Impact investing in pharma: what do we measure?

​How does a patient benefit from the use of a new medicine? Does he live longer, does quality of life improve relatively? And does the new drug contribute to the affordability of our care system? Martin Eijgenhuijsen reflects on an impact project.

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One of the most exciting new developments in managing pension assets  is investing with impact, or as PFZW likes to call it: investing in solutions. Ideally, a pension fund can explain precisely how a participant’s pension euro yields financial returns and contribute to a solution for a societal problem at the same time.

PFZW tasked PGGM with bringing about this positive impact in four sectors, increasing to up to EUR 20 billion in investments in 2020. One of these sectors is healthcare, which is Sustainable Development Goal #3. We are looking for profitable investments that help improve healthcare worldwide as well as close to home, whenever possible.

This is in part effectuated through investments in publicly traded companies that supply products or services that offer healthcare solutions. Our philosophy is that such solutions contribute to a more sustainable world that will allow us to live better and, eventually, also to invest better.

Last year PGGM spent a great deal of energy on measuring impact and asking: ‘How can we make the social effects of our investments tangible in comprehensible terms?’ To that end, we initiated several projects in conjunction with pharmaceutical companies that are part of our specially selected impact portfolio.

Pharmaceutical companies are just as interested in the measurable impact, although they face complicated challenges in this respect. How can we objectively determine the health benefit or cost-effectiveness achieved by a medicine? Can investors and companies find a shared  language?

Regulations pertaining to the pharmaceutical industry are also very complex, with manufacturers never being allowed to advertise their own products in any way. And these regulations extend even further, because as an interested party, PGGM – after all, we are invested in the publicly traded manufacturer – is not allowed to mention the name of the product or its manufacturer.

In the meantime, we have received the results of a first project focused on impact management that we conducted in conjunction with a large pharmaceutical company. It concerns the impact of a medicine that is used to treat ovarian cancer with a very specific mutation. This form of cancer is a serious illness that is diagnosed in 1,350 women annually in the Netherlands, more than sixty percent of whom ultimately die of the disease. All results were validated by an independent party, the Institute for Medical Technology Assessment, which is a department  of the Erasmus University Rotterdam.

Compared to the treatment patients have received until now,  which has been in use for some time, the drug in question extends the period in which the growth of the cancer can be halted from an average of five months under the old ‘no maintenance’ strategy, to up to nineteen months.   Furthermore, research results also indicate that the new medicine adds a number of months when compared to other maintenance treatments. Patients therefore gain a few precious months in which the quality of life is not affected by the treatment. The medicine is expected to decrease slightly the total treatment costs in the first year.

While conducting the study on improved treatment of ovarian cancer, the pharmaceutical company also made good progress in detecting a specific hereditary mutation: 65 percent more cases of this mutation are being discovered now than through previous  tests. This will make it possible to offer better customised treatment. The costs of the test are expected to drop by 9 percent; all women with ovarian cancer are now offered this test. The detection of hereditary tumours allows early discovery of whether family members of the ovarian cancer patients are themselves at a higher risk of contracting the disease.

Thanks to the increased survival, lower treatment costs in the first year and improved detection of the mutation that can lead to ovarian cancer, we have measured positive impact. It goes without saying that we aim to objectively measure the results of as many of the  healthcare solutions as possible that a pharmaceutical company provides. In this way a nurse who is a participant in the PFZW pension scheme can see how much his or her pension euros contribute to improved healthcare.

Senior Investment Manager

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