The recent announcement of GSK to allow input by the British government health care into which drug to develop bodes ill for the traditional pharmaceutical model of developing drugs that address a market need.
Granted a sceptic might say that never really was the business model of pharma and would be at least partially justified in saying so. However before we go into business models, let's look at the shift in government industry interaction that seems to be happening.
GSK's new chief executive, Andrew Witty, said the effort is part of his drive to help the world's second-largest drug maker adapt to a tough pharmaceutical market. In recent years, soaring health-care costs have led insurers, governments and other drug buyers to tighten their belts.
Knowing the preferences of state health-care systems, which pay for the vast majority of all drugs sold in Europe, could make a big difference. A few weeks ago, Glaxo's chief of research and development invited a group of health-care officials from the U.K., France, Italy and Spain to London to examine the drugs Glaxo is developing.
Apparently the officials gave some pretty blunt feedback on which drugs to prioritize and what sort of data Glaxo would need to show to make state health-care systems willing to buy the drugs, according to Mr. Witty.
But let's look at the case of Tyverb (sold in the U.S. as Tykerb): it would cost about £20,000 per year (or nearly $40,000); total costs associated with administering the drug are about £80,000 (or nearly $160,000), as noted by Dow Jones Newswire. One study found women who received the drug survived for 8 weeks longer than the control group who received the currently approved drug.
The recommendation, written for the U.K.’s National Institutes for Health and Clinical Excellence (NICE) can be found here. I am not siding with anyone, I just want to get the facts out there and stimulate debate.
Far from being the only firm to turn to the governments for advice, Novartis AG of Switzerland also approached Britain's state health system about an immunology drug and then altered its plans for the drug's human testing so its studies could answer Britain's concerns about efficacy and cost.
It seems big pharma is getting cozy with the big government programs that are in effect their biggest customers. It's only a matter of time before we see more of that in the US.