Biotech leaders attack Pharmac

By SIMON COLLINS

SAN FRANCISCO - Biotechnology leaders yesterday warned countries such as New Zealand that they will have to pay full market prices for medicines if they want to attract biotech investment.

Dr Gunther Winkler, vice-president of Boston-based Biogen Idec, lectured ministers from six nations against undercutting the industry's profits by buying cheap medicines. The ministerial forum he was chairing in San Francisco included New Zealand Science Minister Pete Hodgson.

Former US Ambassador to the Netherlands Cynthia Schneider told yesterday's forum at the Bio 2004 conference that similar policies in Europe meant Europeans were getting second-rate medicines.

"In the US, drugs are at high, even prohibitive prices, but we have the latest drugs," she said. "In Europe, they have affordable, subsidised drugs but less access to the latest treatments."

Dr Winkler introduced Mr Hodgson and the other ministers with what he called a message to those who wanted to create a flourishing biotechnology industry in their own countries.

"There are two very, very important foundations," he said. "One is you have to support the protection of intellectual property.

"And secondly, you have to provide the means with which we can make a return on the investment that we make in your countries - and that means adequate reimbursement for products, especially for medicines.

"Unfortunately, outside the US, the trend is against those foundations."

Ernst & Young published a report yesterday showing that last year in Europe, biotech revenues fell 12 per cent. At the same time, in the US, revenues went up more than 22 per cent.

"This is directly linked to employment," said Dr Winkler.

"In Europe, employment fell 5 per cent. In the same time period it increased more than 10 per cent in the US.

"So my message to your Governments is: provide the foundations that are necessary for industry to come to you, and flourish."

Mr Hodgson did not respond to the challenge, using his speech instead to emphasise New Zealand's long experience with agricultural and medical biotechnology.

But the German Secretary for Economics and Labour, Georg Wilhelm Adamowitsch, said the drop in European biotech revenue last year was due to international market conditions, not drug pricing laws.

Australian Industry Minister Ian Macfarlane said Australia had budgeted A$150 million ($167 million) to pay 30Ac for every extra dollar spent on pharmaceutical research and development - effectively to compensate drug companies for being unable to recover their drug development costs through drug prices.

The background

* Pharmaceutical company Pfizer cancelled a $40 million research contract with the Auckland Cancer Society Research Centre last month in protest at New Zealand's policy of paying for all medicines at the price of the cheapest "generic" drug in each field.

* Under the policy, Pharmac recently stopped subsidising Pfizer's cholesterol-reducing drug Lipitor and a painkilling drug, Kapanol, except at the prices of cheaper drugs.