bio pharmaceutical innovation improving lives
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Biopharmaceutical Innovation:
Improving LivesRick Smith
SVP Policy, Research & Strategic Planning, PhRMA
September 10, 2007
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PhRMA Who We Are
We represent the nations leading pharmaceutical and
biotechnology research companies
Our mission is to effectively advocate for public policies that
encourage discovery of important new medicines for patients
Our 33 member companies:
Employ more than 83,000 US-based R&D staff
Invested $43 billion on R&D in 2006 (industry overall spent $55billion)
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Biopharmaceutical Companies areCommitted to Innovation
More than 3,300 new biopharmaceutical projects in clinical trials orundergoing FDA review
The Biomarkers ConsortiumPhRMA is collaborating with the National
Institutes of Health, the Food and Drug Administration, and BIO to
discover, develop, and qualify new biological markers to support new drugdevelopment, preventive medicine, and medical diagnostics
Rare DiseasesBetween 1995 and 2005 160 medicines were approved to
treat diseases that affect 200,000 or fewer patients.
Today there are over 300 more drugs in development for rare diseases.
Entering the Genomic EraA new generation of targeted cancer
treatments represents the first wave of personalized medicine. This month
for the first time FDA approved new labeling for an existing drug linking it
to a genomic marker.
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More than 400 biotechnology medicines targetingover 100 disease are currently in development
New Medicines in thePipeline
Monoclonalantibodies to treatasthma, Crohnsdisease, and lupus
Gene therapies forcancer and heartdisease
A recombinantprotein to treatautoimmune
disorders Therapeutic
vaccines forAIDS
Source: PhRMA 2006 report Medicines in Development: Biotechnology
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Industry investment in R&D increasedsteadily over the past decade
$15.2$16.9
$19.0$21.0 $22.7
$26.0
$29.8$31.0
$34.5$37.0
$43.0
$39.9
$47.6
$55.2$51.8
$0
$10
$20
$30
$40
$50
$60
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
(est)
Expen
ditures(BillionsofD
ollars)
PhRMA Member Companies' R&D ExpendituresEntire Pharma Industry
The pharmaceuticalindustry is one ofthe most research-intensive industriesin the United States.
Pharmaceuticalfirms invest as muchas five times morein research anddevelopment,relative to theirsales, than theaverage U.S.
manufacturingfirm.
-- CongressionalBudget Office
In 2006, total industry spending on R&D exceeded $55 billion
Source: Pharmaceutical Research and Manufacturers of America, PhRMA Annual Membership Survey, 2007.
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in the late 1980s only41% of the top 50innovative drugs were ofAmerican origin, in the late1990s[it had] climbed to
62%.
In 1990, the pharmaceuticalindustry spent 50% moreon research in Europe thanin the U.S. In 2001, thesituation was reversed with40% spent more in the U.S.
--Gunter Verheugen, Vice-President of the EuropeanCommission for Enterpriseand Industry
U.S. leads the world inbiopharmaceutical innovation
0
500
1000
1500
2000
2500
3000
3500
4000
1997 1999 2001 2003 2005 2007
Year
NumberofCompounds
inDevelop
ment
US Rest of World EU Japan
Source: Adis R&D Insight Database, customized run, December 2005 and Verheugen, G., Address to the Concluding Session of
the European Track, Lyon, April 14, 2005.Notes: Comparisons were completed for June of each year. Some compounds are at different phases for different indications.
In 2007, U.S. companies had more medicines in development than the rest of the world
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Innovation is yielding resultsBeginning to turn the tide on cancer
Survival times for patients with metastatic breast cancer (MBC) improved by 30% in
the 1990s; Researchers link the improvement to new medicines
Average Survival Time (in days) of Metastatic Breast Cancer Patients
438 450
564
667
0
100
200
300
400
500
600
700
1991 to 1992 1994 to 1995 1997 to 1998 1999 to 2001
Time when MBC patients were diagnosed and treated*
Surv
iva
lTime
(Days
)
Source: SK Chia et. al, The Impact of new Chemotherapeutic and Hormone Agents on Survival in a Population-Based Cohort of womenwith Metastatic Breast Cancer,Cancer2007;110 and New drugs improve breast cancer survival,Reuters, July24, 2007.
