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Health innovation hampered by drive for profit, report warns

Major overhaul needed in way pharma delivers to NHS

Jo Carlowe

Monday, 15 October 2018

Health innovation in the NHS is hampered by a drive for profit, economists warn.

In a new report, led by Professor Mariana Mazzucato, director of the UCL Institute for Innovation and Public Purpose (IIPP), it’s claimed NHS patients are being let down by a global health innovative system which fails to deliver the treatments they need at prices government can afford.

The report, The People's Prescription: Re-imagining health innovation to deliver public value, warns that health innovation is being hampered by a drive for profit and calls for a major overhaul of the system to ensure more drugs and treatments are developed for critical health needs.

Although innovation in health is vital for the development of drugs used by the NHS and healthcare systems around the world, the report finds that the current system for developing drugs incentivises high prices and delivers short-term returns to shareholders, rather than focusing on riskier, longer-term research which it states leads to critically needed therapeutic advances.

The authors warn that the high prices of medicines are causing severe patient access problems worldwide with damaging consequences for health and wellbeing. The solution is not as simple as demanding lower prices but to understand how the characteristics of the system must be overhauled, from the dynamics of patents which are hurting transparency and collaboration to the ways in which corporate governance hurt innovation.

Last year, NHS England spent £1bn on medicines that had received public investment, while spending on drugs is rising at five times the rate its budget is rising. The report further states that the number of new drugs approved against research and development (R & D) spend has declined from around 40 drugs per $1bn of R & D in the 1950s to less than 0.65 drugs per $1bn spend this century, representing a huge drop in innovation and productivity.

Pharmaceutical companies are increasingly focused on maximising short-term financial returns to shareholders, rather than funding health advances in the public interest, the report states. The 19 pharmaceutical companies included in the S&P 500 Index in January 2017 (and listed 2006-15) spent $297bn on repurchasing their own shares between 2007-16 — 61% of their combined R&D expenditures in this period.

As an immediate policy action, the report calls on governments to pursue their legal right to procure affordable generic versions of patented medicines if companies refuse to drop their prices to levels affordable to national health systems such as the NHS. For example, evidence shows that the prices the UK pays for some cancer medicines could be reduced by between 75% and 99.6% if they could be procured as generics.

Intellectual property rules should also be reformed to make vital medicines more affordable and open to innovation, with patents only issued to truly innovative technology, the report states.

Professor Mariana Mazzucato said: "The diagnosis looks bleak for the health innovation system; it's expensive and unproductive and requires a complete transformation. We have a situation now where the NHS is a huge buyer of drugs and the UK government is a significant investor in the development of new treatments, yet big pharmaceutical companies are calling the shots.

"In the year of the 70th anniversary of the NHS, this is an ideal time to take stock and rethink the system with a move towards a model that prioritises long-term public value above short-term corporate profits.”

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