John Crown (Independent) | Oireachtas source

I welcome our guests. This is an important discussion. It is complex and it is important to dig down into some of the specifics. I speak with a little familiarity with this area, having founded the All Ireland Cooperative Oncology Research Group, ICORG, many years ago. Most of my research has in fact involved drug development, and that is what I have been primarily interested in. I am proud of what we had achieved with ICORG. We took on a rather improbable dream in a country that had only four oncologists at the time we founded the group and almost no patients going on clinical trials. Since then we have brought in approximately €30 million to €40 million worth of free drugs to this country and created approximately 100 jobs. In truth, those jobs are in the public sector, but I estimate that we have also created approximately 100 jobs in the private sector, because there are companies here which previously only had a sales force but then developed a research and development office to support the activities of clinical research trials. We have had an honest and honourable role in developing four or five important cancer drugs. I have been invited to present to the US Food and Drug Administration on behalf of a drug which was licensed partly on the strength of that presentation. I have recently undergone an inspection by the Food and Drug Administration, which my team passed with flying colours. We are proud of what we have achieved in that regard.

It is good that we are going to have the equivalent of the US Physician Financial Transparency Reports Act, or Sunshine Act, here in the near future. It will enforce a transparency in the relations between the industry and doctors. This is long overdue and I am supportive of it.

The Irish Pharmaceutical Healthcare Association, IPHA, primarily represents the Irish affiliates of international companies. The typical IPHA customers would be Irish sales and marketing forces selling and marketing drugs in Ireland, rather than representatives of the large manufacturing presence in Cork or west Dublin. Over the years I have managed to get a great deal of money for research from these companies. I have got them to support grants, match grants and so on. However, one of the issues I never quite got to the bottom of was what went into the decision-making process in terms of where they put a manufacturing plant. Were they more likely to put it in Ireland because we carried out good research here? Were they more likely to put it here because the local market was favourable for the sales of the local Irish affiliate sales force? To me that is simply not plausible. I believe there is a complete disconnect between the decision on where a manufacturing plant goes and the minuscule size of the Irish market. Companies put their manufacturing plants here for one reason and one reason only, and it relates to one number: 12%. They come here because of the corporation tax rate. There are other supportive reasons as well, but arguments to the effect that we should not prescribe generic drugs in Ireland because otherwise we would lose the manufacturing base have been advanced by the industry in the past and I believe they are wholly spurious. The industry needs to get its act together on pricing.

The marketing, pricing and costing of drugs has changed dramatically. The old philosophy used to be that a manufacturing company based the price it charged for a drug on the cost of developing it, plus the cost of the many failed drugs that never got to marketing, plus a reasonable market mark-up. It was difficult to argue with that. While science and medicine have become more sophisticated, so has marketing. We now know that one of the key scientific components of marketing is pricing and the question of what the market will bear. The things which determine what a market will bear include the quality of the science behind the drug and the quality of the clinical impact and its reach into medicine, but also emotional and social factors. If a company has an effective drug for a rare disease that affects young people, it is likely that the company will try to yank the price up as high as it can, way beyond the developmental cost of the drug. That is why I am troubled indeed when I hear of individual drugs costing many hundreds of thousands of pounds per annum. That is simply not sustainable.

I know of one cancer drug we are prescribing that costs approximately £120,000 per annum for a patient, and that patient would be on the drug for a year. I know that the drug was licensed on the basis of a trial which included only 100 patients. Therefore, the developmental costs of this drug had no relationship whatsoever to what was being charged for it. Let us compare that to a drug like Herceptin, which was developed in an earlier era and which cost approximately €30,000 per year. It was based on trials that included 20,000 or 30,000 patients. It was expensive to develop. By the way, when we are allowed to prescribe bio-similars instead of Herceptin, I will prescribe them all the time. We need to be absolutely unambiguous about this. Our health service will not be able to afford the high-quality cancer, cardiovascular and cystic fibrosis treatments that are coming if we do not save everywhere we can. In every situation where a generic drug exists that is much cheaper, we should use it. In every situation where a bio-similar drug exists that is much cheaper, we should use it. I take two generic medications with a clean conscience and a light heart every morning and I tell my patients the same thing.

The companies need to have a serious rethink. Increasingly, the purchasers are government collectives throughout the Western world. They probably need to draw a line under this and express to the companies the view that there is an amount of money beyond which they will never pay for one drug and that the companies can still make money on it. I offer one example. A good friend and colleague of mine, Dr. Leonard Saltz from the Memorial Sloan Kettering Cancer Center, was routinely prescribing a widely used colon cancer drug called bevacizumab. A newer drug called aflibercept came along. It was not bio-similar; it was a different company's product. The company wanted to give it and took the view that it was a little better. However, the price was astronomical. Dr. Saltz went to the New York Times, wrote an op-ed and then went to the pharmacy committee of the hospital and said that they should not pay for it because the difference was too small and the cost too great. Immediately, the company was able to drop the price of the drug by one half, which told us that there was no relationship whatsoever between where it pitched the price of the drug and the actual developmental costs of it. The company made a calculation - as it transpired, a miscalculation - that the market would bear a higher cost.

We really need to get our act together on this. If we are going to be able to take these wonderful new cancer treatments into the next generation, we need to look at numerous things. How much money is spent on marketing to doctors? How much money is spent on advertising? Moreover, we need to look at the way pricing works on the drugs. The bad news for the industry is that if they price it too hard, no one is going to pay. That is where it is. We need to work out a way to ensure that drugs become available at a rate that is affordable as well as allowing a reasonable profit for the companies and their shareholders.