Guest Blogspote: How to encourage pharmaceutical R&D

Politicians should only attempt the possible. We must recognise what we cannot do.

1. The UK Government alone cannot influence the direction of R&D significantly. The sums of money involved are so vast that R&D only makes sense in a global context. The UK represents just 3-4% of the world pharmaceutical market. No company will tailor its R&D to suit us if the demands in the world marketplace are different.
2. We cannot sensibly price individual drugs distributed through pharmaceutical wholesalers or retail pharmacies very differently from other EU countries. Under EU competition law these organisations can buy drugs in the cheapest countries and then, subject to certain safeguards, sell them in more expensive ones. If we fix a drug price too low, a drug company would rather not supply the UK than have its European price structure severely eroded. If we fix a drug price too high, the product will be imported cheaply from abroad. The pricing benefit will not go to the company that carried out the R&D.
3. No value-based pricing system, no matter how transparent and expertly applied, can avoid controversy. Many subjective judgements are involved. The key decisions cannot be avoided by burying them in jargon. Answers to questions about quality of life have to be reduced to numbers. The value of, say, a year of healthy life has to be compared with three years of life with considerable suffering. People will not all have the same opinion. Sometimes the value attributed to a drug can vary by a factor of two or three according to what judgments are made within perfectly reasonable ranges. This harsh reality explains the widespread unease over decisions about the value of drugs made by NICE.

We are not, however, powerless. Policies that would encourage companies to locate R&D in the UK include the following:

1. Being convincing in our belief that pharmaceutical R&D is of major benefit to mankind and that we wish companies to do it in the UK.
2. The patent box and R&D tax credit proposals, which effectively provide a favourable tax environment for drugs discovered and developed in the UK, should be implemented and further explored.
3. The drug pricing system should certainly reward companies with breakthrough drugs.  However, businesses in that fortunate position will be successful anyway. All large drug companies have had barren periods in R&D at points in their history. At present several top-10 drug companies (including Pfizer) are going through such periods at the same time because of related strategies and insufficiently responsive management structures. A good pricing system must help support companies with potentially promising R&D programmes even if they turn out to be unsuccessful. For this reason and others a drug’s price should not be fixed completely independently of the circumstances of the company selling it.
4. The launch of valuable medicines should not be held up whilst a price is negotiated.  If drugs have been developed or undergone clinical trials in the UK, companies will be disappointed if attractive prices are not achieved quickly.
5. The NHS should be encouraged to set up clinical trials quickly and efficiently. It must when appropriate do so in full cooperation with the pharmaceutical industry and international drug approval authorities.
6. Every effort must be made to support and further the standing of relevant academic research in universities and teaching hospitals.
7. The skills needed to run successful drug R&D programmes should be covered more explicitly in relevant courses at university.
8. The Government should be seen to lobby internationally for appropriate cooperation where the UK alone has insufficient influence.
9. A major priority, probably through tax benefits and grants, should be to encourage private and institutional investors to invest in biotechnology companies.
10. The time interval between discovering and marketing a drug is often over ten years. A measure of cross-party support would be helpful.