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How Can Pharma Help to Reduce the Cost of Healthcare?

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The cost of healthcare is a major challenge for governments globally. The good news is that the quality of healthcare has improved so much over recent decades that people are living longer and growing older, but as a result, many more are living with long-term, chronic or non-communicable diseases and illnesses. These people require medical attention in the form of hospital beds, therapies and social care for example, all of which take their toll on global healthcare budgets.

The pharma industry has faced accusations of unnecessarily increasing the cost of healthcare by charging too much for certain cancer drugs for example. This might be a tempting viewpoint when you consider that spending on pharmaceutical therapies is due to hit $1.3 trillion by 2018, up by 30% from 2013, but the industry counters that these perceived high costs actually balance their increasingly high costs of development. It can cost $2.6 billion and many years of work to bring just a single drug to market. Add to this the fact that average spend on medications in OECD countries actually comprises only 10% of healthcare costs, and the case for pharma being to blame for increasing costs in care evaporates.

At The Economist’s Pharma Summit, Kieran Murphy, President and CEO of GE Healthcare’s Life Sciences business, pointed out that “Pharma can be a soft target in this discussion. All that’s driving the waste and the cost of drugs is the incredible cost of failure,” suggesting that there needs to be a rethink of the risk versus reward ratio for the development of drugs. Drugs that fail in late stage trials can have consumed billions of dollars, with the pharma company left to pick up the pieces.

More effective risk sharing, public private partnerships, better use of precision diagnostics and big data, more value and outcome-based thinking, and a modernized regulatory framework were all potential solutions discussed by panelists focused on how the industry can help bring down the costs of healthcare.

Even once products are approved, Kieran suggested that there is a huge amount of waste in the current system. “90 percent of medicines only work in 40 percent of patients” he said. “That could be $350 billion in wasted prescriptions¹. More appropriate and wider use of earlier precision diagnostics to help identify the right treatment for the right patients could help radically reduce this.”

Recognizing that savings can also be made in the production of biopharmaceuticals, GE is working to help its pharma customers scale up, industrialize and commercialize highly intricate, sensitive and complex biopharmaceutical manufacturing processes. Kieran explained: “GE draws from the benefit of 30 years of advances in bioprocessing to now help pharma companies build plants in half the time at a quarter of the cost and at one third of the running costs of a traditional factory².”

Collaboration was the buzz word on the day.  There was clear recognition across the board that by effectively collaborating with clinicians, governments, patient groups and public and private players across the healthcare system, the pharma industry can play a significant role in reducing the challenge of the stubborn rise in the global cost of healthcare.

 

References

1 – Nature Biotechnology 30, 1 (2012) doi:10.1038/nbt.2096  http://www.nature.com/nbt/journal/v30/n1/full/nbt.2096.html

2 – Data hosted at GE Healthcare UK Ltd

More Information

Learn more about the panelists’ views here 

GE Healthcare Life Sciences

Economist Pharma Summit

Innovating in Healthcare for the next generation