Andrew Witty

GlaxoSmithKline (GSK)

I am the CEO of GlaxoSmithKline, a business that employs 100,000 people around the world who discover, develop and market medicines, vaccines and consumer health goods.

I am proud of what we do. But today I want to talk about expanding the roles and responsibilities of a company like GSK in helping to address head-on the challenges of improving global public health, not just for those that can afford it, but for those that cannot.

The task is huge. Take Africa. It has 34 of the 50 poorest countries in the world and suffers 24% of the global disease burden. It has just 3% of the world’s health workers.

But even in rich countries there are significant groups that struggle to get access to medicines.

Society expects us to do more in addressing these issues. To be frank, I agree. We have the capacity to do more and we can do more. The question is can we, big pharma, rise to the challenge and be a genuine catalyst for change?

I believe we can. But first we need to adopt a new mindset. We in big pharma should never take for granted our right to exist; our business model is not written into any country’s constitution.
So we should be turning up to work every day with the mindset that we are earning the right to exist. We are earning it by meeting the expectations of society. When you start to think like this, you see the world differently.

DISEASES OF THE DEVELOPING WORLD
To demonstrate what I mean let me start with Africa and the world’s poorest countries.

Two thirds of all people living with HIV live in Africa.

In Africa, a child dies of malaria every 30 seconds. Which is why the promise of a malaria vaccine is so crucial – but let me come back to that later.

GSK offers its AIDS medicines at not-for-profit prices in Sub-Saharan Africa and the LDCs. We have also granted 8 voluntary licences to generic companies enabling them to produce 183 million tablets last year alone.

We also supply vaccines to organisations like UNICEF and GAVI at highly preferential prices - typically 10-20% of the prices in developed countries. As a result, 80% of all our vaccines by volume go to the world’s poorest countries.

However, despite all the advances we have made, it is clear we need to do more – and society expects us to do more, especially when we have the tools to do the job.

The International Task Force for Disease Eradication has identified seven diseases that could be eliminated – that is diseases for which we have the tools, today, to eliminate.

Despite perhaps too slow a start, we are making good progress on three -Lymphatic Filariasis, Guinea Worm and Polio. GSK is heavily involved in polio and LF in particular.

These programmes are all built on partnerships between the public and the private sectors.

Take polio. Last year working with GAVI and UNICEF we supplied around half a billion doses of polio vaccine to some of the poorest people in the poorest countries. We couldn’t have done it on our own, nor could GAVI or UNICEF.

Take LF. We have been involved with the LF elimination programme since its inception ten years ago. Since then 570 million people in 48 countries have been treated. Anyone who has seen this disease will understand how it can shatter lives.

That is why we continue to scale up our commitment. Over the past ten years we have donated over 1 billion tablets. Next year, thanks to our increased investment in India, we will be able to donate 600 million tablets a year.

The LF programme is a particularly good example of what can be achieved when the public and private sectors work together. Again, none of the partners in the LF programme could have achieved such success working on their own.

But for every success story there are plenty of examples where we could do more, but for one reason or another we –the international community - have not quite gotten our act together.
So even as we scale up our existing commitments and programmes we know that we need to go further.

We need to move beyond what we is obvious and find new approaches, new thinking, new ways of working together. We need to be more innovative, open-minded, flexible and more willing to take risks.

What does this mean in practice? I think that there are four areas in particular we need to start to signal we are going to do things differently.

First, by being more flexible on intellectual property. Our industry has treated IP as if it is written in stone. Yes it is vital but we shouldn’t forget that IP is always a balance, a grand bargain, with society.

IP’s primary objective is to incentivise and reward research. But there are plenty of neglected tropical diseases - such as Leishmaniasis - where, for a variety of complex reasons, we have a severe lack of research.

We need to find ways of trying to use IP to help address this gap.

So, GSK is proposing that working with others we should set up a Least Developed Countries Patent Pool for Neglected Tropical Diseases (NB: based on the FDA list of tuberculosis, malaria, blinding trachoma, buruli ulcer, cholera, dengue/dengue haemorrhagic fever, racunculiasis, fascioliasis, human African trypanosomiasis, leishmaniasis, leprosy, lymphatic filariasis, onchocerciasis, schistosomiasis, soil transmitted helmithiasis, yaws).

