'Patent protection plays an irreplaceable role', says pharmaceuticals body

RESEARCH and development of new drugs has become more demanding, lasts longer and is more expensive. And even though the pharmaceutical industry at this time does not play a significant role in Slovakia’s economy, more financing and better protection of intellectual property could change this. Research and development support and respect for intellectual property are problems extending beyond just the pharmaceutical industry and are issues that could determine Slovakia’s competitiveness in the future.

Soňa Strachotová, executive director of SAFS Soňa Strachotová, executive director of SAFS (Source: Courtesy of SAFS)

RESEARCH and development of new drugs has become more demanding, lasts longer and is more expensive. And even though the pharmaceutical industry at this time does not play a significant role in Slovakia’s economy, more financing and better protection of intellectual property could change this. Research and development support and respect for intellectual property are problems extending beyond just the pharmaceutical industry and are issues that could determine Slovakia’s competitiveness in the future.

The Slovak Spectator spoke with Soňa Strachotová, the executive director of the Slovak Association of Research-Based Pharmaceutical Companies (SAFS), about research and development in the pharmaceutical industry in Slovakia, the importance of patent protection, the biggest challenges in the field of bringing new drugs to the market as well as about Slovakia’s medicines pricing policy.

The Slovak Spectator (TSS): Does Slovakia participate in the research and development of new medicines?
Soňa Strachotová (SSt):
Slovakia is not a country in which the pharmaceutical industry is a significant part of the national economy. But it is not completely outside of it either. There are pharmaceutical companies which purchase substances from Slovak institutions active in basic research which are then further researched as potential drugs. Slovak scientists and doctors work on new promising therapies, for example in oncology, on the curative use of stem cells or for treating Alzheimer's disease. SAFS members also conduct clinical testing of medicines in Slovakia which helps Slovak patients to receive quicker access to the most modern therapies. To play a more significant role, more attention, support and investment from the side of the state is required. I believe that this is closely related to the general situation in Slovakia’s pursuit of science and education and the limited amount of money allocated. Slovakia’s share of GDP allocated for research and development is one of the lowest in the EU. For example, Finland in 2006 allocated 3.45 percent of its GDP for research and development; in Slovakia it was only 0.49 percent.

TSS: Do you see space in Slovakia for more research and development?
We have a lot of clever people here in Slovakia and I believe that more support would encourage it. But this is a problem going beyond the pharmaceutical industry. This is an issue of Slovakia’s competitiveness in the future. Whether we want to have here only assembly plants or we want to have something different. Unless Slovak scientists have good conditions for work and, concurrently, motivating salaries here in Slovakia, they will look for better opportunities abroad.

Greater involvement by the country in research and development is also closely connected with perceptions and due respect paid to intellectual work and products of research and development and, afterwards, their protection within the country. I think that here in Slovakia we bear a certain legacy from the communist past and the associated vision of common property. From this stems disrespect for private property and disregard for intellectual work in Slovakia. Such beliefs cannot be uprooted easily. The applicable legislation in Slovakia satisfactorily covers all these issues and in theory provides adequate protection, but in real life the protection itself and enforcement of the law is not 100 percent.

TSS: As much 98 percent of the investment in research and development in the pharmaceutical sector arrives from the private sector. In spite of this some people believe that discoveries in pharmacology should be freely available. How do you perceive this?
Primarily, this is a question of financing. Research and development of one drug costs approximately €1 billion and lasts 12 years, on average. It is naive to expect that somebody will make such a huge private investment, either directly or via a joint stock company, without an expectation of a return on investment and making a profit. Profit is a driving force for investments; and protection of intellectual property, for example by patents or trademarks, provides a partial guarantee of gaining a profit or return on investment, at least. However, this is true not only in the pharmaceutical industry, but in business in general. If anyone, the state, a private person or an organisation, were able to put together sufficient finances to cover the costs and appropriate profit for research and development of a drug, including its testing and registration, the pharmaceutical industry would certainly not oppose it. This would be another, alternative financial source for research and development. There are plenty of issues to be addressed by research and development for all those interested.

TSS: What are the biggest current challenges in the field of research and development of new medicines?
There are two basic areas. One of them is the more general area of global health where health problems such as malaria or leprosy have still not been eliminated. This especially touches less economically developed countries. In the more economically developed and prosperous parts of the globe the biggest challenge comes from diseases related to the ageing of the population and so-called civilisation diseases and illnesses related to poor lifestyles. These are oncological diseases, diseases of the cardiovascular and locomotor systems, psychiatric and neurological disorders, various allergies, diabetes and obesity. Apart from these, the pharmaceutical companies are developing drugs for rare disorders.

TSS: The pharmaceutical sector is one of the primary users of patent protection. Why?
In the case of the pharmaceutical companies oriented on research and development, i.e. those producing so-called original medicines, the patent plays an irreplaceable role. Since development of drugs is an expensive and time-consuming business, having patent protection lasting 20 years gives the producer a chance for a return on the investment and simultaneously opens doors to further research. But since the application for the patent is submitted at the very beginning of the whole process of development, which lasts 12 years on average, the producer has only eight years to get back investments. Patents, trademarks and related areas are various forms of intellectual property protection and they provide assurances for investments. Each violation of this protection can mean huge losses and the undermining of the future of a pharmaceutical company which requires these resources for future research and development.

