A lot of men in the UK suffer from high cholesterol – normally caused by a combination of bad diet, misspent youth and genetics. I am one of them.
Most of them are prescribed statins by their GP – which are expensive drugs with occasionally alarming side effects.
(And taking statins tends to be something you do for the rest of your life – so it’s hard to understand quite why they are being handed out like sweeties).
Open data (e.g. prescribinganalytics.com) now can tell us just how much the NHS spends on statins and other drugs – and guess what: they are paying way too much for branded products. Patented statins can cost 20 times as much as generic versions.
Out of a total drug budget of £12.7bn, £400m is spent on statins. If the NHS had avoided the branded versions they would have saved £200m. (Mastodon C, Open Health Care, Goldacre).
Extrapolate that to all drugs and the British Medical Journal reckons that the NHS could save more than £1bn a year by switching from branded drugs to generic equivalents.
These are big numbers and they raise big and tricky questions for us brand people.
How justifiable is the premium for branded drugs in healthcare?
The price of Atorvastatin fell by 90% when it came off patent last year. So £9 out of every £10 of taxpayers’ money spent on that drug was a brand premium. Or in other words £9 out of £10 could have been spent treating someone else. I am not sure that any amount of argument over R&D cost and its recovery can stand up any more in the light of this. Yes R&D is expensive but does that automatically mean the cost has to be recovered through a branded premium?
What is the role of brand in healthcare?
In a constrained system (which healthcare is, along with energy, finance – and soon food) brands must play a utilitarian role. The needs of the many must outweigh the needs of the few. Leveraging brands to sweat patents for a profit just doesn’t make economic sense when you look at the bigger picture – let alone the moral aspect.
Healthcare brands have to – absolutely have to – deliver identifiable positive social impact. A few are beginning to move in this direction (GsK’s DCMA unit for instance) but the majority of ‘pharma’ brands are stuck in the old model.
Will open data kill bad brands?
Intriguingly the rise of open data could wield some kind of Darwinian effect on bad brand practice. No bad thing.
If open data lets us all see where we are being fleeced at the expense of a greater social benefit we’re going to get outraged. Just as we are with Starbucks and their miniscule tax bill.
And we’ll start demanding that our precious public resources aren’t spent on unnecessary branded drugs. And regional health practices that splurge on brands will be shamed into not doing so.
At Keppel&Co we are convinced that there is no trade off necessary between positive social impact and commercial impact. But that doesn’t make us apologists for bad brand practice.
And 90% premiums on branded drugs in a health system that’s creaking at the edges is bad brand practice.
What’s needed is for one of the big pharma brands to change this game. The opportunity to turn the model on its head is huge. Nobody – but nobody – believes that sweating patents through brands is sustainable (check out Sanofi’s PE ratio now that most of its patents have expired – it went up).
One day a pharma brand is going to break ranks and change the model. Please make it soon.