For our part, we would put our relevant small molecule compounds or process patents for these diseases into the pool, and allow others access to develop and produce new products and formulations. Such a pool would have to be voluntary, so as to foster an atmosphere of cooperation and encourage others to join, because frankly a pool with just one company’s IP in won’t really move the needle.

If - as we hope – something new comes out of such research the full benefits should go solely to the LDCs. The terms and spirit of the pool should ensure this happens.

We would of course still defend our IP robustly outside of the pool. It is right that we do so. But, it is also right that we explore new ways of stimulating research that might otherwise not happen. A patent pool is one such model - there could be others. The point is we are open to exploring the options.

Second, being more flexible on pricing. It is not acceptable to expect someone in a LDC to pay the same price as someone in a developed country.

So today we are setting out a promise – that we will reduce our prices for patented medicines in the LDCs so that they are no higher than 25% of the price in the developed world. This will be the maximum price – where possible, we will go further and reduce our prices more aggressively. We want our offer to be sustainable so the only caveat is that we will need to ensure we cover our cost of goods.

Of course not all our medicines are still in-patent. We sell, for example, antiobitics, which have many generic competitors. But the high quality of our products often mean that people prefer them. So, in addition to our promise on patented medicines, we are making another commitment; that 20% of the - admittedly limited - profit we make from selling medicines in LDCs, whether they are in-patent or off-patent, will be reinvested back into LDCs.

What will we invest in? Projects that strengthen their healthcare infrastructure and widen access. One of the key barriers to improved healthcare in many LDCs is the lack of infrastructure to deliver medicines. By working with others and investing 20% of our profits from LDCs, we aim to start help addressing this issue head-on.

In addition, in middle income countries we will also be more flexible on price so that they will more closely reflect a country’s ability to pay.

One of the key drivers of price is of course our Cost of Goods. We are working tirelessly to drive these costs down. This is particularly important when working with international donors, especially when they are prepared to put additional resources into innovative financing mechanisms such as Advanced Market Commitments. We are currently in negotiations on a pneumococcal Advanced Market Commitment and we have spent a lot of time focussing on driving down our cost of goods so that we can offer the lowest price possible.

Let me come back to malaria. GSK has been working in partnership with PATH’s Malaria Vaccine Initiative on a malaria vaccine for over twenty years. We have put in over $300 million and the Bill & Melinda Gates foundation have committed $100 million. The vaccine is poised to go into Phase III efficacy trials involving 16,000 children across 11 sites in Africa.

If this vaccine works, we need to make sure nothing gets in the way of access, least of all price. The children who need this vaccine are among the poorest in the world - that is why price cannot be a barrier to access. As I mentioned earlier, we supply organisations like GAVI and UNICEF with highly preferential prices so we have track record in this area. We need to get the price right and we need to work with the international community to mobilise the resources to pay for it and the infrastructure needed to deliver it, especially to remote communities. We developed this vaccine in partnership; we need to deliver it in partnership.

Third, by being more open to working in collaboration to fight Disease of the Developing World. We are fully committed to investing in R&D for diseases of the developing world, even though the commercial return on such investment, if any, is highly uncertain.

We have a dedicated Diseases of the Developing World research centre in Spain at Tres Cantos where we have over 100 GSK scientists, funded in part by our partners - including the Medicines for Malaria Venture and the Global Alliance for TB Drug Development.

But globally research into these areas is still too fragmented and represents a sub-optimal approach. The public and the private sectors must work much more closely together. We at GSK are committed to doing just that; allowing partners in to our facilities if that helps create a truly world-class, global, centre of excellence, not owned just by GSK, but by all of its partners, whether they be Governments, Foundations or even other companies.

Fourth, by looking at how we can move from being a supplier of drugs to being a partner in delivering solutions. There are no easy answers, but it is clear that we need to stop saying ‘it’s not our fault there is no infrastructure to deliver healthcare’ and start saying ‘who can we work with to ensure that the infrastructure does exist?’

Our commitment to reinvest 20% of any profit we make in LDCs will help. Our hope is that others will follow us – if that happened I think you would start to see a significant difference on the ground.

But again, we need to do more, especially in terms of partnerships.

We do not want to be seen as just a “western” company – a tourist if you will. We want to be a local company with a commitment to addressing the specific healthcare needs of the country we operate in, which may be very different to the needs of an industrialised country.

We are already doing this in places like Brazil, where we are not just a supplier of vaccines, we are a partner, helping them to build up technical expertise so that in the long run they can produce vaccines themselves.

