5: Meta & Material: 303

June 29, 2011 § Leave a comment

Once upon a time — nay this is not a story about three little pigs! — more involving five somewhat larger anima acronymed in global business and financial spheres thusly, PIIGS. Before which telling I shall relata refero** the tale of two firms in one market. With one drug(pharmaceutical) by chemical name though two brand names. ie one for each firm.

Now it so happened the two firms, neither of whom had been at all involved in the discovery and R&D for this wonderful compound, but both of which sought use in its indicated patient population. At a price, admittedly, fit to blow anybody’s socks off. That is to say, and emphasising, the same price, same indication, different firms. Competitive, not, I imagine people joked at the time.

Still, it was a very good drug, and still is so far as I know though largely as a result of being parked in a usage category perhaps known for ‘drug-resistant only’ chemotherapy. Which at the time had specialist physicians willing to wave their reputations for their suffering patients in front of funding bodies. So assured were they of success.

Whilst asking: “Why, oh why is it so expensive?” To receive a well-harmonized answer from both firms to effect that it was so difficult to manufacture. [ said as if you understand they had manufactured it ]. But, physicians knew, no one would market the compound unless adequate quantities were available to tablet etc and besides, its discovery had been in Italy… and in Italy back then there were no patents on medicines… so what is going on and just who is setting the prices here.?

Before proceeding let me once again explain that my earlier intention to cover ‘Evergreening’ shall have to wait until next time.

To the main story of whence Big Pharma’s mongrel over-ate to put its belly on the ground and, at size megalo, pleaded its owner/trainer for a free ride.

The Economist i/u has a very blunt message from its comprehensive oversight analysis of Portugal:—

Large multinationals, which mostly import finished products, dominate the market.

and obligingly explains:—

In 2006.. Portugal spent 21.8% of total healthcare(itself about 10% GDP, according to the same doco) spending on pharmaceuticals, which is about the same proportion as in Spain (21.7%), much greater than in Germany (14.8%) and France (16.3%), but lower than in Greece (22.7%). The government estimates that medicines account for 18% of the NHS budget. The main reason for the high share of spending on medicines is that many medicines in Portugal are imported, and so prices of drugs are relatively high compared with domestic price levels.

The Portuguese story we might say, so what of Ireland and the Irish..?

In a report entitled Pharmaceuticals and Consumers we find a simply-stated independence to confirm the Irish experience in its European context:—

Most prescriptions in Europe are written using a brand name. The rate of brand prescriptions in Ireland is approximately 85 – 95%”
… In some EU countries, pharmacists may substitute a prescribed brand drug with a cheaper generic alternative. In Ireland, pharmacists are not allowed to provide substitutions.

Wow! Not allowed? In the now warn words of pharm exec: What Were They Thinking ?

What the people who agreed to this were not thinking was what buy branded at patent monopoly prices amounted to.

On to Italy, our once thought unpatented wonder medicines innovator.

Reading as kindness itself for Big Pharma this overview of May/2011 says:—

Due to high pharmaceutical spend driven by limited generic usage, Italy employs a range of pricing and reimbursement tools to control costs. As a result, drug prices in Italy are among the lowest in Europe, a factor which is largely behind the country´s high parallel export activity.

Landmines everywhere here. “Driven by limited generic usage” ? Like don’t use their own but export it..variation on not allowed? Working up a lotta low value (unpatented or generic) for supply-side credits. Waitta minute..! Wouldn’t you want to bet how Big Pharma players e.g. the American and Swiss in our forgoing tale would be giving nothing away in costs as they try take whole bellyfulls of profit from their own domestic consumers!? And other markets.

“High parallel export activity”? Above use is cart before the horse, surely? Else, how long has this been going on? They are both deals, but guess who is for keeping the export drive going! No R&D, no labor to speak of, less pollution..(blah.. blah)

Seeking clarity I dug out a pertinent report to value this market. It read: —

The prescription pharmaceutical market in Italy was valued at $24.9 billion in 2009. Key growth drivers for branded pharma include the growing use of chronic high-value innovative treatments driven by a growing elderly population, the high proportion of the healthcare budget spent on pharmaceuticals, and a high level of brand loyalty among Italian patients.

Pretty clear, huh. Several already familiar themes and, even in the new – 2011 – language which adds Italian patient ‘loyalty’ for Big Pharma’s own benefit—talk about telling them what they want to hear.

Hence to grade G as in Greece. No surprise is the Globe & Mail’s* take “Greece’s generic product utilization is currently one of the lowest in Europe..” Meaning, don’t we know, low generics high brand imports.

Yet also meaning that today hard facts tell of a mongrel finally hitting the ground. And no, not running, far far from it. As Jack and Hope@ ft.com report:—

The Greek government has fallen sharply behind on payments to healthcare companies only months after restructuring its €5.4bn ($7.6bn) debt to suppliers, raising doubts about patient safety while revealing the looming cash-flow crisis faced by the state.

The pharmaceutical industry says only 30 per cent of €1.2bn in payments owed by public hospitals since the start of last year have been made. Of debt due from the start of 2011, just 1 per cent has so far been paid.

* Going for a song is what happens when a country is cash-strapped.

Spain. Old friend Reuters has the story:—

The Spanish prescription pharmaceutical market was valued at $22.1bn in sales in 2009, with an annual growth rate of 6.4% between 2008 and 2009.

… Key growth drivers include growing use of chronic high-value innovative treatments driven by an aging population, with a high proportion of healthcare expenditure spent on prescription pharmaceuticals.

Familiar, sure. Yet with greater clarity still it adds, “The introduction of reference pricing in Spain during 2000, numerous rounds of price cuts..”

Mob meets mongrel, huh. Does the mutt make one final leap into Big Pharma’s arms or..? Like I said before, waitta minute.. there was an Italian connection… Later, yes, yet better than never:—

As a result of reforms introduced [ Italy ] in April 2009, branded pharma companies are now forced to maintain brand prices at a higher price than the first generic product to market. [ Reference pricing.. anyone? ]

Which is likely – Spain would know, being how they modelled RP first – to increase brand erosion and any ‘patient loyalty’ premium after patents expire.

Before closing a message for agent mu@sul(NZ) and/or its ill-advised sponsor could usefully say: know what and its global context before alleging, or even accusing kiwis, of things others have deemed entirely justifiable within the aegis of chemotherapeutic care bestowed upon them.

PIIGS in no wise the less so, have their debt problems as at least part result Big Pharma commercial arrangements upon their pricing and marketing methods. Overdone.

As for the mongrel, my message is firm: SLIM DOWN, boy! Else it is the cattle for you and likely trod upon.

** relato refero = I tell as I heard it

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