How much value do innovative medicines generate for the economy?

Pandemic has prompted re-evaluation of healthcare systems and funding models

More than a year since the World Health Organisation declared Covid-19 a pandemic, we are still grappling with the disease’s devastating impact. About 2.7 million people globally have died. On the island of Ireland, we have lost more than 6,700 people. But, with four Covid-19 vaccines authorised and in use, and some 800 Covid-19-related medicines and vaccines in development, we are getting closer to defeating the disease and reclaiming our lives.

As the vaccination programme accelerates, infections, hospitalisations and deaths linked to the disease will drop. Livelihoods, and the economy, will recover.

Vaccines are a global health and development success story, saving up to three million lives every year. Medicines, too, are keeping us alive for longer, with improving quality of life. By preventing and treating diseases, both vaccines and medicines make major economic contributions, well above their cost.

The pandemic has prompted a re-evaluation of healthcare globally – the systems that deliver it, the funding models behind it, and its scale and reach. Alongside that, the economic contribution of medicines merits more attention. It is an important part of the healthcare conversation now and when the pandemic lifts.


Last week, we published The Value of Medicines in Ireland, the first thorough assessment of the socioeconomic value of medicines and medicines expenditure. The ground-breaking study, carried out by specialist German consultants, the WifOR Economic Research Institute, showed that innovative new medicines for cancer, heart diseases and respiratory diseases generate almost €52 billion in socioeconomic value for Ireland between 2005 and 2025.

WifOR compared two scenarios - one with new medicines and the other without them – in calculating the socioeconomic impact, adjusting for population, age profile and the incidence of the three diseases. Using standard health economics concepts, it showed the reduction in “years of life lost” and “years of living with a disability” from the introduction of new medicines.

It linked these to socioeconomic yield, drawing on data from the Institute for Health Metrics and Evaluation, IQVIA and the Central Statistics Office.

The study found that, without new medicines, 34 per cent more years of life would be lost among patients with cardiovascular diseases. Among cancer patients, that figure is 16 per cent and among patients with respiratory diseases it is 25 per cent.

Bernard Mallee is Director of Communications and Advocacy at the Irish Pharmaceutical Healthcare Association.

Over 20 years, the study found that medicines for cardiovascular diseases generate €25.8 billion in socioeconomic value. In cancer, that figure is €16.8 billion while €9.1 billion is the added socioeconomic value for respiratory diseases. On an annualised basis, the benefit of medicines in these three areas is €2.5 billion - more than the State’s total €2.2 billion spend on medicines in 2019. For every euro invested in these medicines, €3.80 is being returned to the economy until 2025.

The message from all this is clear: the impact of medicines on patients’ lives, both their health and ability to work, is transformational. It situates the therapeutic value of Ireland’s medicines spend in the context of overall population health. We know from other studies that cancer survival rates are rising – and the mortality rate for heart attacks and stroke is dropping. We can expect to live longer now, too. These gains are, in part, down to incremental improvements in innovative medicines.

The pandemic is placing renewed focus on the importance of breakthroughs for unmet medical needs, on giving patients fast and equitable access to new medicines and on raising standards of healthcare.

The study should prompt a rethink of health spending. It is not a “cost centre”, even a “black hole”, as some argue. It is an investment in people and a driver for socioeconomic growth. That will remain the case, even as we emerge from the pandemic and the Government moves to normalise the country’s finances.

Investment in health – in new medicines, in data and information technology, and in emerging breakthrough therapies - should be high on the agenda. Innovation, and the assurance of value for money, can go hand in hand. Each new medicine is already assessed for value in health cost terms before it is reimbursed. But the broader socioeconomic value of a new medicine – for example, in enabling productive participation at work - is not counted, even as sustained investment in new medicines shows clear economic upside.

Our industry aims to conclude a new pricing and supply agreement with the State in the coming months. The value of investment in medicines can be an impetus to agree better ways to fund and provide new medicines in a sustained way.

Ireland has significant biopharmaceutical manufacturing but we have been slow to adopt new medicines, some of them made here, in the health services. We have scale, not speed. Ireland ranks, at best, mid-table in surveys of speeds of access to new medicines across all of Europe and at or near the bottom among western European counties. The Government’s 2021 allocation of €50 million for new medicines has started to tackle the deficit. Already, the Health Service Executive is using the funding to provide new medicines in public health services.

The economic contribution of medicines merits more attention

In the 2022 Budget, and through a new pricing and supply agreement, there is an opportunity to improve the funding model and the reimbursement process so that patients get new medicines faster. That can be done affordably, with industry and the State sharing a responsibility to organise pricing, supply and funding to support innovation.

All this comes as the European Commission, through the Pharmaceutical Strategy, examines the wider role of the biopharma industry as a contributor to investment, jobs and health outcomes. The pandemic is placing renewed focus on the importance of breakthroughs for unmet medical needs, on giving patients fast and equitable access to new medicines and on raising standards of healthcare. Underpinning all new medicines, and Covid-19 vaccines, are intellectual property rights. They spur risk-based investment in breakthroughs, with implications for new treatments and cures and the jobs bonus that goes with them.

Ireland can be a leading voice in these policy debates, siding with innovation, jobs and international investment. We have the chance now, with others, to recast our thinking about health and medicines as economically productive investments.

Bernard Mallee is director of communications and advocacy at the Irish Pharmaceutical Healthcare Association.