Chairman and CEO, AstraZeneca
Moving Healthcare Beyond the Unsustainable Status Quo
Pharmaceutical Research and Manufactures of America
March 18, 2010
It’s been an honor serving as your chairman in this important period of PhRMA’s history.
It’s been quite a journey over the past year as we – and our increasingly diverse groups of allies– have worked to get the right kind of healthcare reform.
There are so many here today who deserve thanks for diligently working to achieve improved healthcare policies.
Over the years, Billy’s consistently impressed me with his intelligence, leadership, courage and what seems to be an innate ability to get things done in a political arena where nothing comes easy.
In a year when challenges sprang up like weeds and important debates occurred in much of the 50 States, Billy and the talented PhRMA team met all expectations.
Later today we’ll hear from my friend, colleague and incoming chairman, Jeff Kindler, CEO of Pfizer. Jeff will discuss what lies “beyond healthcare reform” for our industry.
I look forward to hearing that talk and continuing to work with Jeff, as well as past, current and future board members on issues important to our industry and nation.
I want to express sincere thanks to former or future chairmen of PhRMA and my officer colleagues for your willingness to do more than your fair share of work over the past year, and for providing me with much-needed counsel as we moved through healthcare reforms’ uncharted waters.
All our board members, who I’d like to note hold pretty demanding day jobs, came together and made quick decisions on tactics and strategy as healthcare policy debates inside and outside the Beltway sailed off in new directions.
Many of these CEOs were on the phone at all hours of the day and night, dealing with constantly changing – and rumored to be changing – reform initiatives.
And then, there are our partners– from organized labor, patient groups, think tanks, healthcare providers and professional associations to organizations primarily formed to improve the values and delivery of American healthcare.
The insights gained from working with and coming to understand the perspectives of so many good, talented people have increased our ability to promote change that’s good for our industry and the nation.
Let’s give them all a round of applause. Thank you for all your contributions.
Trends: Important Changes and Retention of Status Quo
Over the past year we’ve worked very hard to improve the healthcare available to all Americans.
Yet, while some things have changed for the better, too much has remained the same – or in some instances gotten worse.
The economy continues to be fragile, and unemployment remains at near record highs , while the number of uninsured and underinsured continues to grow.
At one point last year more than 10,000 people a day lost their employer-provided health insurance.
So they have little choice but to head to the nation’s hospital emergency rooms when something goes wrong.
As Michael Bost, an emergency room physician in Fisherville, Virginia put it:
“What I see every day in the ER is magnified 10 times worse than what we experienced in the 70’s. Not only does it hurt them physically, it hurts them financially.”
Frankly, I’m disappointed that we have yet to see meaningful healthcare reform that could:
- Provide insurance coverage for people who would otherwise not have it;
- Bring about co-pay reform that gives patients real access to the best medicines and treatments; * Deal with the exploding rate of chronic illness;
- Foster an approach promoting well-care over sick-care;
- And maintain a system that makes it possible for the biopharmaceutical industry to invest in research – that develops medicines and lowers the cost of healthcare
Without such prudent measures, it will be extremely difficult, if not impossible, for us to contain the healthcare inflation that affects the public and private sectors.
Indeed, that affects every person getting medical treatment.
Healthcare Reform: Now
I might say that over the past year as we’ve worked on healthcare reform, I’ve gained quite an education on just how Washington does and doesn’t work.
And whether it’s back in AstraZeneca’s London office or in countries where I’ve travelled over the past year, people have repeatedly asked, “what’s going to happen?”
In Europe with a government-run, single-payer-approach to medical care, they’re mystified by the arguments concerning government intrusion.
Yet, in other parts of the world, especially in developing countries, they think Americans already have it pretty good, and that it’s “natural” for large numbers of people to not have access.
Not to take a page from global leaders, but I do think we in America have to go a third or middle way between these divergent views.
Our system, in fact our culture, emphasizes the importance and diversity of the private sector in healthcare. That’s got to be part of our uniquely American solution.
But we also recognize that government has an important role, and while individuals have a responsibility to foster their own wellness, there’s also a need for a structure to be in place to support those efforts.
And regardless of what happens over the next few weeks, we in PhRMA from the start have had our own litmus test for healthcare reform legislation.
Does it promote positive patient outcomes?
Will it maintain, or better yet for the nation, promote and improve upon our industry’s long-term ability to create essential medicines?
And finally, as it aims to reduce cost, will it increase Americans access to the best treatments and medicines?
At this moment, just a couple of weeks after the White House Summit on Healthcare, the odds are constantly changing, but getting healthcare reform has never seemed like a walk in the park.
Achieving difficult goals, after all is our normal.
We come from an industry that goes through five to ten thousand compound combinations to bring a new medicine to patients. And that, maybe more than anything, accounts for our persistence.
If it’s reconciliation or last minute bipartisanship and a bill comes out of Congress, it probably won’t be exactly what you and I want.
