Speeches & Communication

John J. Castellani Remarks Before Congressional Black Caucus

PhRMA April 23, 2013

John J. Castellani
President & CEO
Pharmaceutical Research and Manufacturers of America

Congressional Black Caucus 2013 Spring Health Braintrust
10th Annual Leadership Summit and Awards Dinner
Washington, D.C.
April 23, 2013

Thank you, Dr. Puckrein for that kind introduction. And my thanks to Representative Donna Christensen and Gary Puckrein for inviting me to speak at your Braintrust/Leadership Summit Awards Dinner. And Dr. Christensen, please know how much everyone here tonight admires you and your long history of public service.

I am so honored to share the podium with Dr. Davidson, and to join in celebrating his work to promote and protect the health of all Americans.

I also want to congratulate the Congressional Black Caucus Braintrust and National Minority Quality Forum on this year’s terrific Leadership Summit. The speakers and panelists highlighted many of the healthcare challenges facing African Americans and other minorities.

One clear message emerging from the summit is this: Ending disparities and solving the urgent health problems facing African Americans and other minorities requires a coordinated effort that includes every element of America’s healthcare system. This evening I’m going to talk about one critically important part of the solution: the valuable role that innovative medicines can play.

Looking back over the last two decades, we see the profound effects that innovative medicines have had on the health of all Americans.

To cite just a few examples:

  • The death rate for heart disease declined 30% between 1998 and 2009.
  • It’s a similar story for cancer, with death rates down 20% between 1999 and 2006.

HIV/AIDS is the most dramatic example. Many of us remember when an HIV diagnosis was a death sentence. Today, thanks to new medicines, that diagnosis usually means a chronic disease. The death rate for AIDs in the U.S. has declined 70% since 1995.

And of course, this has a special resonance for the African American community which bears the most severe burden of HIV of all Americans.

This dramatic progress is good news. But it could be just the tip of the iceberg. Around the world, more than 5,000 new medicines are in development. Some 70 percent have the potential to be “first-in-class” medicines. That means they could be breakthroughs that help treat diseases for which no effective medicines now exist, or they could help patients who don’t respond to current treatments.

Many of these new medicines could make a huge difference in the fight against diseases that hit African Americans especially hard.

For example, in the last two days you’ve heard a lot about the challenge of diabetes. You are all too familiar with statistics like this: for every 6 white Americans who have diabetes, 10 African Americans have the disease.

As we meet here this evening, more than 280 diabetes medicines are in development.

There are also many promising medicines in the research pipeline to treat cancers, cardiovascular disease, asthma, sickle cell, and other conditions that disproportionately affect African Americans.

In short, medical innovation is vitally important to reducing today’s healthcare disparities.

But what about tomorrow? 

Continued medical innovation must combine initiatives like those discussed here over the last few days and a pipeline filled with promising new medicines and treatments.

Unfortunately, medical innovation isn’t automatic. It needs pillars to nurture progress.

Those pillars are:

  1. A thriving scientific infrastructure supported in both the public and private sectors;
  2. A business environment that inspires and rewards smart risk-taking and investment; 
  3. A modern, transparent regulatory system that evolves with the science to get safe medicines to cancer and other patients quickly; and,
  4. An environment where innovative medicines are properly valued. 

The pillars are interdependent. But it is the value pillar that is increasingly the most exciting.

When it comes to the economics of healthcare in America, the focus in recent years has overwhelmingly been on the short-term cost of medicines, not their long- term value.

This is due, in part, to the incentives in our health re-imbursement system. Medicines currently constitute a little more than 10 percent of total health spending. Yet they account for upwards of 40 percent of what the average patient spends out of pocket for healthcare each year. 

Moreover, insurers are more willing to cover expensive acute services than medicines. And the differences in costs are stunning. With diabetes for example, if the disease is uncontrolled it can lead to dangerous complications including amputations, kidney failure, heart attack and stroke.

The average cost of amputation surgery is $40,000.

A single year of dialysis for kidney failure runs about $83,000.

But, a year’s supply of medicines that can help control diabetes averages around $2,400.

More than the cost, however, it is unquestionably better for patients to treat and control their diabetes, than to amputate or endure endless dialysis.

Our political leaders must be more mindful of the long-term value of medicines. For example, a University of Chicago study found that reducing cancer death rates by 10% would be worth roughly $4.4 trillion in economic valueto current and future generations.

However, suppose researchers developed a new medicine that dramatically reduced cancer death rates, but the yearly cost of that drug was in the billions. You can bet that budget hawks in Congress would pounce on the cost.

But there’s been some progress. The U.S. Congressional Budget Office (CBO) recently updated its methodology for calculating the costs of Medicare policies. It now reflects the positive effect of prescription medicines on total medical costs. CBO will for the first time account for the savings from medicines that reduce the need for other costly medical services, like hospitalizations, acute care and long-term care.

I hope this small change is the start of a bigger trend.

America’s biopharmaceutical companies want to ensure that every patient, from every ethnic group and economic conditions gets the treatments he or she needs.

If we can resolve the cost/value problem, if we can nurture all four pillars of medical innovation, medical research can help accomplish exactly that.

Of course we can’t do it alone. We need education and outreach, more prevention and wellness programs, better healthcare delivery systems, more accessible treatment programs, and improved reimbursement programs. Since the end of the 20th Century, medical innovation has made a tremendous difference in people’s lives in a very short time. Working together we can ensure that the 21st Century is an era of research breakthroughs and better healthcare and value for all Americans.