According toresearchers,
"This improvement in
survival appeared tobe caused by theavailability and use ofnewer, more effectivesystemic agents forthe treatment ofmetastatic breastcancer."
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Turning the tide on cancer
Cancer deaths in 2003 downfor the first time in 70 years
First cancer vaccines, newtargeted treatments,personalized approaches
Over 600 cancer medicinesin the pipeline
Reducing cancer death rates
by 10% would be worthroughly $4.4 trillion ineconomic value.
Many examples exist of
major therapeutic gains
achieved by the industry inrecent yearsanecdotal and
statistical evidence suggests
that the rapid increases that
have been observed in drug-
related R&D spending have
been accompanied by major
therapeutic gains inavailable drug treatments.
-Congressional Budget
Office
Sources: Hoyert DL, Heron M, Murphy SL, Kung HC. Deaths: Final data for 2003. Health E-Stats. Released January 19, 2006. J.L. Lichtenfeld,PhRMA Future of Innovation briefing, Washington DC, 24 April 2006. K.M. Murphy and R.H. Topel, Measuring the Gains from Medical Research,2003. PhRMA, Medicines in Development for Cancer, 2006. Congressional Budget Office, Research and Development in the PharmaceuticalIndustry, October 2006.
From Killer to Chronic Disease: Drugs Redefine Cancer for ManyWashington Postheadline, 2003
I think we
really are in themidst of arevolution inthe treatmentof cancer.
Dr. LenLichtenfeld,
AmericanCancer Society
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Innovation is yielding results Rheumatoid Arthritis
12.8
17.2
14.0
0 2 4 6 8 10 12 14 16 18 20
Reduced short term
disability incidence plus
declining duration
Reduced short term
disability incidence
Baseline
Dollars (millions)
19% reduction in lostproductivity costs
26% reduction in lostproductivity costs
A recent study on adherence to rheumatoid arthritis medications found a 26%
reduction in lost productivity costs when short term disability costs were included
Source: Integrated Benefits Institute,A Broader Reach for Pharmacy Plan Design, May 2007.
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Full costs for rheumatoid arthritis
Workers' compensation,
4%
Short-term disability, 4%
Long-term disability, 4%
Group
health,
42%
Lost
productivity,
32%
Pharmacy, 15%
Higher co-pays for patients reduceRA medication adherence
Disability costs of lostproductivity from higher
co-pays are twice as largeas pharmacy
expenditures fromincreased medication use
Source: Integrated Benefits Institute,A Broader Reach for Pharmacy Plan Design, May 2007.
Among RA patients, as co-pays decreased, adherence increased, lowering total costs
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Innovation is yielding results Alzheimers Disease
0
10
20
30
40
50
60
70
80
Less Drug Use (36 Weeks
Treatment)
AverageNumberofMonth
sUntil
Nu
rsingHomePlacem
ent
Alzheimers medicine delays need for costly nursing home care
43 Months
73 Months
Source: G. Provenzano, et al., Delays in Nursing Home Placement for Patients with Alzheimers Disease Associated withTreatment with Donepezil May Have Health Care Cost-saving Implications,Value in Health, 4 (2001): 2,158.
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Innovation is yielding results Importance of post-approval R&D
Maintaining strong patent protection along with robust data exclusivity is critical toensuring continued R&D investment vital to new advances
Source: J. Calfee. The Golden Age of Innovation,The American. March/April 2007.
Recent examples:Two biologics first approved to treatrheumatoid arthritis have also been
approved for psoriasis and Crohns diseaseA biologic initially approved to treatcolorectal cancer has also been approvedfor certain lung cancers and is undergoingFDA review to treat breast and kidneycancer
[M]edicine today is actually
in a new golden era of
innovation. In this new
era, the most important
advances in treatmentoften come from products
which have been on the
market for a while but
whose properties were
not completely
understood until
intensive research afterthe drug was
introduced.
