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  • 8/14/2019 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

    http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdfhttp://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?