[Ip-health] Transcript of Bayer CEO Marjin Dekkers quote at the December 3, 2013 FT Event, regarding India compulsory license of Nexavar

Claire Cassedy claire.cassedy at keionline.org
Fri Feb 7 07:46:18 PST 2014


http://keionline.org/node/1924

Transcript of Bayer CEO Marjin Dekkers quote at the December 3, 2013 FT
Event, regarding India compulsory license of Nexavar

On January 21, 2014, Ketaki Gokhale of Bloomberg published a story in
Businessweek on disputes over drug patents. The story closed with a rather
sinister quote attributed to Bayer CEO Marijn Dekkers, "We did not develop
this medicine for Indians. We developed it for Western patients who can
afford it." The comment in question was made by Dekkers at a December 3,
2013 event hosted by the Financial Times, titled "Buffering the Pharma
Brand: Restoring Reputation, Rebuilding Trust." The article and
particularly Dekkers' quote caught the attention of health advocates and
went viral in the health policy community.

A little over a week later, Ryan Chittum of the Columbia Journalism Review
published an article, complaining that Gokhale had "misquoted" Dekker's
comments. [2] Bloomberg reviewed the quote, which had been paraphrased, and
updated the article, to read [3].

"So now, is this going to have a big effect on our business model? No,
because we did not develop this product for the Indian market, let's be
honest. I mean, you know, we developed this product for Western patients
who can afford this product, quite honestly."

While there is a difference between Dekkers' comment and how he was
initially quoted in the Businessweek article, and Dekkers is somewhat more
tactful in his dismissal of cancer patients in India than Businessweek had
first reported, the differences in tone are minor, and the meaning remains
intact.

KEI has prepared a more complete transcript of Dekkers' comments on this
issue at the FT event.

Immediately preceeding the quote in question, Dekkers discusses the Indian
government's decision to issue a compulsory license on the cancer drug
Nexavar,

"In our case, the Indian government said "No, no, your patent is valid, and
this is a product for kidney and liver cancer. Your patent is valid we just
think you charge too much. And because you charge too much you have to do a
mandatory license to a generic company in India that is now going to make
this drug and sell it. And on that low price that they will sell it for,
you will get 6% royalty." And that was a government decision. So we had a
patent but somebody else is allowed to make this product and because there
is not enough access to this product for poor Indians. I don't know if
you've even been to India, there are a lot of poor Indians obviously, and
the hospitals aren't that close by [laughs] to where they live, so we found
that this was extremely politically motivated and essentially, I would say,
theft."

It is odd that Dekkers justified the claim that the Nexavar compulsory
license was politically motivated on his claim that for poor people in
India "hospitals aren't that close by," since plenty of poor persons live
near hospitals in India, and the drug is administered in tablets, typically
2 tablets taken twice a day on an outpatient basis.

The full video of the December 3, 2013 event where Marjin Dekkers made the
statement in question; Financial Times Live, "Buffering the Pharma Brand:
Restoring Reputation, Rebuilding Trust-PANEL."
https://www.ft-live.com/ft-events/ft-global-pharmaceuticals-biotechnology-conference-2013/sessions/buffering-the-pharma-brand-restoring-reputation-rebuilding-trust-panel[4]

The transcript of the FT event available below is transcribed in full from
minute 11:26 to minute 21:17 (which includes the preceding
comments/questions as well as those that immediately follow the relevant
quote), with minute markers included in brackets for tracking and reference
purposes.

There are also other sections of interest from the event included in the
transcription, including, for example, Burns (former CEO of Roche) comments
on Africa in general:

"A typical government in Africa still spends 1% of its budget on healthcare
of GDP and 10% on armaments. These are conscious choices, in a society as
to what percentage you're going to spend."

And Dekkers on South Africa.

"But you know the risk in these situations is always spillover. If this
generic Indian company is now going to sell this product, then South
Africa, and then New Zealand, you never know, you know, how this is going
to spillover. And that puts the whole industry and the patent right of an
industry at risk."

Buffering the Pharma Brand: Restoring Reputation, Rebuilding Trust - PANEL

03 December 2013

Participants:
Andrew Jack (moderator)
Pharmaceutical Correspondent
Financial Times
United Kingdom

William Burns
Former Chief Executive, Pharmaceuticals
Roche / Independent Director on several Boards

Nikos Dedes
Chair / Member
Positive Voice, Greece / EMA Management Board

Marijn Dekkers
Chairman of the Board of Management
Bayer

Rogier Snijdewind
Adviser, Responsible Investment
PGGM Investment

Starting from minute [11:26]

