Billy Tauzin, PhRMA President & CEO

Keynote Address Before The Economist Pharmaceutical Roundtable
Wednesday, November 16, 2005, Philadelphia, PA

Good afternoon. I want to thank you for having me today and kudos to The Economist for organizing this conference. It’s certainly timely and thought-provoking, and something I’m delighted to be a part of.

Today, I’m speaking to you about facing the future and meeting patient needs. But to many outside the pharmaceutical industry, the concepts of industry success and meeting patient needs seem incompatible. We’re a big – no, HUGE – international industry, aren’t we? And haven’t we’ve all heard in countless focus groups around the country that we’re greedy, heartless and make too much money?

But the truth is that we are – as an industry – focused on one thing: the patient. Whether people currently believe it or not, this focus is the reason America’s research-based pharmaceutical companies exist. Granted, we’re a business – a pretty darn big business. But we’re a business OF people working FOR people. We make lives better through better health.

Kind of sounds like an advertisement, doesn’t it?

But seriously, we face a challenge. How do we move forward and continue to meet the industry’s need to sustain the investment necessary for continued innovation while balancing that with patient needs now and in the future? The key is promoting a free market that inspires and rewards both innovation and change. And I’m convinced we can accomplish this in three important steps – all with the patient in mind.

First, we must LISTEN. Second, we must EDUCATE. And third, we must DELIVER.

And if this all sounds basic, it is… and I believe it will work. So let me start by telling you what I mean by my three steps.

Step one, we listen to what patients truly want from the healthcare system. Step two, we educate people on the practices and processes of our industry to encourage an informed and interactive approach to healthcare. And step three, we respond to patient needs by delivering the best possible healthcare solutions.

So here’s what people are saying.

Patients want the best treatment possible. They want the best professional advice that doctors and health care professionals can provide. They don’t want a bureaucrat or a lawyer coming between them.

People don’t want to be treated like the object of health care – they want to be treated like the subject of it. Patients want to know that treatments are based on their needs, and that they have a say. 

This kind of patient-centered health care is especially important in light of the growing demands on the system and those demands are about to grow even more. Starting in just five years, we’re going to see the first round of baby boomers retiring. All told, there are 70 million baby boomers here in the United States, set to swell the ranks of seniors. With life expectancy growing as well, we can expect the older population to increase by 147 percent by 2050.

The health care system has to prepare for new pressures, especially in dealing with diseases like Alzheimer’s, cancer, and diabetes. The growing human cost of these conditions to patients and their families is enormous as is the vast economic cost to our society. By zeroing in on both new treatments and on prevention, America’s research-based pharmaceutical companies are leaders in patient-centered health care.

People also want ACCESS to quality healthcare. Make no mistake; the pharmaceutical industry knows we have a big responsibility here. We don’t make ice cream or sports cars. We produce something that can make the difference between living and dying. Our products cannot be restricted to an inner circle of the wealthy and the lucky. That is why PhRMA, with the support of our member companies, is working tirelessly to ensure that ALL Americans are inside the circle.

One way we are working to accomplish this for senior citizens is through support for the Medicare Modernization Act. It will help make health care patient centered – ensuring that regardless of need, seniors will have the opportunity to select the prescription drug plan that best meets their individual needs.

The new drug benefit comes into effect in January. Enrollment is underway. PhRMA is actively partnering with a network of 70 public and private organizations conducting an aggressive campaign in every state to educate seniors on the benefit and the plans available to them. We want to make sure seniors know about the program, and understand how much it will benefit them. 

It’s a top priority for PhRMA – working together with health care providers, patient advocacy organizations and community groups. Together, we’re bringing an important message to patients: Help is available.

Another way we’re working to improve access is through The Partnership for Prescription Assistance (PPA). PPA provides a single point of access to around 475 public and private patient assistance programs that collectively offer 2500 different medicines to eligible patients for free or at greatly reduced costs.

The patient assistance programs include 175 sponsored by PhRMA member companies. 

Since inaugurating the PPA in April, over 1 million patients have been matched to a patient assistance program that may provide help getting their medicines.

Since 1990, the industry has developed over 300 medicines, vaccines and biologics. Today, there are over 11,000 medicines approved for use by American patients and health care professionals – and new medicines are being made available everyday. Last year alone, 38 new prescription medicines and biologics were approved to help patients.

