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Economic and societal footprint of the pharmaceutical industry in Europe June 2019
Foreword from EFPIA
I firmly believe that building a strong the gap is continuing to grow, all
European economy, a cohesive in the context of increasing
European society and a healthy competition from China and the
population are inextricably linked. It Far East.
is one of the things that makes our
sector unique. As an industry we What does this mean for Europe? As
invest a greater percentage of a recent report1 from the European
revenue in research and Political Strategy Centre stated:
development than any other sector, “Particular attention needs to be
we are an integral part of Europe’s paid to areas:
Nathalie Moll economic landscape and most
a. where Europe possesses or is
importantly, our medicines transform
Director General, EFPIA developing a competitive
the lives of patients and the way we
advantage,
manage our healthcare.
b. chooses to prioritise and invest
To help inform policy and shape public resources, given their
industrial strategy, EFPIA importance in addressing societal
commissioned PwC to conduct an challenges,
analysis of the economic and c. sees as vital to its strategic
societal impact of the autonomy.”
pharmaceutical industry in Europe.
PwC’s analysis shows the impact on Given its dual role as a driver of
patients’ lives across a selection of economic growth and significant
diseases. In addition, it indicates positive impact on public health, the
that, in 2016, 2.5 million jobs were research-based pharmaceutical
supported by the pharmaceutical industry is one of the industries of
sector, with the average Gross Value critical strategic importance that
Added per employee significantly Europe can benefit from by fostering
higher than that of other key R&D and supporting innovation, in
sectors at €156,000. The activities of particular by offering a predictable
pharmaceutical companies directly regulatory environment and
contributed nearly €100 billion to EU incentives model.
economies, with an additional €106
billion provided through the supply The report underlines the economic
chain and employee spending. and societal contribution of the
innovative pharmaceutical industry
The race to attract life-science to the European economy. From
research, development and employment to investment, research
manufacturing and investment is a to new treatments, as an industry,
global endeavour. The number of we won’t rest in creating a healthier
new medicine approvals in the US is future for Europe.
outstripping approvals in the EU and
1
‘EU Industrial Policy After Siemens-Alstom’, European Political Strategy Centre, European Commission, 18 March 2019.
Foreword from PwC
We are pleased to support EFPIA on there has been continued scrutiny
this important piece of work and we on the affordability of medicines,
thank the companies and industry and in particular, the need for
bodies who have contributed and intellectual property incentives to
helped make this work possible. stimulate research and
commercialisation of new therapies.
The pharmaceutical industry has
delivered substantial value to the This debate should consider the
health of European Union (EU) benefits of innovative medicine as
citizens over decades and delivered well as costs. We hope that our
Jo Pisani significant economic value through research is valuable in driving
Partner, PwC UK the research, manufacturing and productive dialogue and further
commercialisation activities that are informs the debate by assessing the
conducted in Europe. Continued overall contribution of the industry to
research and the application of new economic prosperity and
technologies mean that treatments employment, the health and societal
and cures for many more diseases benefits of innovations in specific
are within grasp. However, with areas of medicine, and by reviewing
many EU health economies having the importance of incentive
to manage the increasing health mechanisms in driving continued
costs of an ageing population and R&D and commercialisation.
an increase in chronic diseases
Contents Executive summary..........................................................2 Introduction......................................................................4 Methodology....................................................................5 Economic impact..............................................................6 Health and societal impact............................................. 10 Role of IP incentives....................................................... 14 Conclusion..................................................................... 16 References..................................................................... 18
Abbreviations ART Antiretroviral therapy EFPIA European Federation of Pharmaceutical Industries and Associations EMA European Medicines Agency EU European Union GDP Gross Domestic Product GTAP Global Trade Analysis Project GVA Gross Value Added HAART Highly Active Antiretroviral Therapy HER2+ Human Epidermal growth factor Receptor 2-positive HLY Healthy Life Year HR+ Hormone Receptor-positive IP Intellectual Property QALY Quality Adjusted Life Year R&D Research & Development SME Small and Medium sized Enterprise STEM Science, Technology, Engineering and Mathematics STR Single Tablet Regimen TA Therapeutic Area WHO World Health Organization
Executive summary
We have shown that the whole of the pharmaceutical industry Medicines benefit millions of people on a daily basis. In just a
across the EU in 2016 contributed to... subset of medicines within HIV (HAART) and breast cancer
(HER2+, HR+) we saw that...
€206 billion Over 650,000
people in the EU were treated
in Gross Value Added and...
with these medicines between
2007–2017, who are estimated
to have gained around...
2 million
2.5 million healthy life years, leading to around...
jobs
46% of people employed directly
by the industry are women
€27 billion
In productivity gains for
EU economies, and
approximately...
