Examination of Witnesses (Questions 521-539)|
TUESDAY 11 MARCH 2003
521. Good morning, lady and gentlemen. Thank
you very much indeed for coming along. First of all, for the record,
could you state who you are and your organisation. After that,
if there are any opening comments you wish to make, now is the
time to make them.
(Dr Miller) I am Dr Liz Miller. I am
Head of the Immunisation Division of the Communicable Disease
Surveillance Centre, which is part of the Public Health Laboratory
Service, which, as I am sure you are aware, is about to transfer
to the Health Protection Agency (HPA) on 1 April.
(Mr Kingston) Good morning. My name is Ian Kingston.
I am here as Chairman of UVIG, UK Vaccine Industry Group, which
represents the seven companies who manufacture and supply vaccines
to the UK. You should also know that each representative of the
group is employed full time by one of those members and in my
case it is GlaxoSmithKline.
(Dr Chatfield) I am Steve Chatfield. I am the R&D
Director for Microscience, which is a small UK-based company which
is focused entirely on vaccine R&D.
522. Is there any opening statement you wish
to make, either collectively or individually?
(Mr Kingston) Not from UVIG.
523. Let us go into the first question then.
Could you outline the organisations which undertake research and
develop vaccines in the United Kingdom?
(Mr Kingston) From the UVIG perspective, first of
all we would quote the seven member companies of UVIG whom it
would be useful to think of as integrated vaccines companies.
We have the capacity to do the discovery phase, the development
phase, get them onto the market and produce them. Beyond the big
companies, there are government agencies, there are venture capital
funded companies which you will hear about shortly and work in
university departments. It is a broad spectrum of agencies doing
(Dr Miller) There are three major publicly funded
agencies which have a role in vaccine development and indeed evaluation.
There is the Public Health Laboratory Service, which has the remit
of looking at vaccine needs, quantifying burden of disease due
to potentially vaccine preventable infections and, in partnership
with manufacturers, we do have an active clinical trial research
and development programme taking candidates which look promising
for the UK market and developing them in partnership with manufacturers.
There is also the National Institute of Biological Standards and
Control, which has the remit for the pre-clinical evaluation and
batch release of vaccines which are already licensed. They have
an active role in the vaccine development front, not actually
making the antigens, but in developing in parallel with the vaccine
the pre-licensure tests which would be used as batch release tests
when these vaccines come to market. It is quite important that
happens in parallel with vaccine development and we have been
reasonably successful in the UK in doing that. There is also the
Centre for Applied Microbiology and Research which will be coming
into the Health Protection Agency as of 1 April, which has a vaccine
development programme, both looking at candidates which are clearly
needed for the UK market and doing basic research, but also they
develop vaccines for which there is no major commercial incentive,
for instance they produce anthrax vaccine which is of limited
use for occupational exposure. Those are the major publicly funded
(Dr Chatfield) I will add to that, that
there are several small biotechnology companies within the UK
who are not manufacturers but are in the research and development
phase. Most of those are funded through the venture capital route,
so there is a lot of innovation sitting in those companies which
is relying on the venture capital funding, which is a tough thing
to get in this particular environment. An awful lot of vaccine
early stage research goes on in academic institutions, universities.
A lot of companies have spun out of universities based on some
of those technologies. Some of those technologies are funded through
the Office of Science and Technology, through the DTI, through
MRC grants and also the Biotechnology and Biological Sciences
Research Council. Those are major public funders for those types
of technologies. There is also the Wellcome Trust which funds
a lot of vaccine research in the UK. There are other institutes,
such as the Jenner Institute, located at Compton and that is a
part private/government funded, focussed around the sort of immunological
assays which you need to develop to be able to support vaccine
development through the pre-clinical and the clinical phases.
That is what I would add in terms of other institutions.
524. Does this list of institutes you have just
given constitute a sufficient push to develop vaccines and vaccination,
bearing in mind that immunisation is one of the best methods of
controlling infection? If in fact the answer to that question
is no, not enough, how should that encouragement come along?
(Dr Chatfield) Within the UK there is an absolutely
superb base in terms of technology and innovation at the earlier
phases of research. The issue, the push, then is how you translate
that research into pre-clinical and clinical programmes and through
to products. That is where the major costs are incurred. If you
consider that the research phase is a fairly cheap part of developing
a vaccine, once you move into the pre-clinical and clinical phases
we are probably talking tens of million dollars in order to take
a vaccine through to approval. Yes, there is an enormous amount
of technology and innovation. It is actually being able to focus
down on that and develop the right products and be able to provide
the funding environment to drive that forward.
525. We have heard from previous witnesses that
the large companies, where the sort of development you have just
mentioned would be, are not very keen, for obvious reasons, to
take up development of vaccines. How might one solve that situation?
