John Crown (Independent) | Oireachtas source

Before I start, I note that I would like to meet Deputy Ó Caoláin after the meeting to give him my prescription for Atorvastatin. If one of his constituents could pick some up for me, I would be very grateful.

One of the underlying realities of pharmaco-economics is that we are working in an increasingly globalised world. We hope that as more harmonisation of drug purchasing policy takes place in the EU, it will improve our negotiating position with the companies. I say that with the caveat that we do not want to harmonise down to the UK level and that perhaps the German way of taking new drugs on board is more realistic. In reality, a small economy like ours is not that important. At a global level, if a company reckons it will completely lose sales in Ireland in acting to avoid an adverse judgment against its pricing policies, it will pay that price. We are a tiny part of the international drug trade. With respect to the question of sweet deals, I believe firmly and have for a long time that there is a complete lack of linkage between where international companies put their manufacturing plants and our domestic drug consumption policies. It is all about the 12.5% corporation tax rate. If we ever want to do the experiment to isolate the effect of the 12.5%, we should jack up the tax rate and see what happens. It is possible, however, that companies would try to lead us to believe there were such sweet deals in an attempt to strong-arm us. We discussed this the other day but we saw evidence of it last year or the year before when pressure was brought to bear on the Taoiseach on the issue of the approval of some drugs by companies suggesting darkly, and entirely inaccurately, that it had an influence on where companies decided to locate their manufacturing plants. I hope that as the EU gets better at this activity, we will be part of a market force which allows us to drive a harder bargain collectively.

My second point is that the companies are now engaging in predatory pricing. There is no way around that. We discussed this earlier in private session, but I recap the point. Companies are no longer basing their pricing policies on cost plus cost of failed drugs plus a reasonable profit margin. Rather, they are using professional marketers to set the price their analysis indicates will be the maximum price the market will sustain before the demand for the drug goes down in line with the principle of price elasticity of demand. We must understand that, unfortunately, we are getting into an adversarial position vis-à-visthe companies. The western economies of the USA, Canada, the EU, Australia and others must get together to give companies signals that there are certain thresholds beyond which we will not go on the pricing of drugs. There is an illustrative example of this. A good friend and colleague, Dr. Lenny Saltz from Memorial Sloan Kettering, who trained with me many years ago, reacted to a very unreasonable pricing demand made for a drug called Zaltrap, a colon cancer drug. He said that the incremental difference it made was so small compared with the standard treatment, which in truth was not that great either, that he would not pay for it. The company heard him and the price of the drug was decreased by approximately one third in the USA. That tells us the power of what one can do, but it also tells us that these guys are still making money at a price that is one third lower than the price at which they originally pegged the drug. There is wriggle room on most drugs. In fact, there is wriggle room for most. I know of one drug which has been approved for an uncommon cancer. The company argues that as it is uncommon, the market is not very big. It is €120,000 per annum for the drug. The registration trial for the drug involved 100 patients, which means it did not cost that much money to develop. It is a further example of predatory pricing.

We must make savings where we can because there are places where we cannot. Unfortunately, our market is so small that we are not in a good position to drive hard bargains with international drug companies for expensive drugs. I hope this problem will be addressed at a global level. When I speak to the industry I tell them they are going to kill the goose that lays the golden egg. In a previous generation, one could go to the US Food and Drug Administration with a drug that had a 5% survival advantage in a cancer and be reimbursed and paid for it. That will change. In an era when multiple drugs produce small marginal benefits, people cannot afford to pay for them all. The industry needs to find a way to make those drugs cheaper or apply them to the smaller number of patients where the impact is greater. What can we do? In the short term, we have to make generics mandatory to save where we can. I am happy to take two generic drugs, which I do. If one wants the branded drug, one should pay for it. If society is paying for the drug and has deemed that the generic is just as effective as the branded version, why should it be asked to pay for the more expensive one? We need to find a way to save money on those drugs which make up the bulk of our drugs bill. The bulk of our drugs bill does not relate to the small number of patients on high-tech drugs. It involves the antibiotics, antidepressants and, like those I am on, cholesterol drugs many people are taking.

From a health economics point of view, we have to understand one other reality. There is a bigger picture here. We must look critically at how we spend money on health care. Drugs are an easy target. One of the reasons drugs are an easy target is that people like me who do trials with drugs generally report our results meticulously. One can see in black and white that drug A gave a person three months and drug B gave them seven months. Health economists can then calculate what it costs to get that additional incremental benefit.

There are many things we do in medicine which are never subjected to that kind of analysis, and which are done very inappropriately. I will not go into all the details. There are many operations that have limited impact. There are many people in intensive care unit beds when it is not in their interest to be in that unit and where not only are resources not being used efficiently but also the patient's health care is not being managed appropriately from their own perspective. In looking at figures such as the cost per quality year of life saved, it is critical that we think a little about it.

If one looks at something like cancer care, which in Ireland was historically pretty miserable and is pretty okay now, the one thing we had was good access to cancer drugs. The last problem we needed to fix was the over-prescription of cancer drugs, because we were under-prescribing drugs. There are countries that combat the over-prescription of cancer drugs very efficiently and they have the worst cancer survival rates of major developed countries. The UK has one of the worst cancer survival rates of any health service of equivalent size and sophistication. In New Zealand, no attempt is made to get most new drugs approved. It is important that we not look at problems like cancer drugs in isolation and that we understand that they are a very easy target when attempting to contain costs.