Well, I’ve been in this business a good few years. ‘Is there any chance you will leave it soon?,’ I hear some of you cry. ‘Be quiet at the back. All in good time but that time is not quite yet,’. However, the latest request I have received takes some beating. I have been asked by the powers that be to write about a particular theme considered of great importance!
Now gentle reader, you are no doubt interrogating yourself what can it be: genomic biomarkers, or validating patient reported outcomes, or pharmacogenetics and pharmacokinetics, or nanotech delivery systems or adequate plans to study the effects of drugs under development in children? (He’s done that, twice.) None of these things. I have been asked to write about ‘Annual Conference’.
‘Has Sir Lancelot Pastit gone mad? What is the head of Pannnostrum doing in asking GMcP to write about anything, let alone about Annual Conference?’ Aha. You see, you have jumped to the wrong conclusion; it is not the powers that be at Pannostrum that have asked me to write about annual conference it is the powers that be on Main Committee.
Are they trying to insult me? I can only conclude that they don’t read my column and I am mortally offended since I always assume that it’s the first thing anybody turns to when they get their latest copy of TOSS with its curiously old-fashioned stock image of a thumb tossing a coin. They should know that I don’t do nice (of which more anon). So what on earth possessed them to invite me to pen some lines dripping in sarcasm on the subject of that jewel in the crown of PIMS[1] the annual conference.
What should I write about? The fact that the website informs you that registration is now open for a conference that finished several months ago, the inevitable parade of hype about the omics, the new starter session that I can’t write about because it is banned to people like me, the AGM which now seems to produce the same sort of guff about mission statements and strategic plans that we get at the Pannonstrum shareholders’ meeting.
Obviously, none of those. I know, I’ll upset everybody by being rude about NOPE. Yes, we had a panel session on the reimbursement of drugs with extensive representation from the National Office for Pharmaceutical Evaluation, a totally farcical organisation in my opinion with no clear strategy for what it is trying to do except that the answer will involve numbers needed to treat, has realised rather late the importance of statistics and has an astonishingly limited grasp of economics but which otherwise, of course, does sterling work on behalf of the NHS, its patients and the tax-paying public.
However, at this point I must make a digression to take you back about twenty years to the way in which we used to make economic evaluations about which drugs to develop because, fair’s fair, if NOPE is total rubbish at this, we can hardly claim to have been much good ourselves. It was of course, our marketing department who was in charge, although I have to admit that I can hardly blame the inanity of those years on Rod Furnace and Clive Viper who, if they were working for us then, will have been far too junior to have had any impact on our policy.
This was the department that, thanks to its creativity, every two years would bring us an inspirational leitmotif. I remember with particular fondness the Profitable Opening Opportunity. The earth shattering idea behind this was that you should identify an opening for a profitable opportunity and then exploit it. Incredible how we had overlooked that all those years but now, thanks to our marketing department, we had it covered! These were the same people who did an analysis of the most successful pharmaceutical firms over the previous ten years and came to the conclusion that it was those who had introduced high value high volume products onto the market. Pure genius! Without their help we would all have assumed the way to be successful was to concentrate on low value and low sales.
They also devised our 100 point ranking system for projects, known as the Strategic Index of Potential (SIP) which totalled the points from five categories as follows,
|
Category |
Points maximum |
|
Time to market |
30 |
|
Market size |
20 |
|
Patent life |
20 |
|
Innovative value |
20 |
|
Probability of success |
10 |
|
TOTAL |
100 |
thus proving that although our marketing department couldn’t think they could at least add up.
Well, perhaps that’s a little unfair. (The not thinking bit.) It is true that a project that has zero chance of being developed successfully could still score up to 90 points on the SIP. However, no marketing department can ever be blamed for not selling a drug that is not registered. On the other hand if registered the bigger the lead it has on the opposition, whether generic or otherwise, the easier it is to sell so that short time to market, long patent life and innovative value are bound to make it easier to glean the readies. So looked at from their point of view, a project with almost no chance of being developed but which will sell itself if developed is far more interesting than that dangerous entity a project that you could more or less guarantee would get a license but you would then have to work hard to market. (Those working in development, of course, see things the other way around. They get blamed if the stuff is not registered but its not selling is not their fault.)
Furthermore, although the index is obviously complete nonsense since it takes no account of the cost and probability architecture of projects to use a rather fine phrase I like, fails to capture real options, and is not based on any sound decision-analytic methodology it does, in its dim way, reflect a truth. What you earn with a drug depends rather crucially on how many years you can sell it without generic competition.
Now here’s another related economic insight you can have free of charge from this column. What a sponsor earns for a drug is very closely related to what the reimburser pays for a drug! It’s not just the Pannostrum marketing department that can do creative insight. Of course, lest we think that this is getting too simple, there are indirect costs and sometimes cost savings associated with any medicine, so it’s not quite as easy on the reimbursement side as totting up the direct drug costs. Hence my definition of a pharmacoeconomist as one who asks not only if the cure for dysentery was effective but also after the price of toilet paper. Nevertheless, it is blindingly obvious that if a very relevant consideration for the sponsor trying to work out how much will be earned is the number of years lead it has on the generic competition it has to be a relevant for any reimburser trying to determine what it will cost.
So this was my question to the panel. ‘In deciding whether to reimburse a treatment do you calculate an expected discounted net present cost bearing in mind factors such as patent life?’
And the answer?
NOPE.