European Association of Pharmaceutical Full-time Wholesalers (GIRP)
Intensive wholesaling: who should pay?
Governments hold the key responsibility of ensuring access of medicines
to patients, Liam FitzGerald, chief executive of Irish pharmaceutical
wholesaler United Drug, told participants at the European Association
of Pharmaceutical Full-line Wholesalers (GIRP) annual general meeting,
held in Prague last week.
“Manufacturers, wholesalers and retailers all play a role in ensuring
medicines are available,” he said. “However it is wholesalers,
critically in my view, that ensure availability when and where a patient
needs their medicine. Drugs are not the same as consumer products: they
save lives, and ready availability as and when patients need their therapies
is providing a basic but essential element of a good public health service.”
Mr FitzGerald went on: “Attempts by any stakeholder to cherry-pick
product ranges or to price services without due recognition of the cross
subsidisation nature of our service, or to delimit wholesaling to a pure
logistics operation, will ultimately do patients a disservice and will
compromise the de facto public service that we provide. The issue for
our industry, I think, is to make this message heard.”
He added: “Certainly, we all need to seek out other services that
allow us to capitalise on new outsourcing trends by the manufacturing
industry and, indeed, by governments. However, in doing so, we often
deny our full-line wholesaling heritage and fail to focus on communicating
that service’s value to all elements of the healthcare value chain.”
Mr FitzGerald said that a number of governments recognise their responsibility
to patients via public service legislation that sets out the role and
requirements of full-line wholesalers. “Whether or not this public
service is defined in a country’s legislation, full-line wholesaling
performs this vital public service role by default through its modus
operandi, and this service has a basic cost. … Our service has a
cost that is rooted, in a very fixed way, in the totality of what we
do. In a very low margin business characterised by low returns on invested
capital, small changes in product mix, or in compensation for what we
do, has a disproportionate effect on our profitability.”
Mr FitzGerald believes that other players within the industry do not
fully appreciate the role of full-line wholesalers in the overall provision
of public healthcare. “As I often argue, everybody knows what a
manufacturer does, everybody knows what a pharmacist does, but nobody
seems to know or value what happens in between until it is under threat,” he
said.
“The most difficult element,” argued Mr FitzGerald, “is
demonstrating the high fixed cost associated with the intensity and public
service
nature of what we do. It is not possible to fully separate out one product
or customer group and cost a service exclusively around them.”
He
questioned: “Who should pay for the fact that full-line wholesalers
provide such a comprehensive and intensive service?” He described
this as a complex dilemma.
Access issues not distribution related
Richard Barker, representing the interests of UK pharmaceutical
industry |
There are significant access issues for UK patients but they are not
primarily distribution related. So said Richard Barker, director general
of the
Association of the British Pharmaceutical Industry.
With regard to patient access to new medicines, Dr Barker said: “The
introduction of the National institute for Health and Clinical Excellence,
and its equivalents elsewhere in the UK, and their assessment of technology
in terms of cost effectiveness have represented, [and] continue to represent,
a significant barrier. We can talk for a long time about how legitimate
the barrier is, but the barrier is certainly there.”
He went on: “But even if NICE were to approve a medicine, the local
uptake is extremely slow and extremely variable. And that represents,
I think, the most important and significant barrier to access to medicines
in the UK.”
Mr Barker commented on the changes that have occurred around medicines
distribution in the UK: “As yet no substantial impact has been
made on product availability. But the issue of the integrity of the supply
chain
remains a significant, indeed growing, issue particularly in the area
of counterfeits. We need to focus collectively as an industry on addressing
and resolving this problem, rather than necessarily pointing at each
other.”
Dr Barker said: “Track and trace technology, which we are talking
to all our participants in the supply chain about, offers a valuable
way forward.”
But he went further: “We cannot expect to stay where we are at
a time of seismic shifts in health systems and in the pharmaceutical
companies
that supply products. I believe that direct to pharmacy and a ban on
repackaging would help to secure against counterfeiting for the benefit
of patients
and, ultimately, the benefit of all of us who believe in a secure supply
chain.”
