PharmExec Blog

EFPIA Calls for New Deal in Europe

EFPIA president Andrew Witty is hoping that the deepening European economic crisis will impel European leaders towards more courageous and radical solutions, writes Reflector.
With the European economic and financial crisis deepening all the time, the healthcare sector in general — and the pharmaceutical sector in particular — faces further constraints from cost cutting. As European Union leaders came together in Brussels for yet another “now-or-never” summit at the end of June, they were assailed by calls for leniency, clemency, and support from everyone whose business is health.
Andrew Witty, CEO of GlaxoSmithKline and president of the main European drug industry federation, EFPIA, sent a letter to the heads of state and government candidly asking them to “show your support for pharmaceutical innovation as one of the key platforms of a growth programme for Europe.”
Bouncing adroitly off the EU leaders’ own billing of their meeting as a “growth summit,” Witty pursued the theme of growth as a key argument in his case for a better deal for drug firms. If you want to get Europe out of the hole it is in, he more or less told them, you need to back the winners, even if times are tough.
“EFPIA members fully understand that in the current financial crisis countries need to take steps to control public spending and restore fiscal credibility,” he conceded.  But that said, the challenge, in Witty’s view, is for governments is to make wise decisions about what they cut in their bid to regain their stability. And, he continued, wise decisions would be decisions that promote innovation — particularly in heavyweight innovators like the drug industry.
His pleadings were accompanied by thinly-veiled threats. The industry in Europe is strong, but “other locations such as the US and certain Asian countries present increasingly strong competition.” And the competition is not only in terms of their output as producers. It is, he made clear, a matter also of competition for investment.
“In these extraordinary times for Europe, its economies, and its citizens, a business-as-usual approach of cost-containment policies that create market distortions will drive investment elsewhere and consign Europe to a gradual decline, to the second rank of the new global order.” Europe must avoid complacency, he said.
His corollary was that “a more vigorous industrial and innovation policy is needed.” Member states and the Commission must focus on how they can help encourage individuals, universities, start-up companies and large-scale industrial organizations to focus on innovation, invest for the future, and create products to fulfil unmet medical need.
Witty’s arguments were backed up with the customary litany of European industry achievements — €27.5 billion spent every year on research and development in Europe, 660,000 direct jobs, an EU trade balance surplus of €48.3 billion… But the bottom line was that the best way to support innovation “is to use innovation and reward it by paying fair prices for added value.”
EFPIA also signed up — along with a long list of other organizations ranging from trade unions to members of the European parliament — to another appeal to European leaders, with a broader message of urgency about protecting Europe’s population from the effects of the downturn.
“ln these difficult times, we urge you to set out a sustainable vision for Europe,”  with “confident action that prioritizes the needs of citizens,”  said the letter, composed by the European Public Health Alliance, a broad church of health-related organizations. Two years of austerity and fiscal consolidation have left the EU on the brink of recession, while growth prospects remain dismal, and market forces are increasingly unpredictable, it argued. “This is threatening confidence in democracy, and ultimately the values that underpin European society,” said the letter. “The toll on ordinary people living in Europe is intolerable, affecting their physical and mental health, while health systems are at crisis point.”
The central message from the EPHA-led coalition was “to think beyond the short-term,” and to strengthen “solidarity-based systems of social protection, including health care.” The reason EFPIA (and other industry associations) signed up to this missive may not be unrelated to its insistence that investments in health should be acknowledged as a contributor to economic growth. The letter was evidently congenial because this conspicuously non-industry lobby (EPHA is unimpeachably neutral since it is a frequent critic of much drug industry practice) argued loudly that cuts are “ultimately a false economy.” Even the most red-blooded industry hawk could cheerfully endorse the health lobby’s contention that “indiscriminate reductions in health and social services today will both lead to late detection of illness and higher long-term costs, and take away the much needed support that people in Europe need to be resilient and emerge quickly from the economic crisis.”
Indeed the healthcare industry was delighted to find someone else, with much better credentials in public debate, claiming that “short term savings from cutting health and social spending as proposed in some member states will both mean worse health and social outcomes and higher expenditure, because patients will need more intensive and expensive interventions in the longer term.” Even more helpful to the industry case is the EPHA judgement that “indiscriminate cuts are making a worrying situation even more dangerous, and our fear is that this will threaten the economic recovery prospects for Europe as a whole.”
At the heart of the EPHA entreaty was the health and wellbeing of European citizens. “The toll on physical and mental health is becoming unbearable, and health systems are at breaking point,” it said, alluding to the “devastating impact of the financial crisis on human health,” with rising suicides, mental health problems, and rates of infectious disease. “Current policies are hurtling Europe in a dangerous direction,”  it said, and “for millions of people living in Europe, these last few years have been devastating in a way few had imagined Europe would face again” — with unemployment, household debt and cuts to public services leaving many people “desperate and in need of support.”
The drug industry cannot be accused of anything so cynical as exploiting the message from this coalition of patient groups, migrant-support charities, and social workers. The central concern is the decay of health service provision against a backdrop of tough spending constraints — and this is genuinely and widely shared.
But the industry emphasis is different. It cares about patients and public health, but primarily because its business depends on supplying their needs successfully. As Witty said to an audience of politicians and officials in Brussels on the eve of the EU summit, “As an industry, we realise that we do well only if our patients do well.” This is why it is calling on European leaders for a new deal, in which its delivery of high-quality innovative medicines would be matched by readiness among healthcare payers to reward effective therapies. And Witty remains optimistic that the sheer scale of the crisis — for the euro, for Europe, and for healthcare — will impel European leaders towards more courageous and radical solutions. “I hope that leaders will realise that the old rules just won’t be enough to solve the crisis,” he said, as the leaders themselves were starting to stream into Brussels for their showdown summit. The coming months will reveal how well-founded his optimism is — for European healthcare, and for the euro.

