Select Committee on Science and Technology Minutes of Evidence


Examination of Witnesses (Questions 521-539)

DR STEVE CHATFIELD, MR IAN KINGSTON AND DR LIZ MILLER

TUESDAY 11 MARCH 2003

Chairman

  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 vaccines research.
  (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 agencies.

  (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.

Lord Turnberg

  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 therapy area.

  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 countries.

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.

Lord Oxburgh

  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 is?
  (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.

Chairman

  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.

Lord Oxburgh

  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 the purchase?
  (Mr Kingston) No, the numbers I am talking to are what would be reported in the statutory reports as research and development.

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 of vaccines.
  (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.


 
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