Share of female employees
€13 billion
healthcare cost savings due
in
to avoided complications
46%
24%
16%
Pharmaceuticals Auto Aerospace &
manufacturing defence
2 | Economic and societal footprint of the pharmaceutical industry in Europe
The value of the pharmaceutical industry The advent of targeted breast cancer community, which our analysis has not
to both patients and society is often lost treatments designed to treat specific quantified. We also have not accounted
in the public debate surrounding genotypes have resulted in an estimated for the effect of improved health on
medicine prices. This analysis seeks to gain of over one million healthy life years increases in informal employment, such
highlight the broader value that the in Europe for patients treated with as domestic work, childcare, and family
research-based industry delivers to the selected medicines between 2007 and caretaking, the imputed value of such is
wider European community. 2017, and have delivered a wider impact estimated at 20 to 40% of EU GDP2.
on both patients’ family members and Moreover, the medicines have a ripple
The pharmaceutical industry is a major the broader breast cancer population. effect in that all of them have helped
contributor to the European economy. pave the way for further innovations
We estimate that in total, it contributed Prior to the advent of highly active across different medical disciplines.
€206 billion in Gross Value Added (GVA) antiretroviral therapy (HAART), an HIV
and 2.5 million jobs in 2016, equivalent to diagnosis was almost a death sentence. The current EU incentives model, which
1.4% of the EU’s combined GDP and The development of HAART therapy has includes Supplementary Protection
0.9% of the region’s employment1. The turned HIV into a treatable disease, and Certificates, Regulatory Data Protection,
largest contributions are made in this is evidenced in the increases in Orphan Market Exclusivity and Paediatric
Germany, the United Kingdom and healthy life years and increases in Rewards, is fundamental to ensuring a
France. As well as supporting a productivity it has brought to the strong pharmaceutical industry in Europe.
significant number of jobs, the industry European HIV population. For patients It has helped to generate investment in
has been making strides in areas of treated between 2007 and 2017, the areas with previously unmet needs and
representation and gender equality and HAART therapies we looked at are fostered a thriving industry that makes a
compares favourably with other key estimated to lead to a gain of 800,000 significant contribution to the European
industries. In 2016, 46% of the healthy life years and €22 billion of economy and society. A survey of 18
pharmaceutical industry’s workforce productivity. Outside of the quantifiable EFPIA corporate members reinforces the
were women. gains in healthy life years and importance of these incentives.
productivity, these innovations have the Respondents indicated that, within the
However, the benefits brought by potential to reduce both health current incentives environment, they have
pharmaceutical innovation are not just inequalities and HIV transmission rates. increased investment in the EU over the
economic. The industry improves the past three years. Members indicated that
lives of millions of Europeans through its It is worth noting that the benefits intellectual property (IP) incentives and
contributions to public healthcare and quantified in our analysis represent only faster market access are the leading
wider societal benefits. In order to a fraction of the overall health and factors influencing R&D investment
illustrate some of these benefits, we societal contribution of the decisions, and that dismantling the
investigated two therapeutic areas – pharmaceutical industry in Europe. Our current incentive model would have a
breast cancer and HIV – as case studies, analysis focused only on specific negative impact on their R&D and
measuring the impact of a selection of medicines within two therapeutic areas. Commercial operations in Europe.
medicines in each case study. New, more effective drug therapies Drastically changing the incentives model
improve the psychosocial health of therefore risks damaging the
patients, family members and the pharmaceutical industry’s ability to deliver
value in Europe.
1
GVA captures the gross economic contribution that a sector makes to the economy, in terms of the value
that its activities add to overall economic output. GVA is broadly equivalent to GDP but it excludes some
indirect taxes. It is commonly used to measure the value of a company or sector of the economy for whom it
is difficult to attribute certain taxes.
2
Giannelli et al. (2012). GDP and the value of family caretaking: how much does Europe care?
Economic and societal footprint of the pharmaceutical industry in Europe | 3
Introduction
The value of the pharmaceutical These innovations have allowed us to A better understanding of the
tackle complex diseases far more broader value that the industry
industry to both patients and effectively and with greater precision delivers can contribute to more
society is often lost in the than ever before. Yet these breakthroughs holistic dialogue and
public debate surrounding are expensive: accounting for the cost of decision-making
failed drugs, the average cost of bringing
medicine prices a new drug to market is now estimated To better understand the direct and
to be over $2bn.3 indirect contribution of the
In the past 20 years, the pharmaceutical pharmaceutical industry in Europe,
industry has pioneered research into a Medicine prices are set through negotiation EFPIA commissioned PwC to conduct a
vast range of life-saving medicines. with governments based on the value study focussed on three key areas:
Research into small molecule medicines they deliver to patients and health • The economic impact of the industry;
and vaccines has paved the way for new systems. Unlike other parts of the
• The health and societal impacts of
treatments in a number of key areas, healthcare system, they are subject to
the industry; and
affecting millions of lives, including rigorous value assessments before
being reimbursed. Yet these value • The enabling environment for
precision medicines, biologics, cell and
assessments can overlook the direct and continued investment in innovation.
gene therapies, siRNA and
digital therapeutics. indirect benefits of pharmaceutical
innovation, both in the field of medicine
and to the wider patient population, their
careers, the community, and the economy.