EFPIA president Andrew Witty is hoping that the deepening European economic crisis will impel European leaders towards more courageous and radical solutions, writes Reflector.

With the European economic and financial crisis deepening all the time, the healthcare sector in general — and the pharmaceutical sector in particular — faces further constraints from cost cutting. As European Union leaders came together in Brussels for yet another “now-or-never” summit at the end of June, they were assailed by calls for leniency, clemency, and support from everyone whose business is health.

Andrew Witty, CEO of GlaxoSmithKline and president of the main European drug industry federation, EFPIA, sent a letter to the heads of state and government candidly asking them to “show your support for pharmaceutical innovation as one of the key platforms of a growth programme for Europe.”

Bouncing adroitly off the EU leaders’ own billing of their meeting as a “growth summit,” Witty pursued the theme of growth as a key argument in his case for a better deal for drug firms. If you want to get Europe out of the hole it is in, he more or less told them, you need to back the winners, even if times are tough.

“EFPIA members fully understand that in the current financial crisis countries need to take steps to control public spending and restore fiscal credibility,” he conceded.  But that said, the challenge, in Witty’s view, is for governments is to make wise decisions about what they cut in their bid to regain their stability. And, he continued, wise decisions would be decisions that promote innovation — particularly in heavyweight innovators like the drug industry.

His pleadings were accompanied by thinly-veiled threats. The industry in Europe is strong, but “other locations such as the US and certain Asian countries present increasingly strong competition.” And the competition is not only in terms of their output as producers. It is, he made clear, a matter also of competition for investment.

“In these extraordinary times for Europe, its economies, and its citizens, a business-as-usual approach of cost-containment policies that create market distortions will drive investment elsewhere and consign Europe to a gradual decline, to the second rank of the new global order.” Europe must avoid complacency, he said.

His corollary was that “a more vigorous industrial and innovation policy is needed.” Member states and the Commission must focus on how they can help encourage individuals, universities, start-up companies and large-scale industrial organizations to focus on innovation, invest for the future, and create products to fulfil unmet medical need.

Witty’s arguments were backed up with the customary litany of European industry achievements — €27.5 billion spent every year on research and development in Europe, 660,000 direct jobs, an EU trade balance surplus of €48.3 billion… But the bottom line was that the best way to support innovation “is to use innovation and reward it by paying fair prices for added value.”

