Takeda Warns New Drugs at Risk If Countries Push Deep Price Cuts

Pressure to reduce medicine prices in major economies including the US could force pharmaceutical companies to cut spending on scouting and developing novel therapies, said the head of Asia’s largest drugmaker.

(Bloomberg) — Pressure to reduce medicine prices in major economies including the US could force pharmaceutical companies to cut spending on scouting and developing novel therapies, said the head of Asia’s largest drugmaker. 

“If you push too much you reach a point where you’ll impact the ability to invest in R&D and innovate,” Christophe Weber, Chief Executive officer at Takeda Pharmaceutical Co., said in an interview in Osaka this week. “You cannot just close the eyes and squeeze the price, it doesn’t work.” 

Governments and drug companies have to walk a tightrope to ensure drug affordability, without pushing too hard on prices and limiting investment in research that will produce more advanced medicines, he said. Countries are squeezing prices without acknowledging the fundamental problems faced by healthcare systems, he added.  

Pharmaceutical giants around the world are under increased pressure to protect their revenue streams as governments slash drug prices in a bid to shore up health care systems by limiting the financial burden on patients. Medical care across the world is struggling to cope with staff shortages and rising operating costs exacerbated by the Covid pandemic. At the same time, rising costs of living are squeezing patients paying out of pocket for treatments. 

In the US, President Joe Biden last year passed the Inflation Reduction Act, which allows the government to negotiate prescription-drug prices — a reform aimed at cutting costs for elderly and disabled Medicare patients. The country’s leading pharmaceutical trade group — and Takeda’s bigger American rivals, Merck & Co. and Bristol-Myers Squibb Co. — are suing the US government over the act, aiming to block its implementation. 

The act’s impact on Takeda will be limited as the firm’s exposure to Medicare is one of the lowest among large pharmaceutical companies, Weber said. 

In the UK, Eli Lilly & Co. and Abbvie Inc. have pulled out of a voluntary drug-pricing agreement after the government said companies would need to repay 26.5% of drug revenue this year — a sharp rise from 15% in 2022. 

In Takeda’s home base, Japan — where the government typically reviews drug prices every two years — rollouts of new treatments are slowing down as companies grow reluctant to develop medicines for the market. A 2021 study by the country’s Office of Pharmaceutical Industry Research that said drugmakers had been discouraged from launching new products in the country due to tighter price controls. 

Many developed countries are also seeing a demographic shift toward seniors, who spend more on medications treating everything from cancer to dementia, putting further financial strain on healthcare systems. 

“There is an urgent need for reform of many healthcare systems to make them more efficient,” Weber said, “but also to modernize them so that they are fit for what the society is today.”  

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