3
iMasi et al. (2016). Innovation in the pharmaceutical industry: New estimates of R&D costs. Tufts Center for the Study of Drug Development,
D
Tufts University, United States.
4 | Economic and societal footprint of the pharmaceutical industry in Europe
Methodology
For the economic analysis, we estimated
Direct economic impact Consists of the economic value that
the economic contribution of the
the sector created directly and the
pharmaceutical industry, defined here as
number of people that organisations
the pharmaceutical and life science
within the sector employ.
companies developing and distributing
medicines and vaccines4, in the EU.
The analysis examines how the industry Indirect economic impact Consists of the impact of the sector’s
contributes to the economy through expenditure on suppliers (for example,
Gross Value Added (GVA) and by purchasing raw materials) and
employment. GVA captures the gross suppliers’ expenditure through
economic contribution that a sector subsequent tiers of the supply chain.
makes to the economy, in terms of the
value that its activities add to overall
economic output.5 Employment captures Induced economic impact Consists of the impact of employees
the number of people who are directly of both the pharmaceuticals sector
employed in a given sector, who have a and its supply chain spending
contract of employment and receive their wages.
compensation in the form of salaries.
In addition to the direct economic For the health and societal impact case brought to society. The case study
contribution of the industry, we used studies, we investigated two therapeutic approach covers only a fraction of the
input-output analysis to estimate the areas: breast cancer and HIV. These impacts of medicines, and is intended to
industry’s broader economic contribution were chosen because they cover provide illustrative examples of health
through its supply chain and employee different disease profiles, including and societal benefits rather than be a
spending. The total contribution of the non-communicable and communicable, comprehensive analysis across the
industry is made up of direct, indirect acute and chronic diseases, and affect pharmaceutical industry.
and induced effects, which we define people of different ages and
as follows: socioeconomic backgrounds. To understand the importance of the
current EU incentives model, which
For the two therapeutic areas, we includes Supplementary Protection
focused on a subset of medicines that Certificates, Regulatory Data Protection,
represent important innovations in their Orphan Market Exclusivity and
field and address previously unmet Paediatric Rewards, we surveyed EFPIA
patient needs. To assess their impact, corporate members. The survey sought
we followed a bottom-up process to to determine how the current incentives
estimate the aggregate health, model affects their Europe based R&D,
productivity and cost impact of these commercial and manufacturing
medicines for patients treated from 2007 operations and what dismantling this
to 2017. By estimating the incremental incentives structure might mean for them.
gain in healthy life years6, working days
and the change in net health care costs For more detail on the methodology,
compared with standards of care prior to please refer to the Technical Report.
the introduction of the medicines, we
were able to come up with a picture of
the benefits these medicines have
4
e have defined the pharmaceutical industry as using NACE code C21 (Manufacture of basic pharmaceutical products and pharmaceutical preparations). NACE codes
W
are a Europe-wide standard classification for businesses, which allow us to conduct analysis across countries consistently.
5
VA is a similar measure to GDP, but GDP includes some additional indirect taxes which are difficult to attribute to individual sectors. The formula to calculate GVA is:
G
Direct GVA = Operating Profits + Depreciation + Amortisation + Direct employee costs.
6
In this report, the term ‘healthy life year’ is used as the plain English equivalent of the technical term: Quality-Adjusted Life Year (QALYs). One healthy life year is
therefore the same as one QALY and is equal to 1 year of life in perfect health. Or, for example, 2 years living with a severe illness which reduces quality of life by 0.5.
The QALY is a widely used health outcome measure which reflects both the length and quality of life lived. QALYs are measured in terms of the person’s ability to carry
out the activities of daily life, as well as freedom from pain and mental disturbance. (NICE).
Economic and societal footprint of the pharmaceutical industry in Europe | 5
Economic impact
The pharmaceutical industry is Figure 1: GVA contribution of the pharmaceutical industry in the EU, 2016
a major contributor to the EU 250,000
economy. We estimate that in
total, it contributed €206 billion
GVA impact (€, millions)
200,000
59,914
in GVA and 2.5 million jobs in
150,000
2016, equivalent to 1.4% of the 46,160
region’s combined GDP and 100,000 206,010
0.9% of employment.
