Romanian pharma industry: Addressing Costs, Missing the Value September 24th 2012 Bucharest, Romania Makis Papataxiarchis, MD Janssen Pharmaceuticals, Johnson&Johnson

The Promise of Pharmaceuticals Yesterday Penicillin - effective treatment of bacterial infection Smallpox eradicated by 1977 through vaccination Today HIV- a chronic disease in the west with advances in developing countries Breast cancer curable Cervical cancer preventable Focusing on chronic disease Tomorrow Alzheimer’s Disease onset delayed 3-5 years, eventually preventable with vaccine Hepatitis C curable Schizophrenia controlled Prostate cancer curable

Pharmaceutical Innovation Is About Patients We can all expect to live 30 years longer than 100 years ago Between 1980-2009 in Europe: Infant mortality rate decreased from 14.3 to 4.2 deaths per 1,000 live births Life expectancy increased from 70.2 to 76.8 (men) and 77.1 to 82.7 (women) Huge reductions in mortality (e.g. HIV/AIDS, many cancers, cardiovascular diseases) Significant progress in quality of life (e.g. asthma, diabetes) Huge challenges remain (e.g. Alzheimer, multiple sclerosis, orphan diseases) The research-based pharmaceutical industry is a key asset to scientific and medical progress. Pharmaceutical and biomedical research is primarily about patients: We can expect to live 30 years longer than 100 years ago. Medicines highly contribute to the reduction of mortality in many disease areas e.g. HIV/AIDS, many cancers, cardiovascular diseases. Medicines bring significant progress in quality of life in other disease areas e.g. asthma, diabetes. Huge challenges remain for pharmaceutical research e.g. Alzheimer, multiple sclerosis, orphan diseases. (Source: WHO/Europe 2011) 3

Pharmaceutical Innovation Comes At Cost… An average of 10 to 15 years to develop and market a new medicine The cost of developing a breakthrough medicine from discovery to market today is more than US$1 billion(*) New medicine development is a highly risky venture (1/10.000 molecules make it to the market). Fast commercialization of innovative drugs provides the pharmaceutical industry with crucial revenue to support new drug discovery programs and mitigate the risks of new drug development (*) See e.g., J. A. DiMasi and H. G. Grabowski, “The Cost of Biopharmaceutical R&D: Is Biotech Different?” Managerial and Decision Economics 28 (2007): 469-479; Mathukumalli Vidyasagar, “Cutting Drug Discovery Costs on the Subcontinent,” The Scientist (2004), 18(20):54

7000 Molecules in Development 35 new medicines launched every year Alzheimer - 100 medicines Arthritis - 198 medicines Cancer – 900 Medicines and Vaccines in Testing Diabetes – 235 medicines Heart Disease and Stroke – 312 medicines Infectious Diseases – 395 new medicines and vaccines Mental Illness – 313 medicines Parkinson's Disease –   36 medicines HIV/AIDS - 88 medicines and vaccines ……………………………………………………………… (Source: PhRMA)

Healthcare Spending Is An Investment Recommended medicines can save lives and dramatically improve health Reduction in overall treatment costs Faster recovery may lead to a reduction of non-health care spending Improved treatment may lead to productivity benefits Length and quality of life is increased Source: Biopharmaceuticals in perspective, PhRMA

Healthcare Spending Is An Investment Source: Biopharmaceuticals in perspective, PhRMA

The Pharma Industry is The Largest Investor in R&D (in percentage of sales and in absolute figures)

Europe’s R&D pharma industry 5th largest industrial sector 3.5% of the total EU manufacturing value added 635,000 highly qualified jobs 117,000 of them in R&D € 26 billion invested in R&D 19% of all private R&D in Europe and a higher percentage than any other industrial sector Trade surplus of € 48 billion Highest contribution among high-tech industries to Europe’s trade balance Source: The pharmaceutical industry in figures, Edition 2009

Public debt in Europe

Market size in value, per capita [EUR] Pharma expenditure per capita Market size in value, per capita [EUR] EU average 204 € 134% Out of the 87 EUR average, the reimbursed value is only 60%. The rest is co-payment. Source: IMS

Romania: Low pharma spending per capita 2018.09.22.

Romania Lowest in Life Expectancy in the EU Source: OECD Family Database, 2008

Patients’ W.A.I.T. Indicator 35 new medicines in the EU – zero medicines per year in Romania The pricing and reimbursement procedures should not be longer than 180 days (Transparency Directive) Source: PATIENTS W.A.I.T. INDICATOR ; EFPIA 2010 Report

Romania pricing Pricing Rule: minimum in a basket of 12: Austria, Bulgaria, Belgium, Greece, Italy, Lithuania, Poland, Slovakia, Germany, Spain, Hungary, The Czech Republic Romania is a reference country to 8 countries: Austria, Bulgaria, Greece, Hungary, Latvia, Lithuania, Slovakia, Spain Prices are published in RON and the official exchange rate is published in a Ministerial Decree every April Annual adjustment of the RON prices based on the exchange rate of the state budget – 6.25% increase in 2010, 1% decrease in 2011 and 1% increase in 2012

The levels of reimbursement and copayment in Romania 18.9 % EU average Source: The Pharmaceutical Industry in Figures 2010 report - http://www.efpia.eu:8081/sites/www.efpia.eu/files/EFPIA_Industry_in_figures_2010-20100611-001-EN-v1.pdf

Eurobarometer: Satisfaction with healthcare provisions Date: June 2010 Source: Eurobarometer 70 19

140 Molecules on the Reimbursement Wait List (new molecules + new indications + other requests) in Romania No reimbursement of new molecules for the past 5 years Cancer Psoriasis Psychiatry Arthritis (also juvenile) Hypertension Asthma Osteoporosis Diabetes Renal anemia Immune thrombocytopenia Hepatitis Wilson’s disease ………………………..

Low level of investment generates higher losses Romania loses around 18,6 bn EUR (15% of 2010 GDP) of economic output over the medium to long term because of the poor health conditions of the population* If the health status would be at the EU average, Romania would have a 6.7 bn EUR surplus in economic output (6% of 2010 GDP) Note: as measured by DALY; Source: Pharmaceutical industry in Romaia; Main developments and the impact on the society and economy – Institutul de Prognoza Econominca, Dec 2011

We need to focus on value not cost Assessment of the value of innovative medicines must be done with the goal of better healthcare The price of a medicine can only be justified by the therapeutic value it brings to patients and society. While the cost factor should be covered, the price of a drug should not be based on cost alone Secure early patient access to new therapies We are living longer and better than at any time in history. In part, this is due to pharmaceutical advances.

In conclusion Pharmaceutical innovation brings value to patients and wealth to society Innovation does not come for free and it takes time Access of patients to new medicines is essential and required by the European Commission Governments have to recognize and reward the value of innovation The access of patients to new drugs must become a priority for the Romanian Government

Thank you!