Snijdewind: ...There's a strategic rationale behind introducing and using
corporate sustainability in your daily business. And we are firm believers
that especially the pharmaceutical sector could be on the forefront of that
because unlike any other sector they are, I would be inclined to say, are
able to improve the lives of people and by doing so also hopefully make
improvements for all stakeholders, including those shareholders that I'm
one of. What we use in our analyses and our view of companies and in our
engagement with companies is indicators such as the access to medicine
index which shows, which is essentially a ranking of the access to
medicines policies of companies and also the implementation thereof, which
show us the strategic rationale that companies seem to be having on this.
And it varies greatly within the sector, you have companies that have
really made it one of their key focus areas for the future while others
only think that it encompasses philanthropy and nothing more. Of course
philanthropy from an investor's point of view is really the last road, that
we're, well we realize that it's part of the whole package but from an
investment point of view its not really, there's not much business
rationale behind that. But we do think that going forward, and I realize
there's a lot of companies doing a lot of work on this, they could be more
transparent on this without turning it into a marketing story, too much.
But I think there's a lot of moves a company can make, and in terms of long
term profitability, access to medicine and improving access to healthcare
in general and creating capacity building on the ground in countries where
it's most needed. I think that's, that'll be a long term value driver.

Jack: So if you look at those different areas of reputation we've been
touching on here, there's transparency, on pricing, affordability, on
marketing, and so on, is there one in particular that starts really, that's
front of mind that could potentially really affect investor's attitudes to
the prospects for returns for the industry?

Snijdewind: Well, for us to single out one indicator, we try to look at the
entire, entire, approach of companies. What I find quite important
personally, is the approach to pricing, differential pricing. Which is
important because essentially you want to ensure that the, as was mentioned
before, that people are actually able to afford that medication. It also,
if you do it right, takes away the whole philanthropy approach because
essentially you want people to pay and be able to pay for the medication
that they need most.

[14:40]

Jack: You talk to investors obviously a lot, what's your impression from
the other side? Do you hear a lot of pull concerns you know a sense that a
lot of these issues are driving investment or is it a bit of froth around
the edges?

Dekker: I honestly believe investors, of course Rodger is an exception,
they don't care about these issues all that much. What they do care about a
lot is whether the business model in pharma still makes sense. They are
nervous when companies who don't really have a track record of success in
getting a return on their R&D expenses continue to invest billions in R&D.
And it's almost a bimodal distribution. There are a number of companies
that have been successful and they're encouraged to keep doing what they're
doing and there are some companies with relatively dry pipeline who need to
be managed for cashflow and have almost a different set of rules applied to
them by investors than the first group. And you, I can make the list of
which companies fall into which category. And this is why I'm so worried
about the pricing levels, because you know, we had a situation in Germany
four years ago and there was a mandatory rebate of 16%. It was introduced
by a politician who is now no longer active in the German politics but ok.
16%, that is basically, was at the time a 10% price cut for all
prescription medication. Now in the new coalition agreement it will be
turned around again so we're getting now a 9% increase in pharmaceutical
pricing. But pretty much the entire population of Germany was applauding,
you know, "good job" "let's go and save some money on those expensive
pharmaceuticals." And the politicians felt great about themselves, right,
because those are the voters. I think the issue is that the voters who are
also patients are forgetting then that the incentive to work on newer and
better drugs pretty much is put at risk with such measures. And that, that
connection is never explained.

Jack: Of course you had that example from Germany because also if we're
talking about access issues, you also had your experience in India not so
long ago with one of your cancer drugs, where there was challenges to the
patent. So flipping the question around, is there, do you think further
transparency and further pressure on downwards pricing, some of these
demands perceived to improve performance by the industry, would actually
undermine your ability significantly to-

[17:45]

Dekkers: No, India for us was an unusual situation. Our patent was not
questioned, I mean other companies patents are questioned. In our case, the
Indian government said "No, no, your patent is valid, and this is a product
for kidney and liver cancer. Your patent is valid we just think you charge
too much. And because you charge too much you have to do a mandatory
license to a generic company in India that is now going to make this drug
and sell it. And on that low price that they will sell it for, you will get
6% royalty." And that was a government decision. So we had a patent but
somebody else is allowed to make this product and because there is not
enough access to this product for poor Indians. I don't know if you've even
been to India, there are a lot of poor Indians obviously, and the hospitals
aren't that close by [laughs] to where they live, so we found that this was
extremely politically motivated and essentially, I would say, theft. Of the
Indian government, of a capability of a company that is patented, and
therefore a patent right. [19:10] So now, is this going to have a big
effect on our business model? No, because we did not develop this product
for the Indian market, let's be honest. I mean, you know, we developed this
product for western patients who can afford this product, quite honestly.
It is an expensive product, being an oncology product. But you know the
risk in these situations is always spillover. If this generic Indian
company is now going to sell this product, then South Africa, and then New
Zealand, you never know, you know, how this is going to spillover. And that
puts the whole industry and the patent right of an industry at risk.

