Tuesday 26 March 2019

Medicine row a bitter pill for pharma

Issues over drug access is changing Big Pharma's view of Ireland, GSK's top Irish executive tells Fearghal O'Connor

Aidan Lynch, managing director of GSK. Photo: Damien Eagers
Aidan Lynch, managing director of GSK. Photo: Damien Eagers

Fearghal O'Connor

After six years heading up the Irish arm of one of the world's biggest pharma companies, not much ruffles GSK's Aidan Lynch. But he visibly bristles at any suggestion that high drug prices are the cause of a standoff between global drug companies and those who control Ireland's budget for new medicines.

"One of the fundamental problems is that there is a lack of trust between the Government and pharma companies," says Lynch, speaking in his role as president of Irish Pharmaceutical Healthcare Association (IPHA), which represents the major drugs companies in Ireland.

"There is a perception that it is all about price and that we try and charge the highest price."

It is a charge he dismisses as a simplistic response to a growing crisis around the speed of access of new medicines to Ireland. New and innovative life-saving drugs are increasingly slow to reach Irish patients. There is also a growing belief in the industry that the issue is damaging Ireland's hard-earned reputation as one of the world's pre-eminent pharmaceutical manufacturing hubs.

In 2016 Lynch helped hammer out a new four- year pricing agreement between the Big Pharma companies and the Government, which, he says, delivered €785m in savings to the HSE.

Those savings would - Lynch and other pharma executives believed at the time - create the space in the huge healthcare budget for greatly increased reimbursement of innovative breakthrough drugs. Instead Irish pharma executives have found themselves explaining to their bosses at corporate HQ just why the Government's much smaller actual budget for new medicines - believed to be about €10m per annum - has already run out for this year.

Lynch cites new figures which show that the 10 products approved for reimbursement last month were awaiting a decision from the HSE for an average of 890 days. This, the industry believes, has led to a scenario whereby whatever patient group shouts the loudest tends to get its relevant drug approved, while others can only wait and hope.

"The tragic thing is that Irish patients won't get access to the leading edge, up to date medicines that are made in Ireland," says Lynch.

"We are getting access but our challenge is the speed of access. It's about two-and-a-half years slower than access in other countries even though the products are made in Ireland."

Frustration in the industry increased even further in recent weeks when the clinical director of the National Centre for Pharmoeconomics - the State body that advises the HSE on the cost-effectiveness of medicines - accused pharma companies of "predatory pricing".

"The price is the price," says Lynch. "It's a negotiated price between the company with the Government that is initially based on the average price in 14 countries. The bit in the conversation we never talk about is value and how investment in medicines frees up hospital beds and resources and improves economic productivity."

The average price of medicines in Ireland has actually fallen, he argues, but volume has risen because of a growing and aging population.

"The system has not kept pace," says Lynch. "Everyone agrees that the system is broken. We need to sit down and talk about how can we change it to make it better. Throwing stones is not going to get us anywhere. We need to collaborate."

But getting the Government side and the pharma sector around a table has proven problematic.

"My real problem is that we can't get to talk to anyone on the other side of the table. It is incredibly difficult now for us as an industry to engage, and that is a fact."

The industry is supposed to meet the Government's representatives - made up of officials from the HSE and the departments of both Health and Public Expenditure - twice a year to discuss how the four-year pricing agreement is working. But trying to arrange a meeting has proven difficult.

"I suppose there are many other priorities, but as an industry we are frustrated by the fact that we can't get to meet them per our agreement.

"We want to start talking to them about subsequent agreements. We want to start talking to them about how things need to change for the betterment of healthcare in Ireland and for patient access.

"We need to start having conversations around doing things differently because what we have right now is clearly not working. Medicines are not getting to patients quickly enough. Many of those medicines are manufactured here and yet they get to patients in other countries two years ahead of getting to Irish patients," he says.

This slow access to the Irish market - as well as what Lynch says is a lack of transparency around what is wrong with the system - is causing increasing frustration in the global headquarters of pharma companies, he says.

"All countries have the same issues as Ireland in terms of limited budget, but lots of countries around Europe have found a way to solve the problem and to get these specialised medicines to patients in a more timely manner," he says.

"We have many manufacturers across Ireland who make products in Ireland that get to patients in other countries not just quicker but quicker by years," he says. "Companies like ours look at Ireland negatively when Ireland is dropping from where it used to be the first or second in Europe for bringing new products to market to where we are now: 15 out of 15."

And that fall has accelerated in the past four years, he says. What has actually caused that change is, he says, "the $64m question".

Lynch came to the business via a circuitous route. His first job was as a builder's labourer in Sydney, Australia, in 1984 after completing a business studies course in Athlone.

"There were no jobs in Ireland in the '80s so many of my peers went to far-flung places."

He settled for a time in Sydney, working in finance roles at the Goodyear tyre company and drinks company Segrum. In 1998 he returned to a very different Ireland to become financial controller at Sony Music's Irish operation.