50,000 99,935
0
Direct Indirect Induced Total
Source: PwC analysis
Figure 2: Employment contribution of the pharmaceutical industry in the EU, 2016
3,000,000
2,500,000
Employment impact
2,000,000 1,072,000
1,500,000
2,494,000
1,000,000 780,000
500,000
642,000
0
Direct Indirect Induced Total
Source: PwC analysis
The pharmaceutical industry directly The benefits of the pharmaceutical
employs a large number of highly-skilled industry’s productivity extend beyond
staff, who each make a significant the industry itself: it helps to raise living
contribution to the economy. standards, keep wages high and
increases tax revenues for government.
The pharmaceutical industry directly
contributes an average of €156,000 of
GVA for every employee. This figure is
significantly higher than the region’s
average of €59,000, and it is also higher
than other industries. For example, the
GVA per employee in the car
manufacturing industry is €85,000.
6 | Economic and societal footprint of the pharmaceutical industry in EuropeFigure 3: Economic contribution of the pharmaceutical industry versus other key industries
Pharmaceuticals Automotive Aerospace Computer
manufacturing manufacturing programming
€100bn €211bn €45bn €261bn
Direct Gross Value Direct Gross Value Direct Gross Value Direct Gross Value
Added (2016) Added (2016) Added (2016) Added (2016)
642,000 2,480,000 410,000 3,180,000
Direct Employment Direct Employment Direct Employment Direct Employment
(2016) (2016) (2016) (2016)
€156,000 €85,000 €102,000 €82,000
Value added per Value added per Value added per Value added per
employee employee employee employee
Source: PwC analysis
Breaking down GVA by country shows The pharmaceutical industry’s workforce is more gender balanced than
that the pharmaceutical industry offers other key industries
the largest contribution to GVA in
The pharmaceutical industry has been making strides in areas of representation and
Germany and the United Kingdom, with
gender equality. In 2016, 46% of the pharmaceutical industry’s workforce across the
these countries accounting for 33% of
EU were women. This compares favourably against, for example, the gender
the total GVA created by the industry in
distribution of the 18 million scientists and engineers in the EU who are women (41%),
the entire region. The GVA contribution is
and the distribution of scientists and engineers in high and medium-technology
concentrated in these countries as they
manufacturing who are women (just 17%).7
are home to many large pharmaceutical
companies, who employ a large number
of staff in high productivity roles. Jobs Figure 4: Percentage of female employees in the pharmaceutical industry
supported by the industry are also versus other key industries
concentrated in these countries along
with France. Germany, France and the Share of female employees
United Kingdom account for nearly half (EU average)
(49%) the total jobs supported by the
industry in the region. For more detail
on country-specific results, see Pharmaceuticals 46%
Technical Report.
Auto manufacturing 24%
Aerospace & Defence 16%
Computer programming
23%
Source: PwC analysis
7
Eurostat (2019). Women in science & technology
Economic and societal footprint of the pharmaceutical industry in Europe | 7The Orphan Regulation has helped total of not more than €43 million. Since
to address an unmet need in the its adoption, the number of orphan Ronny’s story
pharmaceutical industry, whilst medicines in the EU has risen
also encouraging the growth of significantly, from only 8 products prior When Ronny was diagnosed
small and medium sized to 2000, to 164 today9. The medicines with neuroendocrine tumours,
enterprises (SMEs) treat a wide variety of diseases, however, he did what people do in
there has been a clear focus on orphan
Orphan diseases affect circa 30 million movies and asked how long
cancer medicines, which account for
people in the EU, with more than half of more than 40% of orphan medicines he had to live. When the
newly diagnosed cases occurring in with market access, and medicines oncologist said: ‘months,
children, a third of whom will die before targeting illnesses with a particularly low years…’, Ronny switched off.
they are five years old. Despite this, fewer prevalence (below 3 in 10,000).
than 15% of orphan diseases benefit from But he did remember the
what the European Medicines Authority The number of medicines granted oncologist adding: ‘But with
describes as ‘even minimal amounts of orphan designation by the European the right treatment you could
scientific knowledge’, and 95% of the Commission has risen year on year, live a lot longer.’ Fortunately,
7,000 known rare diseases have no suggesting a greater number of higher
Ronny had access to the right
approved therapies. quality applications. This goes hand in
hand with the rising number of scientific treatment at the right time. He
The EU Orphan Regulation, adopted in publications on rare diseases, which are is now living a reasonable
December 1999, provides 10 years of providing companies with the knowledge quality of life, participating in
market exclusivity to medicines for they need to develop effective orphan
orphan diseases8, alongside protocol activities such as bicycle rides
medicines.
assistance, reduced fees for regulatory with his wife. He thinks he’ll
activities, and additional incentives for SMEs contribute significantly to the even be able to live to see
SMEs, defined by the EMA as enterprises orphan medicines market, indeed, more some of his grandchildren
with fewer than 250 employees and either than half the medicines that have so far
graduate from school.
an annual turnover of not more than received orphan designation were
€50 million or an annual balance-sheet developed by SMEs.