EFPIA also signed up — along with a long list of other organizations ranging from trade unions to members of the European parliament — to another appeal to European leaders, with a broader message of urgency about protecting Europe’s population from the effects of the downturn.

“ln these difficult times, we urge you to set out a sustainable vision for Europe,”  with “confident action that prioritizes the needs of citizens,”  said the letter, composed by the European Public Health Alliance, a broad church of health-related organizations. Two years of austerity and fiscal consolidation have left the EU on the brink of recession, while growth prospects remain dismal, and market forces are increasingly unpredictable, it argued. “This is threatening confidence in democracy, and ultimately the values that underpin European society,” said the letter. “The toll on ordinary people living in Europe is intolerable, affecting their physical and mental health, while health systems are at crisis point.”

The central message from the EPHA-led coalition was “to think beyond the short-term,” and to strengthen “solidarity-based systems of social protection, including health care.” The reason EFPIA (and other industry associations) signed up to this missive may not be unrelated to its insistence that investments in health should be acknowledged as a contributor to economic growth. The letter was evidently congenial because this conspicuously non-industry lobby (EPHA is unimpeachably neutral since it is a frequent critic of much drug industry practice) argued loudly that cuts are “ultimately a false economy.” Even the most red-blooded industry hawk could cheerfully endorse the health lobby’s contention that “indiscriminate reductions in health and social services today will both lead to late detection of illness and higher long-term costs, and take away the much needed support that people in Europe need to be resilient and emerge quickly from the economic crisis.”

Indeed the healthcare industry was delighted to find someone else, with much better credentials in public debate, claiming that “short term savings from cutting health and social spending as proposed in some member states will both mean worse health and social outcomes and higher expenditure, because patients will need more intensive and expensive interventions in the longer term.” Even more helpful to the industry case is the EPHA judgement that “indiscriminate cuts are making a worrying situation even more dangerous, and our fear is that this will threaten the economic recovery prospects for Europe as a whole.”

At the heart of the EPHA entreaty was the health and wellbeing of European citizens. “The toll on physical and mental health is becoming unbearable, and health systems are at breaking point,” it said, alluding to the “devastating impact of the financial crisis on human health,” with rising suicides, mental health problems, and rates of infectious disease. “Current policies are hurtling Europe in a dangerous direction,”  it said, and “for millions of people living in Europe, these last few years have been devastating in a way few had imagined Europe would face again” — with unemployment, household debt and cuts to public services leaving many people “desperate and in need of support.

The drug industry cannot be accused of anything so cynical as exploiting the message from this coalition of patient groups, migrant-support charities, and social workers. The central concern is the decay of health service provision against a backdrop of tough spending constraints — and this is genuinely and widely shared.

But the industry emphasis is different. It cares about patients and public health, but primarily because its business depends on supplying their needs successfully. As Witty said to an audience of politicians and officials in Brussels on the eve of the EU summit, “As an industry, we realise that we do well only if our patients do well.” This is why it is calling on European leaders for a new deal, in which its delivery of high-quality innovative medicines would be matched by readiness among healthcare payers to reward effective therapies. And Witty remains optimistic that the sheer scale of the crisis — for the euro, for Europe, and for healthcare — will impel European leaders towards more courageous and radical solutions. “I hope that leaders will realise that the old rules just won’t be enough to solve the crisis,” he said, as the leaders themselves were starting to stream into Brussels for their showdown summit. The coming months will reveal how well-founded his optimism is — for European healthcare, and for the euro.

FACTBOX
EPHA’s letter was accompanied by some sharp facts about the effect of the financial crisis. It said:
* In 2010 health budget in Portugal was reduced by 12.3%, and in Ireland it was down by €746 million — a year-on-year cut of 6.6%.
* The Greek health budget for 2011 was cut by €1.4 billion.
* The French government plans spending cuts of €2.4 billion on health insurance.
* Austria plans a drop in healthcare spending of €1.7 billion between 2010 and 2013.
* Spain has cut health and education spending by €7 billion in 2012.
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