"There were loads of jobs. When I left Ireland we didn't know what a cappuccino was. When I came back we were falling over them. Instead of Blue Nun and Black Tower we were all drinking fancy wine."

After two years as finance director at Bewley's, in 2001 Lynch finally joined GSK on a six-month contract to project manage a system to convert the drug company's systems from the punt to the euro. Six months became a decade and in 2012 he became GSK's Irish country manager, overseeing 1,600 employees and a number of major pharmaceutical manufacturing sites around the country.

"Ireland is a very small market but the top 10 pharma companies in the world are manufacturing here so from that perspective Ireland is very important. Ireland has always been seen as a good place to do business because of access to appropriately qualified people, because of government policies, our proximity to Europe, the fact that English is our language, etc."

But the ongoing medicines access row threatens to damage that, says Lynch. In fact it has already hurt the country's standing at the highest levels in the industry, he says. "That is not a very positive picture for us to paint back in our head offices," he says. "The whole thing feeds into a general level of frustration around the system in Ireland. It is absolutely fair to say that this has a negative impact on how companies view our country over time.

"We are a significant employer with 30,000 direct jobs and 30,000 indirect jobs, many millions of taxes paid into the economy and clearly one of the factors in the success and growth of the economy and driver of exports.

"I have had conversations with people in my organisation about why the system is the way it is when we have such a huge investment in the country. There's a fine line between what we can do as organisations vis a vis our investments in countries and market access.

"Ultimately, pharma is a very long-term game. We've been here for 40 years and the industry has been very strong in Ireland for all of those years. But I guess that we would be concerned that unless the environment changes significantly and keeps pace with the new technologies and innovations that are coming, we may not have a pharma industry like we have today in another 40 years."

This impacts investment decisions being made today due to the sometimes decades-long lead-in time from drug discovery to manufacture, he says.

Lynch says that the issue of medicine access is certainly not the only one on which pharma companies make major investment decisions but "pharma companies want to have significant investments in countries where their products get to market reasonably quickly at a fair price. Not a high price... a fair price".

Market access is not the key factor when it comes to investment in manufacturing facilities.

"But it is a factor. You don't turn on or off pharmaceutical investment overnight but, over time, if Ireland continues to be known as a country where market access is difficult I think there is an inevitability around investment decisions that might be made in Ireland."

After six years leading GSK in Ireland Lynch has just moved into a new role - managing director of GSK Trading Partners - helping to prepare the huge company for Brexit. Last year alone, GSK spent £70m on preparations for this.

"Physically getting packs to Ireland has been severely disrupted because of not knowing whether there is going to be a hard Border and customs checks. Most companies that I am aware of have planned for the worst. We may have to sail them around Britain rather than driving them through. We have been working on this since the day after the referendum."

In this role, he says, he has seen how the pharma industry and the HSE have worked "really well, really collaboratively" to get ready for Brexit.

"We have seen that it is possible to work together and have a really fruitful and beneficial outcome. We would like to take the positiveness that came out of that and translate it into how we can work with them in terms of market access and bringing innovative medicines to patients more quickly," he says.

"Companies - all companies - have to change and keep pace with what is going on around you or you get left behind and then you become a Kodak. Governments never keep up but some are better at it than others. In the past the Irish has been way ahead of its peers. That is probably why we got the pharma industry we got."

Government policy here over many years has achieved "fantastic long-term results" in pharma, tech and the IFSC. But, says Lynch, another step now needs to be taken: "The starting point is we need to talk to one another."

The Price Debate

Consumers sometimes complain that medicine is cheaper in other EU countries. Why?

It is not as simple as just the price, is it? You can also buy cars more cheaply, hire people more cheaply and buy properties more cheaply. So it has to be seen in the context of the environment. There’s also a volume issue. Larger countries tend to have cheaper prices because there is more volume.

Critics of the industry argue that drug prices are inflated because of high profits, high wages and big margins. Is that unfair?

Yes. We run businesses. We are accountable to shareholders. If the shareholders don’t get a decent return out of pharma company A they will go to pharma company B.

There are high-paid people and companies that make profits in all walks of life. We take massive risks, as do our shareholders, to develop medicines and we spend much more on the failures than we do on the successes.

The cost of failure is very high but it is worth it for the successes. For example, years ago you died if you got HIV. Now you live. But all of these things come at a cost.

Profile

Name: Aidan Lynch

Age: 55

Position: Managing director, GSK Trading Partners; president of Irish Pharmaceutical Healthcare Association (IPHA)

Lives: Blessington, Co Wicklow

Education: Athlone RTC

Previous experience: Worked in Australia for 14 years in the motor and drinks industries. In Ireland worked in music, in coffee and now in pharmaceuticals with GSK since 2001

Family: Partner, Nadine. Has three adult children - Ben, Rory and Finn

Pastimes: Sailing, rugby, spending time in West Cork

Current book: A monthly sailing magazine, Seamus Heaney 100 Poems and On The Edge by Diarmuid Ferriter

Favourite movie: Action or sci-fi but hard to beat classics like It's a Wonderful Life

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