More about the Peter Jennings Special Report on Prescription Drugs

July 01, 2002

Research and Development | The Value of Medicines | Me-Too Drugs  | Intellectual Property

PhRMA was pleased to work with Peter Jennings and his producers over the last 10 months to provide information about the value of medicines. Most Americans already know the value of medicines - how they can help calm a child's fever, enable an AIDS patient to return to work or even stop a stroke in midstream. However, with a one-hour limit on television, Peter Jennings' team was unable to use all of the information we provided. For a fuller discussion of the pharmaceutical industry's commitment to leading the way in discovering and developing new medicines, please read on.

I. Research and Development

The research and development of a drug is a long, risky and expensive process. Many people are surprised to learn that:

• According to the Tufts Center for the Study of Drug Development, it takes about $800 million to bring just one new drug to patients.
• Researchers spend 10-15 years developing and testing a medicine before it receives FDA approval.
• Most medicines fail in laboratory testing. For example, of the 10,000-15,000 compounds screened in the lab, only one ever gets to the medicine chest.

How does the NIH fit in? Don't they discover most of the new drugs?
We are often asked what role the government, specifically the National Institutes of Health (NIH), plays in drug development. America's pharmaceutical companies are very supportive of the government's investment in basic research - it's an important complement to the basic and advanced research our companies do. Nonetheless, the government does not discover or develop the vast majority of drugs that are approved for patients today. A few facts:

• A recent study by the NIH found that only 4 out of 47 best-selling drugs were developed in part with NIH funding.
• The pharmaceutical industry spends more than $30 billion annually on research and development, far more than the entire NIH budget of just over $20 billion.
• The 32 new medicines added to the nation's medicine chest in 2001 would not exist today if Americans only looked to the NIH for pharmaceutical research and development.

II. The Value of Medicines - Do you think it's worth the cost?

Much of the national debate today is over the cost of medicines. Many medicines are expensive, especially for those who don't have insurance coverage. That's why the industry so strongly supports enacting a prescription drug benefit as part of Medicare. Seniors should have expanded access to medicines. Congress should expand Medicare, which has always covered doctor care and hospitalizations, to include prescription drug coverage and fit the needs of seniors in the 21st Century.

But, we need to put the cost of medicines into perspective. Americans spend only 9 cents of their health care dollar on drugs. In many cases, medicines are the best effective and cost-effective treatment. For example, a cholesterol-lowering pill that costs less than $3 per day can help many people avoid coronary bypass surgery, which can cost as much as $75,000 and require months of recovery. The value of cholesterol-lowering medicines is so clear that the federal government announced that 36 million people should be taking the drugs in order to prevent strokes and heart attacks.

So what's behind "rising drug costs?"
Mainly, it means that more people are using more medicines than ever before - the pharmaceutical industry continues to discover medicines that a decade ago were unthinkable. For example, in 1990, there were no medicines to treat Alzheimer's disease. Today there are four with more than 20 more in development. Doctors and patients alike turn to medicines as the first, and best, course of treatment for millions of people. America's pharmaceutical companies today have more than 1,000 medicines in development, including 400 to treat cancer. Our goal is to give doctors and patients many more tools to fight disease than they have today.

III. "Me-too" Drugs

But aren't a lot of new drugs just variations on existing drugs - not real breakthroughs?

Breakthroughs don't happen every day, even though it's always the goal. But pharmaceutical companies have come up with a remarkable number of breakthroughs. For example, just in the past few years, America's Pharmaceutical Companies have discovered:

• protease inhibitors that have given many AIDS patients a future;
• a drug that can prevent debilitating brain damage in stroke;
• drugs that prevent nausea in chemotherapy patients;
• drugs that lessen the severity and frequency of MS attacks.

Other new medicines differ from existing medicines in important ways that give doctors and patients more options. They may have different side effect profiles, for example, and thus be better for some patients. Since no two individuals are alike, it's good for doctors to have a variety of medicines available to treat the same condition. It's very common for a patient to try one medicine, not like the result or the effect and then ask the doctor if he/she can try something else. Most patients and doctors appreciate having the choice.

In addition, drugs that represent incremental improvements over existing drugs may lead to future leaps in medical progress. While pharmaceutical companies always want to find the "cure," the science today may only enable us to come up with a new or different treatment…and that additional choice is still a great benefit for many patients.

IV. Intellectual Property

Why are patents so important?

Patents are crucial to the discovery process of innovative medicines. It often takes more than 15 years and more than $800 million to bring a new medicine to consumers. Patents give the research-based pharmaceutical companies the opportunity to recover the high costs of researching and testing new medicines. Patents are an essential reward from the U.S. government for the inventor of a new product, and provide the opportunity for a return on the innovator's long-term, high-risk investment that ultimately, leads to more research and more cures.

Why do many drugs have more than one patent?

Many drugs have more than just one patent because most drugs represent more than one kind of invention. The recognition by the U.S. government through a patent that each of these inventions is important to advancing technology provides a continued incentive for companies to innovate.

