australia
Pharmaceu)cal Expenditures as a % of GDP
Public Private
Source: Expenditure on pharmaceuticals per capita and as a share of GDP, 2011 – Health at a Glance OECD Indicators 2013
PBS Expenditure – Where to from here?
0
2
4
6
8
10
12 0.57% 0.59% 0.56% 0.57%
NaPonal Commission of Audit, April 2014
AUS$BN
0.58%
The Market View from IMS
26
Source: IMS Health Market Prognosis (Published March 2014). IMS forecast is built upon GDP forecasts as well as our assessment of specific pharmaceu:cal dynamics and demographic impacts
Australia Pharmaceu)cal Market Forecast 2013-‐2018 (at actual prices)
Retail + Hospital
0.0%
0
1.0%
1.5%
10
5
-1.0%
-0.5%
0.5%
15 13.8
Growth (%
)
2018 (f)
14.0
2017 (f)
Sales (Billion
AUD)
2016 (f)
13.9
2015 (f)
13.7
2014 (f)
13.6
2013 (a)
13.7
Retail + Hospital sales Retail + Hospital growth
CAGR 2013-‐2018
Retail -‐0.1%
Hospital 2.7%
Total 0.5%
Annual Growth(%)
2013 -0.6% 2014 -0.5% 2015 0.3% 2016 0.8% 2017 1.0% 2018 0.8%
The generics are predicted to grow faster than all other categories including OTC
27
Source: IMS Health Market Prognosis(Published March 2014), 2014-‐2018 Australia (*) at ex-‐manufacturer price levels, not including rebates and discounts
Segment Sales + Forecast (AU$ -‐ ex manufacturer)
Non-‐generics: Sales of ‘protected’, ‘no longer protected’ and ‘never protected’ products Generics : Sales of generic products Other: Sales of OTC, non-‐categorized and other products
2013-‐2018 CAGR Non-‐generics -‐1.8% Generics 5.5% Others 1.4% Total 0.5%
0%
100%
80%
60%
40%
20%
% sh
are of aud
ited market
2018
52%
23%
25%
2017
53%
22%
24%
2016
54%
22%
24%
2015
55%
21%
24%
2014
56%
20%
24%
2013
58%
18%
24%
2012
60%
17%
23%
2011
64%
14%
21%
2010
66%
14%
20%
Generics Others Non-‐generics
However access is an issue
Source: Wonder Drug Consulting Jan 2014
Positive progress, more work to be done
• Health Minister Peter Dutton has kept pre-election commitments – Increasing the PBS listing Cabinet threshold to $20million – Listing the backlog of medicines previously recommended by the PBAC
• The recent reinvigoration of the Access to Medicines Working Group (AMWG)
• Consultation is important for certainty.
The question of sustainability
Financially
Meet future health needs of Australians
Timely and affordable access
III . THE BENEFITS OF CERTAINTY
What does uncertainty produce ?
• Reduced R&D spend • Reduced innovative medicines • Reduced foreign direct investment • Reduced employment • Poorer health outcomes • Loss of economic value
Certainty delivers a virtuous circle
1. Excep:onal research and
science
2.Interna:onally aligned IP standards
3. A robust and stable pricing
and reimbursement
pathway
Summary o New medicines and vaccines have been one of the greatest contributors to
increased life expectancy in Australia over the last 50 years
o The bio-pharmaceutical industry invests the resources over the long term, bears the risk and then generates a return over the patent life
o To continue to see similar advances in life expectancy and quality of life society needs to recognise and fairly reward pathways of innovation
o That desirable and beneficial outcome will only occur in the right regulatory, intellectual property and reimbursement environment
o This can be achieved delivering sustainable improvements in healthcare within a sustainable PBS
Patients are relying on innovative medicines to address a broad range of health issues