Big Pharma: Getting away with murder, or saving lives?
Jason Field, Life Sciences Ontario President & CEO, on the dangerous myths putting Canada’s pharmaceutical industry at risk
US President Donald Trump recently sent biotech stocks tumbling with his claim that the pharmaceutical industry is “getting away with murder.” In a meeting with major US pharma companies this week, he again slammed pricing, and said he wants to see more drug manufacturing return to the US.
Trump is channelling public outrage around what many see as unethically high drug prices. How can these companies live with themselves as they profit from the sick?
It’s a good question and we must answer it now — with facts.
I’m a scientist by trade, and spent several years in the pharmaceutical industry and as a public servant. The organization I now lead, Life Sciences Ontario, includes pharma, biotech, medtech, and agri-food companies, along with academia and supporting organizations. Advocating for evidence-based decision-making is a critical part of our mandate. However, key facts and context are often absent from public discourse around pharmaceuticals.
In a lecture at a local university, I asked students to rank what they value most: their health, the environment, money, or possessions. Not surprisingly, they ranked health first. I then asked them to guess where pharma companies fall on the Fortune Global 500. They were shocked that the top pharma firm, Johnson & Johnson, ranks 103rd — not in the Top 10 as they had assumed. The Fortune 500’s highest-revenue companies are retailers, and companies pumping out cars, oil, and gas.
Of course, revenues do not equal profit. The average drug takes at least 10 years and more than $1B to develop. According to PwC, in 2016, three of the top 10 R&D spenders globally were big pharma, with seven among the top 20. While other sectors in Canada showed recent declines in R&D expenditure from 2014–2015, the pharmaceutical industry’s expenditures grew by 23.4%.
With public healthcare costs in Canada ballooning, it’s easy to point to drug prices as the culprit. But it’s simply not true: Innovative medicines comprise only 6.4% of total healthcare spending in Canada. Further, the Patented Medicines Prices Review Board (PMPRB) reports that drug prices have remained virtually unchanged in recent years. The Patented Medicines Price Index (PMPI) has been below the Consumer Price Index (CPI) nearly every year since 1988.
In this context, drug prices have been declining, in relative terms, for nearly two decades.
Trump has also stated that he wants to see more drugs made in America.
The reality is that many drugs are produced in the US already. Many are also produced here in Ontario, where it is cost-effective and practical to do so. The province has a dynamic biopharmaceutical manufacturing industry supported by big pharma, as well as many home-grown CMOs. This “America first” protectionism is a potential threat to Canadian manufacturers and their cross-border trade with US partners.
Simply put, Trump’s “alternative facts” around both pricing and manufacturing stand to put our pharma industry at significant risk.
Dealing with inefficiencies in healthcare delivery, an aging population, increasing lifespans, and other factors, is politically complicated. Intense coverage of evildoers like Martin Shkreli, who inflated the price of a life-sustaining drug by 5,000%, have helped make big pharma into a convenient bogeyman.
Mr. Shkreli is not part of big pharma, though. He doesn’t make anything to help sick people. He is a financial industry outlier who saw an opportunity to generate wealth.
I have spent more than a decade in the life sciences industry; most pharma employees I meet derive their career satisfaction from helping to heal the sick.
The face of big pharma is not the privileged bro or executive. It is the child with cancer, the diabetic, the grandparent with COPD, and the researchers working to help them.
While Shkreli revels in public attention, pharmaceutical researchers are largely content to quietly contribute life saving technologies to the world. It’s estimated that 73% of the increase in life expectancy over the last decade is directly attributed to these new medicines.
So, what is the value of a life-altering medicine? How do we ensure they continue to be developed? It must be profitable for companies investing billions and assuming a high risk of failure.
The conversation about drug pricing is really about quality of life, and the value we place on it. I believe that Canadians need to re-examine those values. Where does our health and the health of our loved ones rank?
Once we understand the facts behind the increasing costs of healthcare, then we must decide what we want government to do about it. What is needed is an unbiased, evidence-based examination of our overall healthcare system — including how we appropriately value drugs — and courageous, forward-thinking political leadership willing to enact change.
Dr. Jason Field is the President and CEO of Life Sciences Ontario (LSO), a not-for-profit, member-funded organization advancing the success of Ontario’s life sciences sector.