Pivotal Time for U.S. Biopharmaceutical Industry

Pivotal Time for U.S. Biopharmaceutical Industry

04.11.13 | By John Lechleiter, Ph.D.

PhRMA Chairman and Lilly President and CEO John Lechleiter is kicking off #PhRMA13 now. In a guest post he discusses the future of the industry. To learn more watch live now!

For decades, San Diego has been at the center of the biotech revolution. The advances pioneered by scientists in the San Diego area have had a dramatic impact on human well-being and longevity. 

With this city’s proud history of discovery as a backdrop, it’s appropriate that PhRMA is here this week for our annual meeting to tell the story of the biopharmaceutical sector.

This is a pivotal time for the U.S. biopharmaceutical industry—and for health care in this country.

The good news is captured in recent headlines: the rise in health care spending has slowed to a pace not seen in decades. And since spending on health care is a principal driver of our nation's long-term fiscal outlook, this is a big deal. 

Congressional Budget Office projections of sharp declines in health care spending are meaningful to patients and government budgets alike. Medicare spending over the next 10 years is expected to slow by $137 billion. Of that, $104 billion – or 75 percent – is due to the drop in expected Medicare drug benefit spending. CBO has lowered the Medicare drug benefit baseline in five out of the last six annual revisions – and from 2007 to 2012, the average growth rate of the Medicare drug benefit was less than two percent.

A new report by IMS Health underscores the positive trend: money spent on prescription medicines dropped last year, according to IMS, for the first time since it began tracking these numbers in 1957. Furthermore, there’s increasing evidence that the use of innovative medicines actually saves money by reducing the need for more costly interventions.

A study in the Journal of the American Medical Association reported that when older Americans who didn’t have comprehensive prescription drug coverage received coverage through Medicare Part D, they saved an average of $1,200 per year in hospital, nursing home, and other medical costs.

In addition, the slowdown in R&D productivity that has bedeviled our industry seems to be nearing an end.

A report released this year by the Analysis Group says:

  • More than 5,000 potential new medicines are being evaluated in human testing - an all-time record. More than 800 are in Phase 3 - the last stage of human testing.
  • Of these, 70 percent have the potential to work in diseases for which there are no existing treatment options - or help patients who don’t respond to current medicines.

At a time when we need these treatments more than ever, however, lawmakers are considering a variety of measures that could cripple our industry’s ability to produce the next generation of treatments for diabetes and cancer … or breakthroughs required to make inroads against diseases like Alzheimer’s.

When I became chairman of PhRMA last year, I said we needed an ecosystem that supports medical innovations - here in the U.S. and abroad - for our industry to continue thriving and delivering on our commitment to patients. To support this ecosystem, I outlined the following priorities for my chairmanship:

1. To address policies in Washington, D.C., state capitols, and in priority countries around the world that help sustain - or threaten to slow down - medical innovation.
2. To build a foundation for long-term policy changes - including regulatory and intellectual property objectives.
3. To consistently stand up for access, innovation, and choice.
4. And to continue building trust in our industry. 

I’m proud that we’ve have made meaningful progress on all of these priorities.

For example, the reauthorization of PDUFA - the law that governs the FDA’s regulatory authority of new drug approvals - brings more certainty and clarity to the drug approval process. We are vigorously defending the importance of free-market access to medicines - and will continue doing so. We’re also aggressively addressing the problem of counterfeit medicines through our new partnership with INTERPOL, the largest international police force in the world.

These successes, and many others, build upon the revolution in medicine that we’ve seen in recent decades. Innovative medicines today are achieving better outcomes for patients than ever before.

Since 1975, new medicines have helped reduce death rates from heart disease by nearly 70 percent. Death rates from cancer have dropped by 20 percent and HIV/AIDS by nearly 80 percent. These treatments have helped add nearly 7 years to the life spans of our citizens.

This combination of better outcomes, lower costs, and the potential to extend and enhance life for all our citizens create a value proposition that’s unsurpassed in U.S. health care today.


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