Right now, there are over 1000 new medicines in advanced stages of development to treat a wide-range of diseases and conditions. These are the tools of a pro-patient health care change. 

Take diabetes for example. It afflicts more than 16 million Americans, more than half of them over the age of 60. But the threat of the disease now extends to the very young with doctors and nutritionists raising new warnings about the growth of diabetes among school age children.

Old or young, what do they face? The possibility of heart disease, kidney failure, blindness and premature death. Right now, America’s research-based pharmaceutical and biomedicine companies are working on 62 new medicines to treat both Type I and II diabetes. That includes a new medicine to stimulate patients’ insulin production – reducing their vulnerability to diabetes.

Or, take Alzheimer’s disease. One in 10 Americans over the age of 65 have it – including nearly half over the age of 85. It could afflict 16 million people by the middle of this century unless we find a way to prevent or cure it.

But the pharmaceutical industry is trying to do just that. The first generation of medication is now on the market and, as of last year. 22 promising medicines were significantly along in the development process. In fact, one would block the production of the protein that forms plaques in the brains of Alzheimer’s patients. 

Or look at Parkinson’s disease. Medicines currently on the market can diminish its symptoms. Drugs now in development could halt its progression – or even replace lost nerve cells.

And what about cancer? We’re working on about 400 drugs to combat cancer; more than 60 to treat breast cancer alone. The anti-cancer projects include smart medicines that would steer clear of healthy cells and go straight after cancerous ones.

These are some of the leading causes of death and disease among America’s seniors. And, developing drugs to treat them is made possible by a process that is centered on people and their needs.

I don’t think we realize how lucky we are in this country to have innovative and responsive drug companies and drug policies. Too often in other countries today, we are seeing a trend away from people-centered healthcare and toward a healthcare approach that is centered on bureaucracy.

In fact, many countries use a form of “health-care rationing,” coupled with price controls. Who, when, why, and how people get to use a drug doesn’t depend on whether they need it – it depends on whether or not the bureaucracy thinks it can afford it. Let me give you some examples. 

Australians can only obtain a drug that can prevent osteoporosis after they have broken a bone. I guess no one ever told the bureaucrat in charge about an ounce of prevention being worth a pound of cure.

In the U.K., no drugs are approved for Alzheimer’s patients over the age of 70 – when people are at greatest risk of needing it.

How do they ration a medication to control macular degeneration of the eyeball? If you lose one eye, you can get a prescription for the other one. Here in America, I hope we never get down to rationing eyeballs. 

Never mind preventing people from getting access to medicine. The EU is now preventing Europeans from getting access to information about drugs. It just issued a directive that websites operating in the home country’s language have to black out information about new medicines. Think about what they are actually trying to do: control demand by controlling information.

It is easy to see what happens: When a state program supplants the private market for drugs, the cost to government treasuries becomes a higher priority than the cost to people’s health.

And just as Americans don’t want bureaucracy-centered medicine, they don’t want lawyer-centered medicine either.

Now, I’ll admit to having a lot of friends who are lawyers. It’s not my fault; I’ve spent a lot of time in Washington D.C. And I’ll also admit to something else: Most lawyers I’ve met are good folks – and the same goes for bureaucrats. The problem is when the spirit of medicine is undermined by the spirit of litigation. Too often, lawsuits are filed without any real concern for the patient involved – just the pot of gold at the end of the litigation rainbow.

Medicine has to be about people working together and trusting one another. Litigation mania undermines this spirit of cooperation instead replacing it with suspicion and hostility. 

Lawyer-centered medicine can get right in the way of prescribed treatment. Take those commercials you see on TV, the ones where lawyers pay for air time to play on people’s fears. The worst part about them isn’t that they are aimed at clogging the courts. They also do something else: deter some patients from taking their medicine – without even talking to their doctor about it.

A 2003 Harris Poll confirmed this. Among doctors, 38 percent said patients had stopped taking medications because of lawsuits. And 44 percent of pharmacists said the same thing about their customers.

But the most alarming thing the poll revealed is this: 43 percent of doctors said they had not prescribed the most appropriate medicine for a patient because of frivolous lawsuits. That’s right – over 2 in 5 doctors surveyed acknowledged that litigation mania was pressuring them out of prescribing based on their own trained judgment. If that isn’t an example of medicine centered on lawyers instead of patients, I don’t know what is. 