(Dr Chatfield) There are several ways of approaching
it. Clearly, in terms of the way vaccines are going now, things
are changing dramatically in terms of the perception of the vaccine
industry, in terms of the values. This is a growth industry at
the moment. It is perceived as a global growth industry. If you
look at market predictions for vaccines going forward, it is around
a $6.5 billion global market at the moment and that is expected
to rise at about 12 per cent per year by 2010 to something like
a $20 billion marketplace. The days of the low commodity, high
volume vaccines, are not something which is the trend in the industry
at the moment. The tendency is to drive vaccine prices up rather
than down. One factor driving the marketplace are new technologies
which are coming along which allow products to meet unmet needs.
There is also more interest from stakeholders, for instance, who
are now starting to consider that yes, there should be a focus
as a country on pathogens causing a lower incidence of disease,
but actually where the consequences of disease are high such as
meningococcus C. A lot of other factors are driving the value
of the vaccine industry. We as a small company, in order to develop
our products, will need to partner with larger companies in order
for them to pick up those costs and be able to take the programme
forward into demonstrating clinical efficacy, the phase 3 studies
for instance, and through to licensure. Part of the way we can
address those issues from a small company perspective is to give
the bigger company a better product development package by the
time we licence it to them rather than what has traditionally
happened, where they have had to go back and repeat a lot of work
which has not been done correctly. There is now more onus on the
small biotechnology companies to be able to do the early development
work properly prior to partnering.
(Mr Kingston) Representing the big companies, may
I reiterate that certainly from the UVIG members, the previous
conception that perhaps vaccines were not an area of interest
commercially is very much in the past. In terms of what we would
see as potential health benefits from the science and in terms
of our ability to develop good vaccines, it is very much an interesting
area. I would also just say that the cost of developing the late
stage clinical trials of a vaccine are now at least equal to and
in some cases significantly more than a typical cost of developing
a drug treatment. These are very big decisions and, to reinforce
a previous point, it is the level of certainty the company management
will have that there is a genuine demand at a reasonable price
level which will determine whether or not the funding is made
available for those late stage clinicals.
(Dr Miller) On the issue of making a vaccine and whether
it is going to have a market, there is a good dialogue between
the Department of Health and vaccine manufacturers, even at an
early stage about which products to bring forward, particularly
also when you are talking about combination vaccines. There are
many vaccines which exist separately, but the manufacturer needs
an early steer on the particular combinations needed for the UK
market. There is a good dialogue with the Department of Health.
The meningococcus C example is a very good one, where we had a
vaccine available for the UK market possibly five years earlier
than otherwise, had there not been that close dialogue between
the Department of Health, the vaccine manufacturers and indeed
an active involvement of the Public Health Laboratory Service
in doing some pivotal studies which were essential for licensure.
526. May I press you a bit further? You are
painting a fairly rosy picture of great innovation and the industry
anxious to take it all up, but I have to say that the sense we
get is not quite that. What we seem to hear is that the industry
is risk averse, there are risks in putting out a vaccine into
the public sector which may have a one in a million chance of
producing some side effects. It is a danger. Can I press you and
ask, when you say the industry is interested and is putting money
into it, what proportion of your funding would go into this area?
Are you really committed to it? You are, but is your company?
(Mr Kingston) Speaking in my GlaxoSmithKline capacity,
the amount of money spent annually on research is in the range
of £150-£200 million, which is between 15-20 per cent
of the revenues. That is typical for the pharma industry. Certainly
you could say that we are as committed to vaccines as any other
527. Is that £200 million a year on vaccines?
(Mr Kingston) Yes; correct. I cannot give figures
for the other UVIG companies, but we can certainly provide them
as supplementary information.
528. Where do I get my perception from then?
Am I completely wrong?
(Mr Kingston) From the UVIG companies' point of view
a lot of the drivers of interest in the field of vaccines and
public health are positive. The scientific possibilities are positive,
the commercial possibilities in terms of the price levels now
being achieved, certainly in the States and increasingly in Europe,
are attractive. The things which make you nervous are the more
day by day process into public perception and sometimes legal
liability issues which arise, not only in the UK but perhaps specifically
in the UK if I compare the UK vaccines business with that of other
Lord Lewis of Newnham
529. May I just take up this point Lord Turnberg
has been talking about? The reason we started looking at this
was because we did have a discussion with the Royal Society and
the Royal Society made a particular point that this was an area
which they felt was in some way a Cinderella in the act. Where
has this misconception occurred? It is not just here, it seems
to be in the established fraternity as well.
(Mr Kingston) I cannot answer where it has occurred,
but I note it and I will certainly take it back to put into the
range of activities which UVIG does. Obviously it is not in our
interests that the perception does not match the reality.
530. Could we pursue the economics of this because
this may be one of the roots of our perceptions or the perceptions
of others? Given that pharma companies are primarily interested
in operating in a commercial way and getting the best return they
can on investment, it would appear that a therapeutic pharma product
which was going to be used repeatedly, offered better economic
prospects than a vaccine which might be used only once or perhaps
on a limited number of occasions during the lifetime of an individual.
