Lilly CEO blasts Europe's drug-pricing moves

Lilly CEO John Lechleiter

European pricing policies aren't popular in the drug industry. In fact, little these days is less popular--except, perhaps, patent expirations. Various Big Pharma CEOs have railed at those policies, which seem to change at a moment's notice, but none perhaps as often or as loudly as Eli Lilly ($LLY) CEO John Lechleiter.

And now, Lechleiter is at it again. He's taken his case to Europe again, at a time when the European Parliament is discussing scientific research and innovation. His contention: Government incentives for research are fine and good. But governments also have to be willing to pay for new drugs. Right now, European countries have shown that they're not.

In an interview with The Wall Street Journal, Lechleiter made the usual statements about endangered R&D investment and jobs. But he also raised some interesting questions about reference pricing, in which governments set their own drug prices based on those paid by other countries. So, price cuts in one jurisdiction ripple throughout the region.

To Lechleiter, that indiscriminate price-setting is patently unfair. Intensive cuts recently made in severely troubled nations--particularly Greece and Spain--can then trigger cuts in countries that aren't nearly so burdened. So, drug prices end up disconnected from a country's actual ability to pay up. "We certainly can't have other countries who are not so affected using those new lower prices for reference," Lechleiter said.

Lechleiter's comments echo similar statements from GlaxoSmithKline ($GSK) CEO Andrew Witty, who warned of the dangers of Europe's reference-pricing system. GSK has also been a proponent of tiered pricing, in which drugs are priced according to each market's ability to pay. The company has been rolling out discounts in some of the world's poorest countries.

Lechleiter also took aim at Germany's new pricing system, which led Lilly and partner Boehringer Ingelheim to abort their launch of a diabetes drug, Trajenta. Lilly hasn't changed its mind about that, he said. "Our position today is we don't intend to launch," he told the Journal.

- read the WSJ piece (sub. req.)

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