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NICE queries pharma R&D costs

pharmafile | September 5, 2013 | News story | Research and Development, Sales and Marketing Dillon, NICE, Pfizer, R&D 

NICE has questioned whether pharma really spends as much as it says it does on bringing new treatments to market – and on whether companies do as much as they can to mitigate the expense.

In a letter to The Times, NICE chief executive Sir Andrew Dillon writes: “If it really does cost £1.2 billion to develop a new drug, the question the pharmaceutical industry must be able to answer is this: are you absolutely confident that it needs to?”

He was responding to an article on 30 August in which Jonathan Emms, managing director of Pfizer UK, was quoted as saying that this is the figure for bringing a new medicine to patients.

“Although this is a number that seems to go up each time it’s estimated, it clearly is expensive to develop new drugs,” Sir Andrew continued.

Part of the comment piece by the paper’s business editor Ian King suggested that “unless NICE stops restricting access to drugs because they are too expensive or they have too many harmful side effects for patients, the pharmaceutical industry will stop developing drugs in the UK”.

“I suspect that the research and clinical environment here holds too many advantages for companies to do that, though it is certainly the case that there is a global market for life sciences R&D and the UK has to compete hard to win its share,” Sir Andrew acknowledged.

While pharma should expect a return on its investment, the NHS also has to be confident that the extra benefit to patients justifies the price, the letter goes on.

“It mostly does so, though sometimes at a stretch,” Sir Andrew says. “If we are not sure, we have to say so, in the interests of all those of us who expect the NHS to apply its resources equitably across all of the demands we make of it.”

Not everyone – even within pharma – is convinced of the oft-quoted £1 billion price tag for drug development: earlier this year GlaxoSmithKline boss Sir Andrew Witty went so far as to call the figure ‘one of the great myths of the industry’.

The figure is an average which includes products which fail, he says, so “if you stop failing so often you massively reduce the cost of drug development”.

“It’s not unrealistic that new innovations ought to be priced at or below, in some cases, the prices that have pre-existed them,” he went on. “We haven’t seen that in recent eras of the [pharma] industry but it is completely normal in other industries.”

By contrast, the ABPI believes it costs £1.15 billion “to do all the R&D necessary before a new medicine can be licensed for use”.

And a report by The Office of Health Economics agrees with the £1.2 billion figure: the think tank also said the cost of pharma R&D has risen ten-fold in real terms over the past four decades.

Adam Hill

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