If vaccine production is to appear as attractive a commercial
proposition as a therapeutic product, either the cost has to be
very high, or the application has to be enormously wide. Could
you elaborate on this a little bit? Is my analysis correct? Could
you elaborate on this?
(Mr Kingston) Your analysis is correct: those are
the variables which would be factored into any assessment of how
attractive the vaccines would be from a commercial perspective.
Increasingly though, that equation is looking not unattractive.
The one major challenge in developing vaccines and bringing vaccines
to the market is that the public's expectations of absence of
any side effects are legitimately phenomenally high because we
are putting chemicals into people who are otherwise fit and healthy.
Your tolerance level is much less than it would be if you were
already ill in some respect. It is very, very hard to quantify
what level of liability you might be exposing yourself to and
that is one of the reasons the upfront costs of doing the clinical
studies are now getting higher than for drugs: not because we
need to prove efficacy, but because we need to get very large
numbers in to try to get a statistical sense of what any risks
may be before we can get them licensed. Your analysis is correct,
but the variables in terms of coverage, number of doses, reasonable
price points to pay back the R&D are fairly easily assessed.
531. Let me take this one step further and ask
which are the conditions for which it is going to be unattractive
for you to develop products?
(Mr Kingston) Without naming specific conditions,
I would say that if we are uncertain from the people we are dealing
with attached in some shape or form to the Department of Health,
who ultimately are going to set the policy and ultimately are
going to pay it, if we are uncertain what the real demand is,
then that is going to make us less confident. If we are looking
at a target at risk population which is particularly small, then
naturally we are going to need to convince ourselves and the payers
that health economics will pay out and society is prepared to
pay to prevent rather than wait until people get ill and then
pay to cure them.
Baroness Finlay of Llandaff
532. Might I carry on with the economics and
perhaps I have misunderstood? You said that £200 million
is spent per annum.
(Mr Kingston) For one company.
533. Is that UK or worldwide?
(Mr Kingston) That is the worldwide spend. Generally
research and development is done on a worldwide basis.
534. Do you have any idea what the UK spend
(Mr Kingston) There are seven companies who are members
of UVIG. Two of them have research establishments in the UK, the
others do not. My company's, for example, is in Belgium, one is
in France, some are in the States. In any event, some of that
money will be spent where you are doing the clinical trials and
the UK certainly has quite developed infrastructure for carrying
out clinical trials.
535. Do you have any information as to what
this £200 million is compared with to the other spend on
pharmaceutical development? Is £200 million very substantial,
or is it a minor portion? I am just trying to get an idea of the
importance UVIG and these companies place on vaccine development
compared with other developments.
(Mr Kingston) Vaccines are a small proportion of total
health care expenditure around the world compared to therapeutics
and I would be surprised if they would be as high as 5 per cent;
some would be less than 5 per cent. Broadly the overall ratios
for companies who are funding their research from current revenues
tend to be the same. You might imagine that the pharma industry
is spending anything between 10 and 20 times more developing therapeutics
than it is developing vaccines in broad terms.
536. I am not clear what those numbers refer
to. I may have missed it at the beginning. Is that research expenditure
you are describing or total expenditure which perhaps includes
(Mr Kingston) No, the numbers I am talking to are
what would be reported in the statutory reports as research and
Baroness Finlay of Llandaff
537. May I unpick this a little bit more? There
are two companies doing research in the UK and you have described
a very close relationship with the Public Health Laboratory Service
as it is now. Do you have that sort of relationship with other
organisations in other countries around the world where you are
doing research if five out of seven are not doing the research
in the UK? Or is the UK the only place providing that kind of
close backup with the government agencies?
(Mr Kingston) The UK would certainly be regarded as
one of the most developed countries in terms of interaction and
forward leading in vaccine policy development. There are others,
but generally speaking the research companies would try to have
as high a quality dialogue as they can with the policy makers
in major healthcare bodies around the world.
538. It sounds as though the PHLS is actually
doing a lot of very important work to back up the development
(Dr Miller) It is really the Department of Health
which is proactive here in having a dialogue with the manufacturers
indicating what might be needed early on. The PHLS is a facilitator
in that we can do key trials in association with the manufacturers
or look at correlates of protection which may assist in licensure
of a product without efficacy data.
539. So the company would contract to the PHLS
for doing it.
(Dr Miller) No, we have a mixed economy in that the
Department of Health, through its Research and Development Division
(RDD) has funded quite a lot of this research. Where we have clearly
got joint interests with manufacturers, there can be co-funding
with the Department of Health perhaps funding some and the manufacturer
perhaps doing the field work, the Department of Health funding
the laboratory work. That has been very profitable. The work done
by the PHLS is done according to the very stringent requirements
which are necessary in order to provide data which can be submitted
for licensure. We shall be touching on the regulatory aspects,
but all parties, whether they are manufacturers who have the responsibility
for submitting for licensure, early biotech companies or PHLS,
must be very aware of the regulatory framework within which we
work and very transparently have good contracts between the various
partners to ensure that the central regulatory needs are met.