According to Reuters, the long-term future of drug research and innovation is in jeopardy due to European market practices.
Ian Read, the boss of Pfizer, the world’s largest producer of drugs, believes that European governments are not taking the correct approach to drug research within the member states.
Slashed prices, complex barricades and winding bureaucratic red tape around new drug treatments as well as ‘freeloading’ off others in Asia and America who are willing to pay higher prices are all not only damaging in the short-term, but could be disastrous for the future of European innovation.
In order to save money in the short term, due to economic volatility and the need to cut national debts, there is now a ‘disconnect’ between Europe and research organisations. Governments wish to save money and slash budgets, however, they also want to remain significance in the race to develop new treatments and drugs.
The problem is that if an organisation wants innovation, it always comes at a price.
Governments across Europe are the biggest buyers of drugs, and as such, it gives them substantial power in dictating prices for such products. Not only this, but with country-wide information available, governments are able to cross-reference and check pricing levels — in turn, the pharmaceutical industry can often be forced to submit to a price war.
The competition to sell these drugs can be fierce — and if one country slashes their prices, often others have to follow suit in order to remain competitive.
In an industry where the most modern, innovative and valuable drugs can be extremely expensive to produce, it is natural that governments would want to clinch the best deal, even if this has detrimental effects for the industry as a whole in the future.
However, it is not only this ‘price war’ that Read is critical of. Not only are governments influencing prices, but according to to the Pfizer boss, they have also left approximately $20 billion in unpaid bills, for both medicines and modern therapies.
Read told Reuters:
“The pharmaceutical industry requires a vibrant marketplace. It’s a high-risk business [..] and a high-risk business needs the potential for high returns. So in the end, European leaders are sacrificing the long term for the short term.”
The knock-on effect seems to be becoming more substantial, as other pharmaceutical leaders feel that Europe is not an attractive proposition in which to launch new products — preferring areas such as Japan or the United States.
Read believes that governments in Europe should take a long-term view of the issue, and begin working on ways to solve the pricing issue, and additionally who should pay for cutting-edge medicines in the future.
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