“The Strategic Agreement between government and Medicines Australia, representing the innovative medicines industry, will deliver benefits to patients, taxpayers and the local medicines industry,” according to association chair and managing director of Boehringer Ingelheim, Wes Cook.
“This agreement is a significant step towards creating an environment that encourages growth in the Australian pharmaceutical industry which has been identified as one of the key sectors for our nation’s future economic success,” he says.
Mr Cook spoke with PharmaDispatch to discuss the five-year agreement negotiated in the lead up to the 2017-18 Budget.
He says the agreement sets the scene, giving Medicines Australia time to address many of the challenges facing its member companies, adding it also gives Australia time to decide whether it is really committed to a thriving pharmaceutical sector.
In return for $1.8 billion in savings, the association has secured a raft of commitments in its agreement, headlined by no new price-related savings for F1 medicines without consultation. It has also secured a framework for administering the agreement and even potential changes on comparators and the relationship between statutory price reductions and post-market reviews.
He says one key difference between this Budget and the events of 2015 was agreement at Medicines Australia Board level on a set of principles to guide its approach to the negotiation.
The principles, which underpinned what it needed out of any negotiation, included a five-year agreement, acknowledgement of what it gave in 2015 and the challenges its companies confront with the 5 per cent reduction at five years, and a commitment to reinvest savings in new medicines.
Mr Cook believes the commitment to reinvest savings is a major win for the health system that could help address one of the key challenges facing the PBS – funding new medicines.
“Our approach this time could not just be us saying we can or can’t accept something – we had to explain why,” he told PharmaDispatch.
“We need more certainty, we don’t need uncertainty, so how to make that happen was one of the key early questions in our negotiation.
“It was one of the things that resonated with everybody, including the Department and minister’s office. In 2015, managing directors were going to headquarters with new plans every few months. I was personally questioned whether I could even deliver the plan I presented.”
He says an agreement is “fundamentally important” for the sector.
“We will never know the cost of not having an agreement for the past two years, in terms of clinical trials and investment. We do believe it has not been good for Australia, for the country, that the largest advanced manufacturer and private investor in R&D has not had a formal agreement with government.
“This agreement says, right, we have five years of stability and time because we need to have a discussion, with government and all stakeholders, about whether we want a pharmaceutical sector in Australia”.
“Australia needs to make a decision and the agreement gives us the time for that. We will work closely with government with the goal of getting the right decisions for our industry and Australia – which should be a desire to have a thriving pharmaceutical sector – that requires a strong PBS.”
The Medicines Australia chair says the agreement has the potential to redefine the sector’s relationship with the Department of Health and reframe the relationship with the government.
“I feel the relationship is going to be based on collaboration rather than conflict. I think the agreement gives us the chance to get the dialogue right and we all have an important role to play in that. It is an opportunity – not a guarantee. Getting the agreement was hard but the work to make it ‘live’ and deliver on its potential is going to require a lot of work.
“I truly believe one of the opportunities for the Department of Health is to have MA at the table early when it comes to health policy discussions as not involving MA has proven problematic as we provide a valuable perspective that should not be lost.”
Mr Cook pays tribute to Medicines Australia staff, notably policy director Elizabeth de Somer, who he describes as having a “real and deep passion for the industry.”
The association’s negotiating team included three Board members, led by Mr Cook with AbbVie’s Kirsten O’Doherty and Takeda’s James Jones, with the support of Ms de Somer and an additional special adviser.
The ‘trio’ of Mr Cook, de Somer and the special adviser, were the same three that almost secured an agreement in 2015.
“We had unfinished business,” he said, also acknowledging the contribution of the board and the broader MA secretariat, including CEO Milton Catelin.
He also praises Department of Health secretary Martin Bowles PSM, for his openness during the negotiation and willingness to personally be involved when required, his team of officials and health minister Greg Hunt’s personal staff, including Dr Lisa Studdert and Alex Best.
“A great satisfaction of being involved in negotiating this agreement was seeing truly passionate and expert individuals from the Department, MA Secretariat and industry work together in the genuine pursuit of good health policy.”
Going forward, Mr Cook says he believes the association’s strategy is right, the Board is operating well and the secretariat structured appropriately.
“This agreement marks what I hope will be an exciting new era for Medicines Australia and our members.
“However, there is no doubt we need to continue to put the work in to make this agreement live and get the most out of it. That will not be about the detail but the principles. Critical to the agreement’s success will be how we deliver on the principle of ‘joint stewardship’ because as an industry we don’t believe the PBS can succeed without us.”