Jack: You wanted to come in? Just to Rogier first, and then we'll come to
you. [directed at Dedes]

Snijdewind: Just to address that PGGM is the exception as far as investors
go-I think there's a great continental divide, if you look at US investors
it's not really on the top of their agenda, but I think that European
investors, particularly Dutch and English investors. I believe its a bit
different. I do think the key takeaway of today is that politicians are to
blame for pretty much everything. Which is a popular viewpoint nowadays. I
don't necessarily disagree with that. But with regards to your remark about
the business model I do think that indeed about the changing business model
I think if the pharma sector would not be focused on, or would have to
reshift their focus on the high margins on blockbuster drugs, then just do
volumes, then I think thats a great case to be made for increasing access.
Also in other countries because essentially that the only way that have to
increase volume in the short run. Especially in the long run when prices
can increase.

[21:17]

Dedes: Well Rogier's got to it first, and what I would make as a plea to
CEOs that are in the room is that to develop medicines not for markets, but
for patients. Because as you said [indicating Dekkers], the pricing is such
that Indian markets could not possibly afford it, but if it is with the
business model that Rogier just mentioned, where you can have return on
investment with volume, I mean we all know how the iTunes and the Mac/Apple
applications are being marketed-as such low price-but of course they are
selling millions, billions of those and this is where they get their return
on investment...

...

[25:15]

Burns:...And what is it that then says well I've got to get a payback
before the patent expires? Well I understand that from the innovation part
and we need that to be intact, but there is a vibrant generics industry.
And once a product goes off patent, then free market forces do take place.
It does not mean that access goes up. A typical government in Africa still
spends 1% of its budget on healthcare of GDP and 10% on armaments. These
are conscious choices, in a society as to what percentage you're going to
spend. Or in a country like India, where the patent law is in early stages
and there's still a desire to protect the local generic companies until the
patents become vibrant enough with local industry. It was rather
interesting, it took until about 4 or 5 years ago before in China there was
an inflection point that there were more patent cases between Chinese
national companies whereas up until that point it had all been
international companies against Chinese national companies. So as
innovation kicks in, as research kicks in in all those countries, they
start to appreciate it...[goes on to cite a 40 year-old off patent drug on
WHO list that has saved a lot of live as example of people having access to
the drug and that people don't give the pharma industry enough credit for
making these drugs]...It's very easy to bash the industry on short term
pricing than to look at, what is the long term contribution? and the access
around the world?
[29:09]

...

[32:30]
Dekkers: Yeah, before I joined Bayer I was not really in the pharmaceutical
industry and, as I tried to say in my opening remarks, I was shocked by
some of the practices, quite honestly. Off-label promotion and advertising
being the two most significant examples of it. So, off-label promotion is
illegal, so that's easy, it should not be done. And I really do believe
that the industry has really gotten its act together on that 100%. But what
we often still read about is cases that are 10-20 years old that are being
dealt wit still. The advertising is just something so unnecessary. And if I
were a doctor and a patient, it would turn me off. As a doctor I would say
why are they meddling with my relationship to the patient? And as a patient
I would say why is the pharmaceutical industry pushing something on me that
I should be prescribed by my doctor? So I don't see how that can be a win
situation for either the doctor or the patient...

...

[39:40]

Dekkers: ...When its about access to medicines, and I do believe that this
is not just a Bayer philosophy but a pharmaceutical company industry
policy, pharmaceutical companies really do not want that poor people cannot
use their drugs. We really don't want that. We want people to have access
to drugs. We want to make that more and more possible. It's not always
easy, but the pharmaceutical industry is clearly working on that. It cannot
get to the point where when you pay, where when you have poor people pay
very little for a drug basically that costs less than the rich Germans or
the rich Brits or the rich Americans or the rich Japanese, are like "Hey,
you sell it there for that price, why don't you sell it to us at that
price?" You can say that, you can force that upon pharmaceutical companies,
my only point then is not a complaint, just know that then the
pharmaceutical industry won't be motivated to develop the next drug.
Because, there has to be a return on your investment...

Links:
[1] http://keionline.org/user/57723
[2] http://www.cjr.org/the_audit/bloombergs_viral_misquote_1.php
[3]
http://www.bloomberg.com/news/2014-01-21/merck-to-bristol-myers-face-more-threats-on-india-patents.html
[4]
https://www.ft-live.com/ft-events/ft-global-pharmaceuticals-biotechnology-conference-2013/sessions/buffering-the-pharma-brand-restoring-reputation-rebuilding-trust-panel


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