Calls For Pharma To Come Clean On R&D Spending Grow Louder
Executive Summary
Pharmaceutical companies must heed growing international calls to be more transparent on how R&D is funded, say NGOs.
Pharmaceutical companies must come clean on what they spend on R&D and can no longer ignore growing demand for more transparency, says the advocacy group Health Action International. Meanwhile, the pharmaceutical industry has defended its approach to R&D spending.
HAI’s comments come in response to a Dutch report calling for conditions to be attached to publicly funded R&D investments. Entitled Overpriced Drugs Developed with Dutch Public Funding, the report from not-for-profit organization SOMO (the Centre For Research On Multinational Corporations) accuses pharmaceutical companies of charging “astronomical” prices for medicines that have been researched and developed with at least some public funding.
According to HAI, the issue is gaining prominence on public agendas in several countries, including Spain and the UK where civil society has been active. “The topic is slowly permeating lawmakers at national and EU levels and hopefully we will be seeing some sort of legal reform soon,” Jaume Vidal, HAI’s European policy advisor told the Pink Sheet.
HAI backs the call for conditions. “In our opinion, accepting public funds would be tantamount to explicitly signing a social contract for which the company would engage in making sure that the resulting product is accessible/affordable to the public,” said Vidal.
Though companies are for-profit entities and operate in a free market environment, the production of medicines and other life saving goods should not be viewed in the same way as the manufacture of other goods, he said. Vidal believes that pharmaceutical companies should be subject to tighter conditions and regulations. “In some cases, it would be justified to curb profits to ensure that society is not paying twice,” he said.
But more important than conditions on R&D funding is more transparency on spending, said Vidal. For example, greater transparency around programs and ad-hoc interventions that form part of government industrial strategies is required, including information on how much money is being invested, for how long and any conditions that are attached.
In addition, pharmaceutical companies need to come clean about what exactly they are spending on research and development, including failed projects that have been abandoned. At the same time they need to exclude promotional and marketing activities from declarations on R&D spends
“There is a social demand for greater transparency and accountability that cannot be ignored. Those who would do, do so at their peril,” said Vidal. He pointed to the 72nd World Health Assembly underway this week, where a resolution put forward by Italy on greater transparency on pharmaceutical pricing is to be debated.
Industry Response
Meanwhile, in response to the report, the Dutch pharmaceutical industry association, Innovative Medicines, said that the bulk of R&D investments comes from the pharmaceutical industry. Total annual investment in global drug research is worth €132bn, ($147.2) of which some €95bn comes from pharmaceutical companies, it said.
The association said that public investment was important and that regional investment funds offer “a first push” for start-ups by providing “a few million Euros” for financing R&D and hiring researchers. These investments, however, do not match the total development costs for a new medicine, it said.
“When a start-up makes an invention, drug companies come into the picture to further develop this promising discovery into a fully-fledged medicine. That is desperately needed, otherwise these discoveries would never have the chance to become a medicine,” said the association. “The costs for this process are enormous and cannot be met by a starting company.
Innovative Medicines said that “according to independent consulting firm Gupta, it costs €2.2bn to develop, test and register a drug. These costs are mainly due to the many 'failed' medicines that never reach the finish line and the high capital costs.”
The association also said that public-private partnerships optimized expertise and knowledge from different parties. “With this, new medicines can be developed faster and more efficiently, so that they reach patients faster,” it said in a statement.