Race to the bottom

Pricing policies threaten pharmaceutical makers.

One of the biggest threats to the pharmaceutical industry in the years ahead will be pricing pressure, which is coming from all directions. In the United States, big pharmaceutical companies have already agreed to certain cost control measures as part of the healthcare reform legislation known as Obamacare.. The companies apparently agreed to these measures in return for the promise of new patients, but a few short years after the law’s passage and before all of the provisions have even taken effect, politicians in Washington have already begun discussing further price control measures. Meanwhile, Indian regulators have caused a fuss by granting a compulsory license to generics maker Natco Pharmaceuticals for permission to manufacture a generic version of Bayer’s lucrative cancer drug Nexavar. Indian authorities argued that the license was necessitated by the high cost of branded Nexavar, which keeps Indian patients from accessing this life saving treatment. Bayer, meanwhile, made the well-worn but true contention that pharmaceutical advancement depends on companies’ ability to charge premium prices for innovative treatments.

Lately the debate about proper pricing for pharmaceuticals has shifted to Europe, where drug makers’ profits are under attack from multiple angles. As part of the ongoing debate concerning the best way to rein in spending, many countries are looking at cutting drug prices as a source of savings in government budgets. In no country will these new price controls have more effect than in Germany; as much for the country’s leading role in the European economy as for the lost revenue. Due mostly to its economic strength, Germany has maintained pharmaceutical prices that were relatively robust when compared with its European neighbors. After years of debate, though, Germany has begun switching from a policy that mostly allowed free pricing towards implementation of a new regime that weighs the costs and benefits of each drug, similar to that of the UK’s National Institute for Health and Clinical Excellence (NICE).

In addition to looking at the potential clinical benefit of any new medicine, German regulators will also consider the price for each drug in neighboring countries. Germany’s great wealth means that most of its neighbors have weaker economies, making them a poor benchmark for prices. Indeed, many of these countries look to their larger neighbor to take the lead on pharmaceutical pricing. These ingredients could quickly lead to a race-to-the-bottom for drug prices as countries push each other lower and lower. Germany’s new pricing policies have already claimed at least one victim – diabetes patients in Germany will not have access to a promising diabetes treatment. Wary of the threat of price controls, and deterred by rules for defining the proper comparator, Eli Lilly and its German partner Boehringer Ingelheim decided not to launch their new drug Tradjenta (linagliptin) in the German market. While regulators are working out bugs that may lead to more straightforward pricing in Germany, the overall effect will be the same – consistent lowering of prices.

The race to the bottom in pharmaceutical prices has already caused unintended consequences, spawning an army of carry-trade speculators trying to buy drugs cheaply in one country for sale in another.In the UK, for example, regulators have a reputation for insisting on drug prices that are lower than in neighboring countries. This has led to export of drugs from the UK into neighboring countries where they are sold at premium prices. This practice has already led to shortages of some important drugs in the country, prompting the All-Party Pharmacy Group (APPG), a trade organization, to urge the government to take action. Although the dire drug shortages cited by the APPG are disputed, the potential clearly exists for patients to be denied life-saving medicines. The same problem is manifesting for different reasons in Greece. Due to the slow-motion collapse of the Greek economy, pharmaceutical prices have been slashed dramatically. This has been done to allow people to keep access to their medicines without further bankrupting the government. The unfortunate and unintended consequence of the price cuts is a very lucrative carry trade for pharmaceutical wholesalers.

Amid the clear need for national governments to control healthcare spending, it is unfortunate that wholesalers and distributors are siphoning off pharmaceutical profits. While pharmaceutical companies can justify their high prices with the need to conduct expensive research, the carry trade directly detracts from this goal. Society tends to hold healthcare providers to a higher standard than most capitalists, making the bald taking of profits from unhealthy people somewhat unpalatable. As a result, the European Commission has announced the beginning of an investigation into pharmaceutical parallel trade. Considering these factors, it appears that international pricing pressure and its consequences will be a major area of concern for pharmaceutical companies into the foreseeable future.

Dr. Jerry Isaacson is head of GlobalData healthcare industry dynamics.

Photograph: Getty Images

Dr. Jerry Isaacson is head of GlobalData healthcare industry dynamics.

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The joy of only winning once: why England should be proud of 1966

We feel the glory of that triumphant moment, 50 years ago, all the more because of all the other occasions when we have failed to win.