We have a long history and presence in much of the developing world but we know we can do more. While it takes time we are taking the lessons we have learnt in places like Brazil and we are challenging all our local businesses in the developing world to develop at least one partnership with a local company, public sector organisation, or academic institution. These partnerships will tie us much more closely to the country we operate in, giving us a stake in its economic and social development. That is how it should be.

In addition it is worth noting the benefits of conducting research in developing countries. Turning again to our Malaria vaccine.
The clinical development has taken place in Africa. Most of the places we are doing our trials have virtually no healthcare infrastructure. So with our partners we have helped set up 11 clinics in 7 countries, each training scores of doctors, nurses and laboratory staff. Infrastructure that we hope will remain long after the trials are over.

HEALTHCARE REFORM IN THE US
But as I said at the beginning it is not just in the developing world that we need to meet new challenges.
In the US, as we all know, there are nearly 50 million uninsured people.

Co-pays, a fact of life in the US, mean that for insured people under 65, forty percent of their out-of-pocket medical spending is for prescription drugs.

Of course, we need to keep the overall cost of drugs in context. In the US, drugs as a proportion of total healthcare spend has remained constant – at about 10% - over recent years, even as healthcare costs more broadly have continued to rise rapidly. And in 2007 prescription drug prices rose by just 1.4%.

But that is not to belittle the fact that prices are a concern for many people. As an example we know that patients with severe asthma and COPD are conserving their medication to avoid refill costs. Of course, not controlling their asthma or COPD puts them at risk from life-threatening respiratory attacks and costly hospital visits.

So, just as with tackling the problems of healthcare in the developing world, we need to work in partnership, to address healthcare here in the US. We need to evolve our business model, putting it onto a more sustainable footing, one that it is not reliant on the blockbuster approach.

We at GSK are doing just that.

One of the key things we need to do is to be able to demonstrate much more clearly the value of our medicines to payers.

In fact, we have plenty of experience in this field. Health Technology Assessment as it is known in Europe is common place. In the US as well, we see many variations on the HTA theme, for example in the course of formulary reviews by individual payers.

However, formal assessments to evaluate a drug’s effectiveness relative to existing treatments – evaluations known here in the US as “comparative effectiveness research” (CER) – have been slow to take hold despite interest among payers.
But it is only rational that payers want more and better information with which to assess a treatment’s value.

What we can bring to the table are the lessons learned from how CER works in different European countries. CER is not always perfect or an easy process in practice. There is always the danger that CER will be used simply as cover for restrictions on access to drugs, driven by a focus on short term cost pressures. And there is a risk that the CER process will be too academic, theoretical, and insufficiently transparent; that it becomes divorced from the realities of actual clinical practice and the individual patient’s experience, losing its human face. If the pendulum swings too far in this direction – as it can – patients could face barriers to accessing the latest medicines.

Nonetheless GSK is fully committed to the shift towards a more value-based or outcomes-based pricing model.

And in Europe we are discussing these approaches at the highest levels with payers. Some people thought we were crazy to be talking to payers about these issues, but the feedback from them shows that there is a huge appetite to work together, to move from an adversarial relationship, to one which is based on trying to find new solutions.

In fact we are transforming our R&D process so that from early stage development our scientists are thinking about the value a drug creates; and how we prove it. We are changing our incentives scheme, so our scientists are rewarded for getting a drug reimbursed; not just approved.

Healthcare reform is not just about demonstrating value.

We need to do better for the uninsured.

And we need to do more to help people who avoid refill costs.

We at GSK are ready to play our part in addressing these issues head-on. We are fully committed to working with the Administration as their thinking evolves.

For us there are no sacred cows, no areas off-limits. There cannot be, we need to address these issues, and urgently.

Again, the issue is one of partnership. We recognise that we must change and we are willing to do our bit. What we need is for others to work with us on these vitally important issue.

CONCLUSION
The main theme of what I have set out is that the world is constantly changing and new challenges are always emerging. We must change to meet those challenges. And at GSK we want to be proactive. We will not shirk from the hard decisions. Our employees are proud they work for a company that has the power to do so much good in the world. It is a privilege for me to be at the helm of such a company.

We know that we cannot solve the problems on our own; so we will actively seek new partnerships, new ways of doing things, new approaches. We will evolve our business practices and model. In doing so we aim to be a catalyst for change.