America's Pharmaceutical Companies don't stop trying to improve their inventions just because they receive approval from the FDA. In addition to continuing to conduct post-marketing safety tests for the FDA, pharmaceutical researchers continue to refine their inventions. If through the process they discover a new way to improve a product, the companies will put the new and improved version of their drug on the market. Sometimes that newer version represents a new invention that the patent office deems worthy of a patent, but regardless, any new patents on the improved version of the drug do NOT prevent a generic manufacturer from producing the older version of the drug when it comes off-patent.

For more information on patents, visit innovation.phrma.org.

V. Generics

Aren't generics a better - and cheaper - option?

Generic medicines play an important role in the health care system. Because they are copies of older medicines, they offer greater choice and competition in the marketplace. But because a generic medicine may not be the newest or best treatment, doctors and patients should decide whether a generic medicine is the best treatment rather than have a government or employer mandating generic use.

Fortunately for patients, the generic industry is thriving today. After the patent(s) on an innovative brand name medicine expires, generic companies may manufacture and market a copy of the medicine simply by proving their product is "bioequivalent," meaning that it is absorbed into the body at the same rate as the brand name drug and produces the same effect. In 1984, Congress passed a law making it easier for generic companies to get their drugs on the market as soon as patent(s) on the original drug expire. Since then, the percentage of prescriptions filled by generics has risen to nearly 50 percent. As generic companies do little research, they can afford to sell their copies more cheaply. But it's important to remember that without research-based companies working to discover new medicines, there would be no breakthroughs and no generic drugs.

Right now, research-based companies are working on more than 400 medicines for cancer, 122 for heart disease and stroke, 24 for Alzheimer's, to name just a few. A patient's best hope for a future cure or treatment is the innovative brand name industry.

Today, some in Congress want to change the 1984 law to make it easier for generics to come to market, even before patents on the brand name drug have expired or the courts have spoken. They argue incorrectly that the pharmaceutical industry is granted special patent rights, when in fact the 1984 law authored by Senator Hatch and Representative Waxman actually stripped the pharmaceutical industry of many patent protections granted to every other U.S. industry.

Legislation now in Congress could also lower the standards for approving generic drugs. This means that patients might not be able to have the same confidence in the safety and effectiveness of these drugs.

The bottom line is that the legislation would chill the incentives to invest in costly drug research. This could mean fewer cures in the future. Small wonder that physicians, who need new medicines to meet the needs of their patients, overwhelmingly oppose any weakening of patent protection for prescription drugs. A recent poll found two-thirds of all doctors believe weakening of drug patents will hurt research, especially research on cures for rare diseases.

VI. Drug Safety

Are drugs really safe?

Every prescription medicine has risks as well as benefits. That's why they must be prescribed by physicians and dispensed by pharmacists. In order to be approved, drugs must undergo years of testing to ensure that any risks are outweighed by the benefits to patients. Americans have the safest drug supply in the world, because the U.S. Food and Drug Administration has the most stringent standards. And the FDA and pharmaceutical companies constantly monitor medicines after approval to make sure they remain safe.

VII. Marketing and Advertising

If pharmaceutical companies stopped advertising and marketing, wouldn't the price of drugs be reduced?

No. There is no direct relationship between advertising of prescription drugs and price increases. Moreover, reducing advertising and marketing would decrease the amount of information doctors and patients would receive regarding new treatments. Finally, it's important to recognize that more than half of pharmaceutical company marketing expenditures go toward providing free samples of medicines that physicians give to patients.

Because consumers are increasingly taking charge of their own health care, pharmaceutical companies also advertise medicines directly to consumers. Direct-to-consumer (DTC) advertising empowers consumers with information about health conditions and possible treatments. DTC improves public health by getting patients into doctors' offices. A 1999 survey by Prevention Magazine found that, as a result of DTC advertising, nearly 25 million Americans talked to their physicians about a condition they had not discussed before. DTC advertising also addresses the serious problem of underdiagnosis and undertreatment of disease. For example: 18 million Americans don't know they have high blood pressure; 6 million don't know they suffer from diabetes, and a third of those with major depression don't seek treatment. Patients who discuss a drug they have seen in an advertisement don't necessarily get a prescription for that drug. Often, doctors prescribe a different treatment.

To reiterate there is no evidence that promotion and advertising lead to higher drug prices. In fact, advertising promotes competition, which traditionally lowers prices.

VIII. Access, access, access

What is the pharmaceutical industry doing to get drugs to those that can't afford them?

Prescription medicines are the biggest bargain in health care. But it's true that many people, especially seniors, can't afford the medicines they need to stay healthy and active. That's why the pharmaceutical industry supports prescription drug coverage for seniors. It's the industry's number one priority, and we hope Congress will pass a bill this year. In the interim, several pharmaceutical companies have launched discount programs or drug benefit programs for seniors. And many companies sponsor patient assistance programs that give free prescription medicines to seniors and others who can't afford them. Last year, these programs helped 3.6 million patients fill 10 million prescriptions. To find out how to contact the company patient assistance programs, look at our home page for the Directory of Pharmaceutical Patient Assistance Programs.