8
According to the Orphan Regulation requirements, an orphan disease cannot have a prevalence higher than 5 in 10,000
9
EMA (2018) Annual report on the use of the special contribution for orphan medicinal products. Available online here: https://www.ema.europa.eu/en/documents/
report/annual-report-use-special-contribution-orphan-medicinal-products-2018_en.pdf
Figure 5: Types of organisations with orphan designations in development
from 2002 to 2012
13%
SMEs
Academia and public bodies
16%
51% Large companies
Other
17%
Intermediate-sized companies
3%
Source: Charles River Associates (2017)
8 | Economic and societal footprint of the pharmaceutical industry in EuropeThe number of orphan-focused SMEs has risen since the adoption of the Regulation: of the 276 SMEs focusing on orphan
medicines that currently exist, 90% were incorporated after 2000.
Figure 6: Number of SMEs focusing on orphan medicines
30
25
20
15
10
5
0
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
Source: European Medicines Agency SME Register
Alongside benefits provided by the
Regulation exclusively to SMEs, SMEs
developing orphan medicines can
benefit from attracting early investment.
Venture capitalists investing in orphan
medicine start-ups typically do so on
average one year before they would in a
non-orphan medicine equivalent.10
Benefits aside, the orphan medicines
market is suited to SMEs, as it offers a
wide breadth of niche areas that require
bespoke research, creating an
environment with less direct competition.
10
Charles River Associates (2017). An evaluation of
the economic and societal impact of the orphan
medicine regulation
Economic and societal footprint of the pharmaceutical industry in Europe | 9Health and societal impact
The benefits brought by Breast cancer Pharmaceutical innovations since 2005
have led to an improved prognosis for
pharmaceutical innovation are Before 2005, many patients with
these patients. The subset of medicines16
aggressive or advanced breast cancer
not just economic. It improves we investigated for both the HER2+ and
had very low chances of survival11 and
HR+ forms of the disease represent a
the lives of millions of were limited in their treatment options.
pipeline of treatment innovation, in that
Europeans through its Drug resistance12 in these cancers meant
they capture both the first treatment
that patients were forced to undergo
contributions to healthcare and gruelling and in some cases ineffective
forms and their subsequent evolutions.
wider societal benefits. The chemotherapy courses.13 For certain We estimate that between 2007 and
metastatic breast cancer patients, for
following case studies illustrate 2017, over 500,000 breast cancer
example, average life expectancy after patients received these targeted
some of these benefits. diagnosis was 20 months, with patients treatments, resulting in a gain of nearly
responding to chemotherapy for an 1.2 million healthy life years.
average of just six months.14
Innovation in medicines has helped to
address this previously unmet need. In
our case study, we consider patients
with early and advanced HER2+15 and
advanced HR+ breast cancer.
546,000 breast cancer
patients treated between
8% of the
2007-2017 of which 406,000
patient population*
had early stage and
140,000 had late stage
1,160,000 healthy life Average of 2.12 healthy
years gained in Europe life years per patient
2.45 healthy life 1.17 healthy life
years gained years gained
per patient with per patient with
early stage advanced stage
* With only 4% of patients with advanced breast cancer eligible for HER2+ treatment, and 10% of patients with
early stage cancer eligible for HER2+ treatment, this is a significant proportion of the eligible population.
11
Slamon et al. (2001). Use of Chemotherapy plus a Monoclonal Antibody against HER2 for Metastatic Breast Cancer That Overexpresses HER2.
12
Moiseenko et al. (2017). Resistance mechanisms to drug therapy in breast cancer and other solid tumors: An opinion.
13
Sledge et al. (2014). Past, Present, and Future Challenges in Breast Cancer Treatment.
14
Slamon et al. (2001). Use of Chemotherapy plus a Monoclonal Antibody against HER2 for Metastatic Breast Cancer That Overexpresses HER2.
15
HER2+ breast cancer is a breast cancer that tests positive for a protein called human epidermal growth factor receptor 2 (HER2), which promotes the growth of
cancer cells. Approximately 20% of breast cancer cases are HER2+ breast cancer.
16
See Technical Report for list of medicines considered in the study.