There’s a phrase in football that I really hate. It used to be “Thirty years of hurt”. Each time the England team crashes out of a major tournament it gets regurgitated with extra years added. Rather predictably, when England lost to Iceland in Euro 2016, it became “Fifty years of hurt”. We’ve never won the European Championship and in 17 attempts to win the World Cup we have only won once. I’m going to tell you why that’s a record to cherish.

I was seven in 1966. Our telly was broken so I had to watch the World Cup final with a neighbour. I sat squeezed on my friend Colin’s settee as his dad cheered on England with phrases like “Sock it to them Bobby”, as old fashioned now as a football rattle. When England took the lead for the second time I remember thinking, what will it feel like, when we English are actually Champions of the World. Not long after I knew. It felt good.

Wembley Stadium, 30 July 1966, was our only ever World Cup win. But let’s imagine what it would be like if, as with our rivals, we’d won it many times? Brazil have been World Champions on five occasions, Germany four, and Italy four. Most England fans would be “over the moon” if they could boast a similarly glorious record. They’re wrong. I believe it’s wonderful that we’ve only triumphed once. We all share that one single powerful memory. Sometimes in life less is definitely more.

Something extraordinary has happened. Few of us are even old enough to remember, but somehow, we all know everything that happened that day. Even if you care little about the beautiful game, I’m going to bet that you can recall as many as five iconic moments from 50 years ago. You will have clearly in your mind the BBC commentator Kenneth Wolstenholme’s famous lines, as Geoff Hurst tore down the pitch to score his hat-trick: “Some people are on the pitch. They think it’s all over. It is now”. And it was. 4 - 2 to England against West Germany. Thirty minutes earlier the Germans had equalised in the dying moments of the second half to take the game to extra time.

More drama we all share: Geoff Hurst’s second goal. Or the goal that wasn’t, as technology has since, I think, conclusively proved. The shot that crashed off the cross bar and did or didn’t cross the line. Of course, even if you weren’t alive at the time, you will know that the linesman, one Tofiq Bakhramov, from Azerbaijan (often incorrectly referred to as “Russian”) could speak not a word of English, signalled it as a goal.

Then there’s the England Captain, the oh-so-young and handsome Bobby Moore. The very embodiment of the era. You can picture him now wiping his muddy hands on his white shorts before he shakes hands with a youthful Queen Elizabeth. Later you see him lifted aloft by his team mates holding the small golden Jules Rimet trophy.

How incredible, how simply marvellous that as a nation we share such golden memories. How sad for the Brazilians and Germans. Their more numerous triumphs are dissipated through the generations. In those countries each generation will remember each victory but not with the intensity with which we English still celebrate 1966. It’s as if sex was best the first time. The first cut is the deepest.

On Colin’s dad’s TV the pictures were black and white and so were the flags. Recently I looked at the full colour Pathe newsreel of the game. It’s the red, white and blue of the Union Jack that dominates. The red cross of Saint George didn’t really come into prominence until the Nineties. The left don’t like flags much, unless they’re “deepest red”. Certainly not the Union Flag. It smacks of imperialism perhaps. In 1966 we didn’t seem to know if we were English or British. Maybe there was, and still is, something admirable and casual about not knowing who we are or what is our proper flag. 

Twelve years later I’m in Cuba at the “World Festival of Youth” – the only occasion I’ve represented my country. It was my chance to march into a stadium under my nation’s flag. Sadly, it never happened as my fellow delegates argued for hours over what, if any, flag we British should walk behind. The delegation leaders – you will have heard of them now, but they were young and unknown then – Peter Mandelson, Trevor Phillips and Charles Clarke, had to find a way out of this impasse. In the end, each delegation walked into the stadium behind their flag, except the British. Poor Mandelson stood alone for hours holding Union Jack, sweltering in the tropical sun. No other country seemed to have a problem with their flag. I guess theirs speak of revolution; ours of colonialism.

On Saturday 30 July BBC Radio 2 will commemorate the 50th anniversary of the 1966 World Cup Final, live from Wembley Arena. Such a celebration is only possible because on 16 occasions we failed to win that trophy. Let’s banish this idea of “Fifty years of hurt” once and for all and embrace the joy of only winning once.

Phil Jones edits the Jeremy Vine Show on BBC Radio 2. On Saturday 30 July the station celebrates the 50th anniversary of the 1966 World Cup Final live from Wembley Arena, telling the story of football’s most famous match, minute by minuteTickets are available from: www.wc66.org