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Executives say health cost push threatens innovation

Bayer chairman Marijn Dekkers (right) was speaker at a luncheon where he discussed the economic downturn and research. Before his speech, he chatted with John Fernandez.

Suzanne Kreiter/Globe staff

Bayer chairman Marijn Dekkers (right) was speaker at a luncheon where he discussed the economic downturn and research. Before his speech, he chatted with John Fernandez.

The push to contain spiraling health costs around the world could hamper the ability of drug makers to bring new medicines to market, two biopharmaceutical executives warned Wednesday.

Marijn Dekkers, chairman of German drug giant Bayer AG, sounded the alarm at a luncheon hosted by the Boston College Chief Executives’ Club of Boston, saying the global economic downturn has intensified pressure to restrict reimbursements for therapeutics.

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“There is tremendous pressure all over the world . . . to bring down the price of prescription drugs,” Dekkers told an audience of about 300 at the Boston Harbor Hotel. “The danger of pushing prices down, down, down is that the system for developing drugs will lose its attractiveness.”

Dekkers, a former Boston-area life sciences executive who helped engineer the $10.5 billion merger of Thermo Electron Corp. and Fisher Scientific International Inc. in 2006, said some of the profits from drugs now on the market are used to fund research and development for new treatments.

He echoed remarks made earlier in the day by Genzyme chief executive David Meeker, who told an industry conference in Boston that drug companies must work to meet patient needs and win “reasonable reimbursement” as the business environment gets tougher worldwide.

“It’s all about value creation,” Meeker said in a keynote address to more than 200 executives during the BioPharm America 2012 Conference at the Westin Boston Waterfront Hotel. “And value is defined by the patient’s ability to access treatment — that’s the endgame.”

Meeker, whose Cambridge-based company is owned by French drug maker Sanofi SA, said some companies’ experimental treatments have been approved by European regulators only to be denied adequate reimbursement by government panels that set payment rates.

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“That’s the new reality,” Meeker said.

Increasingly, regulators and payers are asking not about how drug candidates compare to placebos, but how they compare to the best therapies already on the market, he said, maintaining that drug companies will have to meet that standard.

In an interview after his luncheon address, the Dutch-born Dekkers said some biopharmaceutical companies recently have decided not to launch approved therapies in Germany because of the government’s pressure on reimbursements.

“In Germany, this is becoming more of a problem,” he said. “This is worrisome because if a country with a good standard of living is going to drive drug prices down, who is going to reimburse innovation? Once you accept a price in a certain country, no country will pay higher.”

By contrast, he said, US insurance and government payers still largely recognize that drug makers deserve to get an attractive rate of return on their investments.

Dekkers also complained about the lack of protection for intellectual property in developing countries such as India and China, citing a recent Indian court ruling requiring a drug maker to license a patented therapy to an Indian generic-drug manufacturer.

Despite his familiarity with the Boston life sciences sector, Dekkers said that Bayer has no plans to open its own operations in the Boston area. Bayer has a partnership with Norway’s Algeta ASA, which opened a Cambridge office earlier this week, giving the German company the rights to market Algeta cancer therapeutics in countries outside the United States.

“Although Boston is a very good hub for health care and life sciences, traditionally Bayer has had a relatively small presence here . . . ” Dekkers said. “We have a strong presence in New Jersey and San Francisco, and we have chosen in the past not to fragment this. It is not something against Boston.”

Robert Weisman can be reached at weisman@globe.com.
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