Open Innovation: One Possible Solution to Meet the Dilemma of Access
Last week Barcelona played host to the annual meeting of global law firm Baker & McKenzie. Hundreds of partners and experts from around the world met to discuss their sectors, take note of concerns, talk about future plans. The firm's three main experts in pharmaceutical law expect a scene marked by greater regulations, more requirements, and more costs for the pharmaceutical industry, but also, perhaps, a way out of the puzzle of access thanks to Open Innovation.
Regulations and access to technology are the two main headaches the industry faces, according to Montserrat Llopart, head of the Firm's Pharmaceutical group in Europe and Spain. Pharmaceuticals is one of the most regulated industries, subject to compliance with the regulations in effect. This trend will not stop, says Montserrat, but will increase, with more regulations regarding safety, supervision, and monitoring in post-production.
Other possible changes will also come from the worldwide debate on access to innovations. According to Jane Hobson, Baker & McKenzie's exiting Global Healthcare Chair, "The sector will probably not come out of this unscathed." In her opinion, the question that counts is: how can more medicines emerge from R&D? One possible solution, she adds, may come from so-called Open Innovation.
Hobson believes that this tendency, which encourages companies who are otherwise competitors to work together and offer better results, "has a bright future ahead" and offers satisfactory responses to the main demands for change in the pharmaceutical market. First, prices: they will no longer be based on individual investment since, investing collectively, the costs for each company will drop. Second, patents: "This model may even be used to protect intellectual property, but that will have to be on other terms, perhaps joint ownership," Hobson says.
These changes will be slow to come about in any event, taking into account the rigidity and complexity of the model for patent approval. But other changes could come before that. Ben McLaughlin, new Global Chair of Healthcare, mentions the possible "Clinton effect" in the establishment of prices if the Democratic candidate wins the presidency of the United States.
The experts also foresee a change in the external development of companies, based on mergers and acquisitions. The pharmaceutical sector was the worldwide leader in these operations in 2014 and 2015. The tendency cannot last. In fact, these transactions have already begun to diminish. Now, it is mid-sized companies, according to McLaughlin, "facing the risk of being acquired."
In any event, this type of transaction has a "best by" date. After changes in American politics, "redomestication" is now ceasing to be an option in many places. London, for example, has begun to leave aside the tendency to big mergers and acquisitions in favor of the purchase of complex licenses.
Brexit: Two Supply Chains?
How will Brexit affect investments, and the regulatory environment? The issues which most concern the pharmaceutical sector with respect to the United Kingdom's leaving the European Union have yet to find answers, given the uncertainty generated. Jane Hobson believes that there is still time to keep investments from destabilizing. The reason is that the country is still debating how to leave the EU when the main point of it is "to resolve immigration problems." According to her, it will be complicated, taking it to its ultimate consequences – that is, opting for a hard Brexit – since that would involve imposing restrictions on the circulation of goods.
Something similar is happening in terms of regulations. The industry wants to maintain the current status quo while the Government is appealing for calm. Approving major changes would go against the tone of the global market. But there will be changes: the United Kingdom will not transpose the regulations on healthcare products until after Brexit is complete and the location of the European Medicines Agency (EMA) has its own implications.
For the time being, companies are advising their staff on their immigration status. And Baker & McKenzie is making its clients think of other issues: Will the United Kingdom continue to be the country of reference for the approval of medicines in Europe? How will the supply chain be managed if new taxes are imposed due to a hypothetical restriction of goods and persons? They are already considering a solution: two supply chains in different places.
Recently, the Glaxo Smith Kline announced that it would prohibit all transfers of value to healthcare service providers. Could this example spread to other companies in the sector? Baker & McKenzie indicates that they know that other laboratories are considering restrictions on certain types of value transfers in order to advance toward total transparency in their relations with healthcare professionals and organizations. "However, the model adopted by GSK is not necessarily the example to follow. For other types of companies, investment in the training of physicians has a corporate as well as social purpose," says Montserrat Llopart.
What is clear is that the issue of transparency is going to entail two more major changes, at least in Spain. The fact that the national codes and those of European Federation of Pharmaceutical Industries and Associations (EFPIA) have required the consent of the physician has caused the content mostly to be published in groups. Starting in 2018, however, the professional's consent will no longer be required. "Many people don't want their name to appear. We'll have to look for other ways," says Llopart. Furthermore, the authorities are considering treating invitations to scientific congresses as remuneration. The most probable thing is that, following the example already used in other countries or the model to be demanded of the healthcare technology industry, these invitations will be channeled through hospitals.
This article was written by Carlos Rodríguez and originally appeared in El Global on 21 October. Please click here to read the original article.