The contribution of pharmaceutical innovation to the health of the population

September 12, 2012


*by Jacqueline Anastassiades

Innovation in the pharmaceutical sector is a characteristic of medical progress in general and has contributed dramatically to increasing population survival or improving disease management.

Innovation is present in all sectors of economic activity, but most frequently innovation is thriving in sectors of high R&D, such as that of pharmaceutical technology. An example of pharmaceutical innovation could be the introduction of a new pharmaceutical substance or a new factor, with an innovative mode of action or a new pioneering pharmaceutical form which leads to additional benefits for the patient and for the health-care system as a whole.

More than 90% of the new drugs are developed by research pharmaceutical industry. Research and development of new drugs is a time-consuming process, which means a significant investment risk and cost, as it is associated with the research of a large number of potentially beneficial molecules leading to the marketing of a medicinal product with optimum clinical efficiency and safety. It is estimated that the introduction of a new pharmaceutical substance on the market requires 10-15 years of research and development, whereas the average cost of discovering a new drug is approximately 1.3 billion Dollars.

For a comprehensive evaluation of pharmaceutical innovation every new treatment should be assessed against the following indicators:

Clinical efficacy: Quantitative and qualitative improvement of patients’ lives and the possibility of better health care for specific patient groups

Safety: Reduction of adverse events and, as a consequence, of mortality, morbidity and cost

Ease of use-administration: Improvement in patient compliance with the treatment leading to higher efficacy.

Value for money: Saving health-care system resources (e.g. fewer hospital admissions, fewer surgical interventions, reduced use of health infrastructure as a result of an innovative treatment).

Improved patient quality of life: better physical, mental and social health, higher compliance with the treatment administration
As a result, pharmaceutical innovation contributes significantly to the improvement of the health of the population, which in its turn achieves savings in terms of resources in health-care system. Today, the majority of the developed countries assess the data above, rewarding innovative treatments through pricing policies and reimbursement systems.

How has pharmaceutical innovation contributed to the improvement of the health of the population and to savings in terms of health-care resources?
Increased life-expectancy:

Nowadays, life-expectancy has increased by 10 years compared to 1960.

In Germany, life expectancy increased by 1.4 years between 2001 and 2007. 32% of this increase is due to the fact that new medicines have replaced older ones.

In Canada, new treatments have reduced mortality risk by 51%.

The introduction of new medicines is linearly associated with the reduction in mortality in the case of diseases such as AIDS, cardiovascular disorders, cancer (a disease where despite the increase in the number of cases there is a drop in mortality)
Financial benefits from the introduction of new drugs

1% reduction of cancer-related mortality worldwide is equivalent to 500 billion Dollar savings of resources

1% increase in per capita pharmaceutical expenditure due to the introduction of new drugs is equivalent to a 3.7% drop in per capita hospital costs

In the USA, between the years 1991 and 2004 the introduction of new drugs led to 18% increase in per capita pharmaceutical expenditure, but also to a 71% drop in per capita expenditure for other forms of health-care.

In the USA it has been calculated that every 100 prescriptions for new drugs correspond to 16.3 fewer days of hospital admissions
As a result of the above, scientists support that:

Pharmaceutical innovation is self-financed, in other words the financial benefit that arises from the introduction of new drugs balances out and exceeds the additional cost. It has been estimated that over the last years, the cost-benefit ratio of innovation twice exceeds the GDP of the UK.

Each extra year of life expectancy now corresponds to a 4% increase of a country’s GDP

Without new drugs, 29% fewer people would be working today at a productive age.
It is therefore obvious that any pharmaceutical policy planning should incorporate mechanisms and criteria compensating pharmaceutical innovation to help provide the most effective health-care for the appropriate patient groups and achieve overall savings of resources in the health-care system.

The only way to help reduce health-care costs and modernise the health-care system is by rewarding innovation and applying good clinical practice. Any other policy which focuses exclusively on prices without taking into account the clinical and overall financial benefits of treatment leads to sub-optimal clinical practices and ends up being more expensive and counter-productive for the system, the health-care professionals, the patients and society as a whole.

*Jacqueline Anastassiades is the President of the Cyprus Association of Research and Development Pharmaceutical Companies (KEFEA).