TSS: The perception of the general public of the pharmaceutical industry is sometimes quite negative. Why do you think this is?
Products of the pharmaceutical industry – drugs – are often perceived via the prism of emotions. People need medicines when they are ill, weak or their lives are endangered. They expect that drugs will, in some way, save and extend their lives or make their lives easier. In such situations people react more sensitively to things which they accept without concern in other industrial areas, for example the already mentioned patent protection or higher prices for innovative products. Moreover, most people have had personal experiences, whether directly or via their family members and friends and some feel they have become 'experts’ in the field of medicines. This may lure some media or politicians, for example, to draw on emotions instead of facts to increase their popularity by fabricating sensational statements.

But one should not forget that research, development and production of medicines is an industry. Most of the members of SAFS are joint stock companies, whose stockholders expect profits and for the value of their shares to increase. Otherwise, the companies produce losses and go
bankrupt. In order for a company to run well, it needs to operate in the black.

But we also receive a lot of positive responses, for example from people who have been helped by drugs or whose lives or those of their relatives have been saved.

TSS: Research and development of medicines is subject to a large number of various regulations. How do these influence new medicines?
Generally, research and development of medicines has become more demanding, lasts longer and is more expensive. But as long as regulations are for the benefit of patients, i.e. they increase requirements for the effectiveness and safety of medicines, this is all right. History has taught us that it is necessary to be careful and that medicines are not candies. Effective drugs often have side effects and clinical testing has become one of the most important phases of the process of developing new drugs.

However, other regulations in drugs policies may be more problematic. Of course, resources within a country are not unlimited. But the number of regulations and restrictions should be perceived sensitively. If the drugs policy is too restrictive and does not enable a timely arrival and appropriate use of modern drugs, this will certainly mirror itself in the health condition of the population in the longer run. Our country’s medicines policy certainly should be not perceived only as a tool to save money. The goal of a good medicines policy should be effective and targeted use of resources which will help to achieve established health goals, for example improvement in parameters such as life expectancy and the quality of life of oncology patients.

TSS: How do you perceive the efforts by the Health Ministry to reduce expenditures on drugs by replacing original medicines by generic substitutes?
It depends on what level of generic substitution we are talking about. In Slovakia, generic substitution is directly incorporated into the system of setting the coverage of prices of drugs by the health insurance scheme. In a single group of drugs with the same therapeutic effects, the portion of the price of these drugs paid by health insurance is based on the price of the cheapest one, and when a generic, cheaper, drug arrives within this group, then the coverage from the health insurance decreases as well. This means that the sum paid for any drugs from this group from the health insurance scheme is the same. Since these drugs have different prices, the difference is then in the supplementary payment by the patient in the pharmacy. In the end, the patient can decide which drug he or she wants, either original or generic, and what supplementary payment he or she is willing to pay. Sometimes the supplementary payment on original drugs is lower than on generic medicines. Slovakia implemented this system of generic substitution in approximately 1994. SAFS perceives it as a way to reshuffle funds for coverage of new, innovative treatments. If one means by generic substitution the exchange of a medicine prescribed by a doctor by a pharmacist, the patient saves money depending upon which medicine with what supplementary payment he or she decides on.

TSS: How do you perceive the current system of setting prices for medicines in Slovakia?
Slovakia has adopted a new system, the so-called reference system, based on which the price of a drug covered under health insurance cannot exceed the average of the six lowest prices of this drug in EU. In this way the Slovak Ministries of Health and Finance have pushed the prices of medicines covered from health insurance to one of the lowest levels in EU. Our concerns stem from comparing prices of drugs also with countries outside the eurozone and that the Health Ministry has accepted only changes leading to final lower prices of drugs, even if these changes were caused by weakening of exchange rates and not an actual reduction in prices. It is necessary to find a way also for a potential increase in prices in case of appreciation of these currencies. The system of referencing has already saved the Slovak health-care sector millions of euros, but I believe that saving more money via referencing is to a large extent used up.

TSS: How has the current financial and economic downturn affected SAFS members?
Members of SAFS are international pharmaceutical companies and since the crisis is global its impacts have been affecting them like all other economic institutions. People obtain drugs via two ways – either they buy them directly or a doctor prescribes them and a health insurance company covers a portion or the whole price. When unemployment grows, resources of households as well as state budgets and health insurance companies decrease. When looking for savings, drugs are among the first in focus because this is a relatively transparent and statistically well-monitored segment of health care.

In response to the crisis, pharmaceutical companies, like those from other industrial branches, are searching for savings. In order to make their operations more effective and economical, they undergo restructuring, merge, slim down, and re-assess their research goals and investments.

TSS: SAFS, in cooperation with GENAS, the association of generic drug producers in Slovakia and ADL, the Association of Drug and Health Devices Suppliers, has elaborated the Ethical Code of the Pharmaceutical Industry. What was the driving force to develop such a code and what are its main goals?
SAFS members consider ethics to be one of their priorities and since the very beginning SAFS has been endeavouring to increase ethics in the marketing of the pharmaceutical industry. This is also the main task of the code which in many respects exceeds the framework of the Slovak legislation. The code is a tool for self-regulation and signing it is a compulsory part of membership in SAFS. Its current version dates back to 2004. At that time, after about one year of discussions with the other industrial associations, GENAS and ADL, we launched this common code for the pharmaceutical industry in Slovakia. I have to say that in Europe we are unique in having one common code for the whole sector; usually each organisation has its own.

The Slovak Association of Research- Based Pharmaceutical Companies (SAFS)
Founded: March 13, 1997
Members: SAFS has currently 22 members – international pharmaceutical companies focusing on research and development. They account for 55 percent of the total drug market in Slovakia in terms of value.

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