As if medicine isn’t becoming skewed enough towards lawyers’ tactics and away from patients’ needs, we are also seeing attempts in several states to encourage even more lawsuits. Take what’s happening Michigan. That state has what’s known as the FDA defense. It basically says that when it comes to an FDA-approved drug, litigants can’t sue the manufacturer unless the FDA finds that the manufacturer defrauded them in some way. Makes sense: If the FDA approved the drug, it must have been thoroughly tested and shown to be safe.

But trial lawyers in Michigan have persuaded some state legislators to repeal the FDA defense. Such a move will clog the courts, and make patients, doctors and medicine manufacturers potential adversaries instead of partners in health care. Worse yet: It could create an environment that discourages the huge investments in time and money necessary to develop new medicines. 

This brings me to another huge factor in developing new medicines: investor risk. The fact is, it costs about a billion dollars and sometimes over 15 years to create a new medicine. And only three out of every 10 drugs approved ends up paying for itself. It is simply not realistic to hope to put all of the reward on one side of the table, and all of the economic risk on someone else’s.

Last year, PhRMA member companies spent almost $39 billion on R&D. Let’s put that in context. That’s 19 times as much as pharmaceutical companies were spending in 1980, when I first came to Congress. And it’s more than this year’s entire operating budget for the National Institutes of Health.

That kind of capital doesn’t come from management, and it doesn’t come from and angel investor. It comes from the market’s ability to pull together the needed resources.

In the end, it’s the potential financial reward that pulls together the capital … that funds the research … that creates the medicines … that makes it possible for children to survive leukemia, for people to live a lot longer with AIDS, for Alzheimer’s sufferers to live a decent life for far more years than they would.

And for about 10 million people like me to get a chance that we wouldn’t have had a few years ago – the chance to beat cancer. 

For that, I am indebted to some dedicated researchers working in the pharmaceutical industry. I thank my lucky stars that they had access to the resources they needed. And I know that the market made that possible.

I’ll never forget the day that I found out that I needed a miracle – or a miracle drug. Soon after my surgery I met with my doctor at MD Anderson Cancer Center at the University of Texas – an excellent institution. But for me it was the site of bad news. “Billy,” he said, “you’ve got a lymph node in there and it’s cancerous.” Then he gave me the worse news. They didn’t have a protocol for dealing with it. They couldn’t go back in there. Further surgery was out.

But my doctor offered a hope. He told me about the brand new drug: Avastin. He said it might cure me – or kill me. I would be one of the first people to take it post-surgery. So I asked him: “Would you give this to your wife?” And he looked down and said quietly: “No.” But I wasn’t about to give up hope quickly, so I said: “Maybe I should have asked this earlier, but how well have you and your wife been getting along lately?”

I made the decision to go ahead with my doctor – and my wife. There wasn’t a bureaucrat in the room looking over our shoulder. We came to the right decision.

That was an option because of a lot of dedicated people. When I took this job, one of the first things I did was thank the people who developed and produced Avastin. I paid a visit to the Roche plant in Nutley, New Jersey. I can tell you – their commitment to saving lives is beyond question.

So what’s the bottom line? It all goes back to my three-pronged approach of LISTEN, EDUCATE, and DELIVER.

First, let’s listen to what patients want and need. For example, we have to evaluate prescription drugs from the patient’s point of view. People need access and affordability – but they also need innovation. They don’t just need the most accessible medication – they need the most effective medication.

Second, we need to educate the public about our business so they understand what we do, how much we do, and how we do it. 

We can’t possibly expect people to support us without fully knowing our approach and process and understanding the risks and benefits of the medicines we make. Knowledge is power…and we want patients to have both in order to make informed decisions about their health care.

Along those lines, we need to make sure that patients get the chance to work with the health care professionals who can help them. Lawyers and bureaucrats have a place in our system. But their place must not be standing between Americans and the care they need.

Third, we must deliver. We must continue to deliver the treatments and cures that people want and need. To do this, we must ensure that the government policies in this country encourage innovation and allow the market to reward successful breakthroughs.

Friends, America has taken the lead in creating life-saving drugs for good reason. We are committed to innovation and supportive of scientific discovery. We have confidence in individuals and in the market system. We believe that health care must be focused on the patients it is intended to benefit.

These are big assets to our nation’s health – big advantages that will help us develop and produce the medications that will continue to make life longer, better and happier for generations to come.