10 | Economic and societal footprint of the pharmaceutical industry in EuropeThrough more effective treatment these allowing increased access to a similar
medicines have also reduced days lost standard of care. For example, in
to illness thus creating additional Europe, four trastuzumab biosimilars
economic benefits. We estimate that the have recently come to market,20
new treatments create productivity gains indicating a drive from pharmaceutical
of €9,700 per patient, or €5.3bn in total, companies to continue innovating and
which is equivalent to about 3.5% of the delivering impact.
total economic cost for breast cancer
care in Europe.17 Finally, the medical benefits of these new
treatments are not limited to HER2+ and
Outside of the quantifiable gains in HR+ breast cancer treatment: they paved
healthy life years and productivity, these the way for antibody-targeted treatment
innovations deliver a wider impact on across many different cancer types.
both patients’ family members and the
broader breast cancer population. The
health and societal impact presented
here will likely be much greater than
that captured by our analysis. This is Suzanne’s story
owing to the disproportionate
contribution of women, more specifically
When Suzanne Leempoels found
mothers, to the economy in terms of out at the end of her early breast
unpaid work. Globally, women spend up cancer treatment that she had
to ten times more time on unpaid work metastasis in her lungs, the first
than men,18 and as breast cancer largely
thought that crossed her mind was
affects women, the impact of improved
breast cancer treatment on unpaid work that she wanted to live to one day
is significant. meet her grandchildren. Fortunately,
her oncologist opted for curative
Improved treatments have also helped to
alleviate the burden placed on primary
treatment, and five years later, her
caregivers and patients’ immediate cancer is inactive.
family members. It has been reported
that among breast cancer caregivers, Suzanne now campaigns for
30% suffered from depression and awareness on behalf of other
almost 80% of employed caregivers metastatic cancer patients. In
missed work.19
particular, she wants to highlight
Furthermore, the patent lifecycle of these that cancer is more than just a
medicines opens the way for new medical problem; it affects all areas
entrants, such as biosimilars or improved of life, from work and financial
versions through life cycle management,
resulting in a healthy competitive
security, to patients’ emotional
ecosystem. These new entrants are condition and sense of self-worth.
typically offered at a lower price, thereby
17
uengo-Fernandez et al. (2013). Economic burden of cancer across the European Union: a population-based
L
cost analysis.
18
Promundo (2019). State of the World’s Fathers: unlocking the power of men’s care.
19
runfeld, E. (2004). Family caregiver burden: results of a longitudinal study of breast cancer patients and their
G
principal caregivers.
20
Generics and Biosimilars Initiative (2018). Biosimilars of trastuzumab.
Economic and societal footprint of the pharmaceutical industry in Europe | 11HIV
Prior to the advent of highly active vomiting, anaemia, neutropenia, The advent of HAART, which saw the
antiretroviral therapy (HAART), an HIV myopathy, pancreatitis, and peripheral introduction of protease inhibitors and
diagnosis was considered by many to be neuropathy,21 as well as a high chance of the development of backbone NRTIs, in
a death sentence. In the early 1990s, HIV developing AIDS. The low tolerability of the mid-1990s marked a breakthrough
patients were treated with dual NRTI these side effects contributed to for patients. These backbone therapies
therapy (AZT with zalcitabine or poor adherence. became more efficacious with fewer side
didanosine) which had limited success in effects over time. Our analysis looks at
lowering viral load and was accompanied the health and societal benefits that
by severe side effects, including nausea, HAART has brought.
Timeline of HIV treatment development
Early 1990s: Mainstream practice was 2000s onwards: Backbone therapies made over this time period became
dual therapy combining two NRTIs, more efficacious with fewer side effects. Major drug developments have
AZT with zalcitabine (ddC) or been the ability to combine triple therapy into a single tablet (STR), as well
didanosine (ddI). as CCR5 and integrase inhibitors.
Mid 1990s: Advent of triple therapy, later called HAART, thanks to the
development of protease inhibitors, the first of which was saquinavir. Early
forms of HAART later saw great improvement through the creation of PI-
boosters and the development of the back-bone NRTIs.
The development of HAART has turned have better tolerability and thus improve treatment pre mid-1990s23, bringing life
HIV into a treatable, chronic disease. the quality of life for people living with expectancy for people with HIV on
These new drugs tackle the potency of HIV. The development of STRs has also anti-retroviral treatment and responding
the virus with no further risk to the enabled greater medication adherence to treatment in line with the general
patient. In doing so, they have overcome within the HIV community, which has had population24, meaning patients can
the single biggest challenge facing HIV a significant positive impact on viral expect to live full lives. In total, for
drug development. suppression in HIV patients. patients treated between 2007 and 2017,
we estimate a gain of 775,000 healthy life
There are now more than 30 HIV drugs Looking at a subset of STRs introduced years. This increase in health extends
available, of which there are 13 fixed in the last decade22, we can see the their ability to work and contribute to
dose combinations that are called single difference these treatments have made to society, resulting in an estimated
tablet regimens (STR). Continued patients’ lives and to society at large. €207,000 in productivity gains on average
investment in the research and We estimate that HAART gives the per patient over their lifetime.
development of new anti retrovirals, average HIV patient an extension of
including within STRs, has resulted in the 9 years in life expectancy (approximately
development of new combinations that 7.4 healthy life years) compared to
21
Darbyshire et al. (2000). Zidovudine (AZT) versus AZT plus didanosine (ddI) versus AZT plus zalcitabine (ddC) in HIV infected adults.
