American big pharma boss doesn’t support tariffs on Australian medicines | 7.30

Key Concepts:

• Australian Pharmaceutical Benefits Scheme (PBS)
• Market Access Time
• Drug Pricing and Value Assessment
• Innovation Valuation
• Global Price Debasement
• US Drug Pricing System
• Transparency and Middlemen Costs
• Tariffs on Medications
• Regulatory Review Replication
• Mutual Recognition of Regulatory Approvals
• Vaccine Skepticism

1. PBS and Market Access Time:

• Treasurer Jim Charmers stated Australia is strengthening the PBS, not weakening it as American multinationals might want.
• David Ricks (Eli Lilly CEO) clarifies that the primary concern isn't weakening the PBS, but the time it takes for innovative drugs to reach the Australian market.
• Australia is described as an "outlier" with a slower system compared to G7 nations and other Commonwealth states.
• Eli Lilly has experienced delays of "several years" compared to markets like the UK and Canada.
• A specific example is given of a breakthrough breast cancer medication that took over 600 days and three negotiation steps to gain access, despite being the global standard of care.

2. Drug Pricing and Innovation Valuation:

• Ricks states that Eli Lilly prices medicines for value.
• He argues that the PBS scheme struggles to value "real breakthroughs" adequately, while it does a reasonable job of comparing medications similar to prior ones.
• A low valuation (low price) for a breakthrough drug in Australia could "debase" the global value point, impacting pricing in other markets.
• The reward for investors needs to be considered when investing years in advance of a medicine being available.
• Ricks emphasizes the importance of fairly valuing breakthroughs that have a real consequence on health and the total cost of delivering public care.

3. US Drug Pricing System:

• Australia views the US system as one with "extremely high and inflated" drug prices, partly due to middlemen.
• Ricks agrees that the US system has problems, particularly the multiple intermediaries that add cost, complexity, and reduce transparency.
• He advocates for reducing costs for patients and improving transparency, having made suggestions to the US government.
• The US system is praised for allowing immediate market access upon regulatory approval and for valuing innovation, albeit peripherally due to the decentralized healthcare system.

4. Tariffs and Trade:

• Ricks states that Eli Lilly does not support tariffs on medications anywhere.
• He clarifies that while they want to see changes to the PBS, "pressure is not the right word."

5. Regulatory Review and Mutual Recognition:

• Ricks questions the need to replicate regulatory reviews already conducted by agencies like the US FDA, especially among developed nations with mutual recognition in other areas (e.g., aircraft safety).
• He suggests that mutual recognition could save taxpayers money in Australia and avoid unnecessary work and cost for manufacturers.
• He notes that approvals in Australia often end up in the same place as in other countries, but take longer.

6. Vaccine Skepticism and Robert Kennedy Jr.'s Appointment:

• Ricks expresses concern about vaccine skepticism, emphasizing the importance of vaccines for public health.
• He personally believes in the power of vaccines.
• He states that he would regret if Robert Kennedy Jr.'s appointment as US Health Secretary affected the FDA's conduct.

7. Synthesis/Conclusion:

David Ricks' interview highlights the pharmaceutical industry's concerns regarding the Australian PBS, particularly the lengthy market access times for innovative drugs and the perceived undervaluation of breakthroughs. While acknowledging the flaws in the US drug pricing system, he advocates for a system that rewards innovation to incentivize further research and development. He also calls for greater harmonization of regulatory processes among developed nations to improve efficiency and reduce costs. He firmly opposes the use of tariffs on medications and expresses concern about the potential impact of vaccine skepticism on public health. The core message is a plea for a more efficient and innovation-friendly regulatory and pricing environment in Australia.