But it will be a giant step.
And while incrementalism may not be what the President and his political allies want, there will no doubt be a need to improve upon whatever comes out.
One can only hope that the next rounds will include efforts from both sides of the aisle.
The American people deserve it and sustainable reform of our healthcare system requires it.
The Importance of Partnerships
So just what have we, the members of PhRMA, accomplished?
While healthcare reform is not yet a reality, along the way we’ve gained more than a few achievements that make this journey worthwhile.
As we’ve moved forward in promoting sustainable healthcare reform, we knew that developing partnerships with all affected stakeholders would be essential for the long-term welfare of patients and our business.
You can say we looked at potential allies in a new way.
With our allies, we coalesced around the fact that the status quo was unacceptable and unsustainable.
In building alliances, we focused on constructive engagement emphasizing what we could support as opposed to what we would not support.
We’ve actively listened to potential allies and what previously would have seemed to be some unlikely partners to clarify our views. And, I believe this approach increased our value as a partner.
This is true within the healthcare reform debate and beyond.
In creating more transparency in relationships with doctors and making direct-to-consumer advertisements more informative and, quite frankly more helpful, we’ve clarified who we really are: An industry that can be trusted.
We worked for SCHIP and a taxpayer-friendly Medicare Part D. Both programs enabled millions of beneficiaries, who previously had little or no insurance coverage, to gain access to medicines.
Our efforts moved us out of the crosshairs and paid reputational dividends.
With SCHIP, Medicare Part D and increased access to medicines via legislation and individual company’s assistance programs, there’s less of a demand for obsolete formulas.
We’re making progress on multiple fronts.
Working with the Partnership To Fight Chronic Disease, Families USA and others, we’ve focused on prevention and wellness, as alternatives to chronic disease.
And that was a most important decision.
Chronic disease continues to cost us 75 cents out of every dollar spent on healthcare and is the number one cause of death and disability in the USA.
It’s been estimated that lost workdays and lower employee productivity due to chronic disease result in an annual economic loss in the U.S. of more than $1 trillion.
We want people to get to the point where they don’t have diabetes, heart disease and many types of cancer. These are among the most preventable diseases.
Yet today, one in five American adults still smoke, and one in three of us are obese.
If we don’t reform behaviors as part of reforming healthcare we will not achieve the cost savings or healthier people needed to put our delivery system on a sustainable path.
As a nation, we need to focus more on health and wellness, as we maintain clinician-patient relationships that promote personal responsibility and healthy lifestyle decisions.
Our work helped change the direction of the healthcare debate to one that will, I believe, lead to improved American healthcare.
PhRMA, Not Waiting: Meeting People’s Needs
While elected officials argue, we, the members of PhRMA, continue to implement our own plans for promoting better healthcare, greater access and affordability.
Yes, we’ve pledged support to giving people access through pending legislation in Congress.
Until that day arrives, as an industry, we’ll continue to focus on ensuring that patients get access through our prescription programs.
Early in my chairmanship, I hit the road seeking to meet people across the country. I wanted to listen and hear their thoughts on what healthcare reform means to them, their families and friends.
Not since I was a salesman, in a decade increasingly far away, have I learned so much about what Americans far from the Beltway think about medicines and healthcare.
So, for me, it was truly a valuable experience.
Even though PhRMA’s Partnership for Prescription Assistance Program has gone to all 50 states and helped close to six million people, we still encountered surprise and appreciation.
We listened intently to healthcare woes and individual medical concerns, and explained what PhRMA was doing in Washington.
But, most people weren’t there for policy discussions.
No. They sought ways to help themselves and others get and stay healthy.
I vividly recall meeting a woman in Philadelphia’s Love Park last April, while we explained the Partnership for Prescription Assistance.
She was so excited by our good news about prescription assistance that she had to rush home to tell a seriously ill neighbor, who had limited funds and no insurance, about PPA.
Again, and again, we found excitement and support for what the industry’s providing to patients across the USA.
People who thought there was little hope learned about PhRMA programs that can and do help.
And the program’s been of particular assistance to those Americans who’ve lost their jobs and insurance because of the recession.
Through and with all of this, we’ve rebuilt trust and shown a commitment to advancing patient health that extends beyond the laboratory because we know that medicines benefit no one – patient, provider, and employer – unless people get genuine access to them.
With this economy, the need is even greater.
Jobs, Innovation and Regulation
When I stepped into the role of chairman, policymakers across the political landscape were talking about a declining economy, the loss of jobs and the critical importance of healthcare to the long-term economic viability of the USA.
Yet, when President Obama gave his State of the Union address, the importance of healthcare reform had moved from a headline proposal to the 35th minute of the speech – way behind trade, small business, tax cuts and jobs.
For several weeks before the Healthcare Summit, like many other elected officials, he placed increased emphasis on job creation.