22
See Technical Report for medicines included in analysis.
23
See Technical Report for details on methodology
24
NHS UK. What is the life expectancy for someone with HIV?
12 | Economic and societal footprint of the pharmaceutical industry in Europe105,000 HIV patients were 8% of the Patrick’s story
treated between 2007-2017 patient population*
Patrick Reyntiens was
diagnosed as HIV-positive in
1985. At the time, the disease
775,000 HLYs gained Average of 7.4
in Europe HLYs per patient was close to a death
sentence. The great
breakthrough came in 1996,
* The medicines we have analysed are single tablet therapies. Many people are treated with multi tablet
regimens with the same active ingredients. with the introduction of ‘AIDS
Cocktails’ (early HAART).
By reducing patients’ risk of developing failures in treatment make the possibility Initially, Patrick was on 20 –
AIDS and other HIV-related of virologic rebound high among patients 30 pills a day and he felt
complications, HAART has also in these groups.27 Through better
alleviated pressure on healthcare adherence and improved viral
sicker on the medication than
systems. We estimate that, compared to suppression, access to STRs would from the virus itself. These
treatment in the early 1990s, treating disproportionately benefit less privileged days, however, Patrick takes
someone with HIV using HAART could socioeconomic groups. only five pills a day. Many
result in net savings to the healthcare
Moreover, HAART has had a major patients only need to take
system of €11,000 per patient over their
lifetime25. This suggests that despite the impact on HIV transmission rates. A one. Patrick’s quality of life
high cost of new HIV medicines, they recent study found that due to the has improved enormously and
deliver value for money in the long-term. reduction in virologic load, patients on he uses his time to raise
HAART treatment presented no
In addition to the quantifiable gains in transmission risk to their partners28.
awareness of HIV. He’s
healthy life years and productivity, these Reducing the transmission risk could hopeful treatment will continue
innovations have the potential to reduce further significantly lower the prevalence to improve and that one day
both health inequalities and HIV of HIV across Europe and in turn, reduce there might even be a cure.
transmission rates. HIV is most prevalent the healthcare burden of HIV and HIV
among vulnerable groups and especially related illnesses. Furthermore, studies
among those of lower socioeconomic are now evaluating the use of such
status. Treatment outcomes for these medicines as pre-exposure prophylaxis
groups tend to be worse, due to a (i.e. taken to prevent HIV infection by
combination of factors including failure those who do not have HIV but are at
to diagnose HIV early enough, late substantial risk of getting it), which have
initiation of antiretroviral therapy (ART)26 proven successful in lowering HIV
and poor adherence to ART. These transmission in America.
25
This could range from net savings of €40,000 to net cost of €31,000 depending on assumptions applied. See Technical Report for further information.
26
Lodi, S. (2014). Delayed HIV diagnosis and initiation of antiretroviral therapy.
Burch et al. (2016). Socioeconomic status and treatment outcomes for individuals with HIV on antiretroviral treatment in the UK: cross-sectional and longitudinal analyses.
27
28
European Centre for Disease Prevention and Control. (2018). The benefits of HIV treatment: undetectable means you do not pass on the virus.
Economic and societal footprint of the pharmaceutical industry in Europe | 13Role of IP incentives
For the industry to continue to The IP incentives considered in the Figure 7: Percentage of respondents
survey are the Supplementary Protection reporting a change in European
deliver such value to the Certificates (SPCs), Regulatory Data footprint in the last three years
European community, it is Protection, Orphan Market Exclusivity,
essential that the legal and and Paediatric Rewards, among others. Change in European footprint
Research and development of new % or respondents reporting a change in
regulatory environment medicines can be a long, complex, risky the last 3 years
encourages innovation and – and ultimately expensive – process.
These incentives are designed to
fosters growth. This kind of encourage continued innovation by 14%
environment has been enabled offering additional protection for
in the EU through the medicines that make it to market. 35%
introduction of several initiatives, Within the current environment, over
including IP incentives, which 80% of respondents reported that they
have increased or maintained current
have encouraged the levels of investment, which is consistent
51%
development of innovative with reported figures29 from the
pharmaceutical industry. Research and
medicines. To help understand Development (R&D) and Commercial are
the importance of the current the segments of the value chain that Increase No change Decrease
incentives model, and the have benefited most from this trend as a
result of maturing pipelines, incremental Source: Results of PwC survey of EFPIA
potential effects of dismantling investments in existing facilities and corporate members
it, we undertook a survey of capabilities, new product launches and
partnership-led R&D approaches.
