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Pedro Nueno, Professor, IESE Business School, University of Navarra

Bludgeoning pharmacists

Sat, 15 May 2010 07:49:39 +0000 Published in Expansion (Madrid)

The pharmaceutical sector costs the State money. If you don't like this, you should find a way to pay for medicines in a different way: by having part of the price paid out of pocket by the patient; by encouraging the public to take out private health insurance; by making people feel better and need fewer drugs.

What you can't do is tell the public that you pay for their healthcare and force the provider you buy it from to give it to you at the price you say.

In Spain we have good healthcare (still). Our King said it with enthusiasm after a very quick recovery after a relevant intervention. One of the reasons for this quality is that we have a good pharmaceutical sector, with Spanish and foreign companies established in Spain, which develop products here and manufacture them here.

The interaction between scientists working in pharmaceutical companies, doctors in hospitals and professors in universities is a complex cycle that has been working very well in this country. Pharmaceutical companies create high quality work jobs but also have an extraordinary multiplier effect on a wide range of suppliers: Chemistry from specialization program, material from laboratory, industrial machinery, sophisticated packaging, logistics, and many others. For every employee in a pharmaceutical company, there are five more induced in other sectors.

It also turns out that Spain is not the country with the highest pharmaceutical prices in Europe, on the contrary. And this means that all the companies are working hard to achieve productivity and quality. If we did not have a powerful sector we would have to import drugs from other places and they would be more expensive. And we would not have a lot of high quality work jobs in industry, hospitals and universities.

While on the one hand, politicians keep talking about the " knowledge society", on the other hand, the Government is destroying the only one that works well in this country. With the price reduction it imposed on drug manufacturers, it placed them on the edge of the abyss and with the one it intends to impose on them now, it is sending them to the bottom. The government is in the "society of ignorance".

A pharmaceutical company has to stake a portion of its revenues on the success of its research. Obtaining a new pharmaceutical ingredient can require more than 6 years of effort researcher. This research sometimes requires a complex web involving several allied companies, sometimes of different nationalities, hospitals, university researchers. A new principle can cost 1 billion euros from expense at research and development but any relevant improvement of a pharmaceutical principle is hundreds of millions and a long term commitment.

If the new price reduction announced is implemented, this process will be abruptly cut off in a lot of companies with a brutal loss of knowledge, work and future jobs. Soon we will see our best doctors leaving for a serious country and the same will happen with the best researchers. The rest of us will be left to make a living in the bike lane.