This is not to say that the President is any less dedicated to healthcare reform– We know he is.
But you know what?
From my view, these issues are not mutually exclusive. Job creation and employee retention are key concerns for us too.
The biopharmaceutical industry supports cost containment and increased access to much-needed medicines, but we’ve also consistently created the highest paying jobs of any US manufacturer.
In the US, the bio-pharmaceutical sector employs about 700,000 people directly. And, those jobs support more than 3 million jobs in other sectors.
Yes, recession and other market challenges have brought consolidation to our industry.
However, as we achieve greater efficiencies, and reform brings people greater access to medicines, we’re confident that the US-based branch of our global industry will continue to increase its role in American healthcare.
And we’ll remain among the most knowledge-intensive, innovative industries in the world.
Innovation: At the Heart of Our Enterprise
As part of his job creation effort, the President has called for increased investment in innovation, as he proposes doubling the funding for the National Institute of Health.
We support these measures.
However, when policymakers talk about innovation, they rarely seem to mention the biopharmaceutical industry anymore.
Outside this industry and among those directly benefitting from our innovations, too few people appreciate the level of technology and the investment required to develop medicines for people to live healthier, more productively.
Frankly, I think the term innovation has been hijacked from this industry.
So it comes with little surprise when Business Week and Fast Company’s annual lists of the most innovative companies include few from our industry.
Apple is usually in the top 5 because they’ve rolled out another iPod.
But our industry does much more than that.
It routinely creates medicines that save people’s lives.
A University of Chicago study reported that from 1970 to 2000 gains in life expectancy added 3.2 trillion dollars per year to the national wealth.
In other words, in developing medicines, we directly and indirectly impact the nation’s economic development.
We promote productivity and give people, who had little hope to see next week, the opportunity to start planning for next year, and the next decade.
For example, in the early days of his administration, President Obama said he wanted to cure cancer in our lifetime.
The industry remains focused on curing cancer or the many diseases that make-up the spectrum of cancer.
Indeed it’s why the policies we advocate for reforming the healthcare system include preserving incentives that promote the R&D needed to discover innovative medicines that combat cancer and other diseases.
Whether it’s cancer or a potential pandemic like H1N1, our industry is always searching for safe, reliable solutions that will benefit as many people, as quickly as possible.
Just like with healthcare reform, partnerships are critical for achieving innovation. We actively collaborate with academic institutions and government to share knowledge and spur new ideas as we invest our own money in research and development.
In 2008 in the midst of the recession, many industries cut back on investments in innovation.
What did we do in the biopharmaceutical industry?
We spent a record $65 billion on R&D – an increase of roughly $2 billion over the previous year.
We not only talk innovation – we invest in it– even in the hard times.
With state and federal policies and processes in place that promote these efforts, we’ll continue to create much-needed medicines and jobs.
FDA and PDUFA
Unfortunately, when our medicines are close to going to patients, there have been bottlenecks at the Food and Drug Administration.
At last year’s PhRMA meeting I talked about supporting a strengthened, better-financed FDA.
We need to make sure that the agency has what it needs to do a consistent job in regulating our industry and delivering innovative treatments to patients.
Beyond the Unsustainable Status Quo
When President Obama spoke to the American Medical Association this past June he said:
“The cost of healthcare is a threat to our economy. It’s an escalating burden on our families and businesses. It’s a ticking time bomb for the federal budget. And it is unsustainable for the United States of America.”
That statement is obviously still true.
And perhaps more important, chronic disease and real access to the best medicines and treatment, is not yet a reality to all who need them.
Yes, we still have a ways to go. But we’re making progress.
Whether it’s reform at the Federal level, or in individual States where many healthcare policy decisions are made, PhRMA has created a process emphasizing open communications with our partners that positively affects debates and, we believe, will ultimately lead to better healthcare.
Recent surveys show that over a relatively short period of time, the impact of those actions resulted in a significantly more favorable representation in the media.
As a matter of fact, in 2009, we achieved our highest favorability rating in 10 years. That’s something we should all be proud of. We’re on the right track, but we shouldn’t rest.
Politics change from year to year.
But our industry’s principals of promoting positive patient outcomes in every nation where we do business, maintaining an environment favoring innovation and promoting a US healthcare system that gives patients real access to the best research-based medicines remain the same.
Today, pharmaceutical companies, in actively living those principles, have gained us recognition as a legitimate, much-in-demand partner in the effort to move healthcare beyond the unsustainable status quo.
Our industry can be proud of these accomplishments.
We are making a big difference.
We’ve earned that seat at the table.
And we’re become an increasingly valued voice to both sides of the aisle in ongoing healthcare discussions.
Together, with our principals as a compass, we’ll continue to build productive partnerships, support cost containment, advocate pro-innovation policies and promote people gaining access to the best treatments and medicines.
Thank you for listening.
And thank you for a wonderful year as chairman of this great organization.