--Jack Calfee, American
Enterprise Institute
New uses for biologics:Expanding approved usesTreating different conditionsDemonstrating improved results when used incombination with another drug
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Medicines account for small portion of overallhealth care cost growth
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Research and Construction*
Personal Medical Equipment andNon-Prescription Drugs
Nursing Home and Home HealthCare
Net Cost of Private HealthInsurance, Administrative Costs,and Public Health Programs*
Hospital Care
Prescription Drugs
Doctors, Dentists, and OtherProfessional Services
Prescription medicines accounted for about 10% of total health spending in 2005,the same proportion as in 1960
Source: National Health Expenditure Accounts, http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf
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Changes in Disease Prevalence and PopulationCharacteristics are a Key Driver of IncreasedHealth Care Costs
For four costly chronic conditions, up to 79% of the growth in spending has been due to
an increase in the number of cases over a 13 year period
Percent Change in Health Spending Due to Rise in Treated
Prevalence and Increased Population, 1987-2000
79% 79%
63%
76%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Mental Disorders Cerebrovascular
Disease
Pulmonary
Conditions
Diabetes
Percen
tIncrease
Source: K. Thorpe et. al., Which Medical Conditions Account for the Rise in Health Care Spending,Health Affairs, 25 August 2004.
Discussion of themagnitude ofhealth carespending growthusually doesnot take intoaccount changes indiseaseprevalence anddemographicfactors behindspending growth
--Kenneth Thorpe,Emory University
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Medicines are one part of the solution
Slowing the rise in the nations health costs will require controllingthe epidemic of chronic disease.
Mortality and heart failure fell by
nearly halfamong patients hospitalizedfor heart attacks between 1999 and2006 as the result of an increased use ofprescription drugs
Return on investmentfor a 20% increase in
adherence to medicines:
$1 spent on medicines=$4 to $7 in savings
Sources: K.A. Fox, et al., Decline in Rates of Death and Heart Failure in Acute Coronary Syndromes, 1999-2006,JAMA 297, no.17: 1892-1900. M.C. Sokol, et al., Impact of Medication Adherence on Hospitalization Risk and Healthcare Cost,Medical Care,
June 2005. C.W. Cranor et al., The Asheville Project: Long-Term Clinical and Economic Outcomes of a Community
Pharmacy Diabetes Care Program, Journal of the American Pharmaceutical Association, March/April 2003.
The City of Asheville, NC provided free screenings and medicines to
patients with diabetes and other chronic conditions. Employees learned to
better manage their conditions, resulting in significant health improvements
and an average net decrease of 34% in health care costs -- $2000 perpatient per year -- and a 50 percent reduction in absenteeism
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Continued robust innovation is essentialto better, more affordable care asboomers retire
$653
$553
$416
$112
$184$155 $156
$183$235
$314
$1,167
$980
$778
$112
$184 $216
$261
$332
$443
$593
$0
$200
$400
$600
$800
$1,000
$1,200
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
ProjectedSpending(inBillio
ns)
Projection with Treatment Investment
Current Projection (without Treatment Investment)
Delaying the onset of Alzheimers Disease by 5 years could save $100billion per year by 2020
49
Source: The Lewin Group for Alzheimers Association, Saving Lives, Saving Money: Dividends for Americans Investing inAlzheimers Research, 2004.
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Continued robust innovation is essential tobetter, more affordable care as boomers retire
Parkinsons costs society $27 billion per year in medical bills and lost wages;
Worldwide, projected cases of Parkinsons will more than double by 2030
Projected Increase in Prevalence
of Parkinson's Disease
8.7
4.1
0
2
4
6
8
10
2005 2030
Year
Population
(inmillions)
Data source: E.R. Dorsey et al., Projected Number of People with Parkinsons Disease in the Most Populous Nations, 2005Through 2030,Neurology. 2007; 68: 384-386
There are 27 medicinesin development forParkinsons Disease.
For example:A drug that may prolongeffective treatmentwindow and treatcomorbid conditions ofdepression and anxiety.
A gene therapy which
may help prevent neurondegeneration inParkinsons patients.
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Fostering innovation throughcollaboration and strong incentives
For more information on new medicines visit
www.innovation.org
Strong patent incentives to encourage medical advances through new
investments in R&D
Data exclusivity to support investments essential to the development ofnew biologics
Public/private partnerships to collectively combat the burden of disease
Evidence-based medicine that supports quality improvement and
physician/patient decision-making, rather than line-item cost-cutting
and blunt access controls
How do we enable the US to uphold its position as the leaderin biopharmaceutical development?