Innovation not available EU-wide
There is no value in developing innovative medicines if these cannot
be of use to all patients in the EU, said Antonie Egeland, of DG SANCO’s
health strategy unit. Some products, particularly those with small markets,
are not made available in every EU country, which “drives significant
inequality in access between member states”, she said.
However,
Ms Egeland made clear: “Member states are in charge of the organisation
of their own healthcare systems and they have to take into consideration
the budgets they have available.”
Small-step innovation questioned
The diminishing number of valuable drugs coming out of the R&D pipeline
has led to a rise of “me too products” or “small-step
innovation”,
Gerard Van Odijk, president and chief executive of Teva Pharmaceuticals, told
participants.
“Small-step innovation will have head-to-head competition
with generics. And how can you justify the exclusivity period and the high
price that comes with that, versus a generic competitor?”
He said this
leads to the question: “Is there a right of existence for this small-step
innovation and, if so, what is the value in that?”
Pharmaceutical Forum discussed
The third and final meeting of the Pharmaceutical Forum will take place
in the autumn, Christian Siebert, former head of the unit on competitiveness
in the pharmaceutical industry and biotechnology, EC Directorate-General
for Enterprise and Industry, told participants.
Dr Siebert explained that the high-level Pharmaceutical Forum is a shared
responsibility between the Directorate-General for Health and Consumer
Protection (DG SANCO) and the industry department, involving close working
with a range of stakeholders. This work is undertaken in three work streams:
information to patients; pricing and reimbursement; and relative effectiveness.
He also drew attention to a recent session looking at wholesaling and distribution,
within the forum’s pricing and reimbursement working group. Dr Siebert
told participants that GIRP had contributed constructively to this meeting,
as well as the broader Pharmaceutical Forum process, with its expertise
and understanding of the sector.
He said that specific features of distribution were highlighted through
this work, for example, the specific role and responsibility of wholesalers
that carry the full assortment of pharmaceutical products, and the issue
of public service obligations for wholesalers.
Dr Siebert also said there
was debate around the density of wholesalers present in certain EU areas, “together
with the challenges that might come from new ways of distribution, such
as mail order, internet and direct to pharmacy”.
“It was underlined that this might lead to possible risks for the distribution
of individual products, particularly lower price and maybe low demand
segments,” he
said, adding that there were concerns over increases in the number of
transactions that could occur if wholesalers reduce the amount of “bundling” of
orders between manufacturers and pharmacies.
In a separate presentation, Bernard Amoury, vice-president, supply chain,
Sanofi-Aventis, told wholesalers that manufactures are changing their
supply models “to protect ourselves, not to attack you”. He said that
Europe is an increasingly difficult area for the industry to do business: “Our
problem is to survive.”
PGEU defends
wholesaling The traditional
model of pharmaceutical wholesaling is extraordinarily successful,
said Mika Vidgrén, president of the Pharmaceutical Group of
the European Union.
“Medicines are not like any other products.
It is amazing that in Europe today we still have to make this point,” he
said. “The distribution of medicines is not simply a logistics
function.”
He added: “The patient should always be at the centre of our common work.” |
Single-digit growth and poor R&D pipeline behind supply changes
Adel Al-Saleh, of pharmaceutical market consultancy IMS, told participants
about the pressures prompting pharmaceutical companies to change their
models of medicines supply.
He said that growth in the pharmaceuticals sector is now in single rather
than double digits (5–7 per cent growth over the next three years),
with trends moving away from blockbuster drugs. Smaller players, such as
biotechnology companies, are now driving growth and bringing innovation
to the marketplace, Mr Al-Saleh suggested.
He added that the efficiency
of research and development and its contribution to the production of
new products is under pressure — “that model is broken” — and
that the generics industry is now dominating large therapy areas.
He told the meeting that manufacturers are moving quickly to new supply
models, which would impact on how access and distribution will look in
the future. “We believe that community pharmacy will continue to
be at the core of dispensing,” Mr Al-Saleh said, but he added that
new channels would mean the pharmacist will, in some cases, be excluded
and, in others, get access to drugs differently. |
The
Pharmaceutical Journal