18 EFPIA corporate members.
29
Informa UK (2017) Pharma R&D Annual Review 2017.
“
We made multi-million €
investments focused on
modernising existing
R&D facilities, ramping
up R&D activities, and
enhancing R&D
capabilities
Respondent to PwC survey
14 | Economic and societal footprint of the pharmaceutical industry in EuropeEFPIA members indicated that IP incentives and quicker market access are the According to EFPIA members,
leading factors influencing R&D investment decisions. IP incentives were dismantling the current incentives model
consistently ranked by the respondents in the top three factors influencing would have a negative impact on
investment decisions. pharmaceutical companies’ EU
research-based investment activity.
Respondents indicated that phasing out
Figure 8: Market factors in order of importance in terms of deciding which
current incentives in Europe would have
countries to invest
a material negative effect on their
European operations, with over half
Overall indicating that this scenario would lead
rank to a reduction in their R&D and
Commercial footprints of more than
IP incentives
1 25%. Organisations choosing to reduce
their footprint in Europe would seek
opportunities to increase investment in
regions where their IP is better protected
Accelerated approval/early access schemes 2 and innovation more actively rewarded.
This finding is consistent with previous
studies30, 31 which show that weaker
intellectual property regimes limit the
Skills and wage costs of labour 3 willingness of companies to invest
in R&D.
Size of economy and potential for growth 4
5
“
Macro-economic/political issues
(e.g. inflation, political uncertainty)
Investments have been
Attractiveness to conduct clinical trials 6 increased by more than
10% per year over the
last 3 years to launch
Tax rates 7 new products, continue
increasing our
investments in our
Infrastructure and transport
8 existing portfolio,
support the creation of
Source: Results of PwC survey of EFPIA corporate members new affiliates, and
reinforce our expertise
and global organisation,
particularly in terms
of R&D
Respondent to PwC survey
30
NERA Economic Consulting (2007). Key Factors in Attracting Internationally Mobile Investments by the Research Based Pharmaceutical Industry.
31
Porter, M. (2000). Location, Competition, and Economic Development: Local Clusters in a Global Economy.
Economic and societal footprint of the pharmaceutical industry in Europe | 15Conclusion
Our research provides evidence of the The results of our survey of pharmaceutical
significant economic contribution that the companies indicate that the current
pharmaceutical industry makes to incentives model is important to ensuring a
economic prosperity and employment in strong industry in Europe. It has helped to
the EU. We estimate that in 2016, it generate investment in areas with
generated over €206 billion in GVA previously unmet needs and fostered a
(including indirect and induced effects) and thriving industry that makes a significant
employed over 2.5 million people across contribution to the European economy and
the EU. society. Drastically changing the incentives
model risks damaging the pharmaceutical
This study also highlights the valuable industry’s ability to deliver value in Europe.
health and societal benefits of
pharmaceutical innovations in specific There is an ongoing debate about the
areas of medicine. We estimate that for affordability of medicines and the need for
over 650,000 HIV and breast cancer the current level of IP incentives –
patients treated between 2007 and 2017, justifiably so given the numerous
the subset of medicines analysed resulted competing objectives of government.
in gains of nearly 2 million healthy life years However this debate should consider
and €27 billion in terms of productivity. It is benefits as well as costs, and the
worth noting this only quantifies a fraction pharmaceutical industry has contributed to
of the overall health and societal many significant advances over recent
contribution of the pharmaceutical decades. For example, cancer death rates
industry. Aside from addressing only two have fallen by 20% over the last 20 years33,
therapeutic areas, we have not touched on and close to 30 diseases are preventable
the ways in which new, more effective drug by vaccination, preventing between 2 to 3
therapies improve the psychosocial health million deaths globally per year34. By
of patients, family members and the providing better understanding of the
community, and our productivity direct and indirect contribution of the
calculations do not account for increases pharmaceutical industry in Europe, we
in informal employment, such as domestic hope that our research will prove valuable
work, childcare, and family caretaking. The by further informing the debate and
imputed value of such unpaid work has facilitating productive dialogue.
been estimated at 20 to 40% of the EU
GDP32. Even the impact of the medicines
analysed here are likely to be greater than
stated, given that all of them have helped
pave the way for further innovations across
different medical disciplines.
32
Giannelli et al. (2012). GDP and the value of family caretaking: how much does Europe care?
33
Jönsson et al. (2016). The cost and burden of cancer in the European Union 1995–2014.
34
World Health Organization. (2018). 10 facts on immunization.
16 | Economic and societal footprint of the pharmaceutical industry in EuropeEconomic and societal footprint of the pharmaceutical industry in Europe | 17
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