Shire CEO Angus Russell said Wednesday the UK-based specialty pharmaceutical company is now evaluating whether potential drugs can get reimbursed at an acceptable rate by insurers as early as Phase 1 of clinical development, and urged other companies to follow suit.Speaking at the 2011 BioPharm America conference in Boston, Russell said that the industry landscape has changed more radically in the past five years than in the preceding 25 years, and that survival in the new world requires “market driven R&D, not just clever science for its own sake.”
Russell said he’s concerned that he “doesn’t see a real sense of urgency to wake up to what’s going on” in the industry when it comes to pricing and reimbursement.
Russell said in the future, other markets are likely to follow Germany’s lead in deciding not to pay for drugs that have not been evaluated in head-to-head studies with approved drugs to determine their relative value in the marketplace. He said Shire (NASDAQ:SHPGY), which is best known for its ADHD and rare-disease drugs, is now initiating head-to-head studies as early as Phase 1, so as to avoid expensive late-stage clinical trials if the potential therapy does not show promise to be best in class.
Shire is based in England and has its North American headquarters in Wayne, although it is exploring relocating that headquarters to New Jersey or Delaware.
Russell said payers and policymakers talk about value, not innovation, and that “if you ignore payers and policymakers, you are not going to be successful in the new world we are entering.”
Russell criticized the lack of coordination between business, regulatory bodies and government health payers, whereby pharmaceutical companies consult with regulators early in the drug development process to design clinical trials, etc. – but only after approval, or just before, do they consult with payers about pricing for the drugs.
He said pharma companies have got to realize they have work to do to build trust with government payers, who are “pretty angry” about the high prices requested by the industry, and said, “we are all losers at the end of the day if payers don’t want the drugs,” or don’t pay a return that is acceptable to shareholders.
Finally, Russell put some of the blame on regulators, who are struggling to keep up with innovation and have not updated the approval rulebook in quite some time. He urged the industry to open up dialogue with regulators, saying “if we don’t get involved ... we’ll end up in a bad place.”
