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

2. 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

3. Pharmaceutical Innovation Is About Patients
We can all expect to live 30 years longer than 100 years ago
Between 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

4. 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/ 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): ; Mathukumalli Vidyasagar, “Cutting Drug Discovery Costs on the Subcontinent,” The Scientist (2004), 18(20):54

5. 7000 Molecules in Development 35 new medicines launched every year
Alzheimer medicines
Arthritis 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 medicines and vaccines
………………………………………………………………
(Source: PhRMA)

6. 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

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

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

9. 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

10. Public debt in Europe

11. 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

12. Romania: Low pharma spending per capita

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

15. 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

16. 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

17. The levels of reimbursement and copayment in Romania
18.9 % EU average
Source: The Pharmaceutical Industry in Figures 2010 report -

18. Eurobarometer: Satisfaction with healthcare provisions
Date: June Source: Eurobarometer 70 19

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
………………………..

20. 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

21. 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.

22. 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

23. Thank you!