Annual meeting update from PhRMA

Annual meeting update from PhRMA

04.14.11 | By Kate Connors

[11:00 a.m.] At the PhRMA Annual Meeting, we set up a "listening gallery," a wall on which participants were invited to share their thoughts on what innovation truly is.

Here are a few samples.

Innovation is:

- turning healthy ideas into healthy people
- hope for patients
- jobs (from Governor O'Malley)
- for patients and for my family
- our team, our dream
- doing the important things better
- success for patients
- not a given
- hope for a better future
- opening your mind to the new
- what happens today for a better tomorrow
- ours to lose!

Be sure to check out pictures from the annual meeting at

[10:34 a.m.] CNN's Fareed Zakaria closed the PhRMA Annual Meeting with a positive message about the future of America's economy.

Highlighting the world's economic challenges of the past - and discussing the ways in which various countries have recovered - Zakaria stressed that America is now on the mend, despite public sentiment.

"If you were to ask people what they think of the American economy, there's an enormous amount of caution, pessimism, a sense of wariness."

But that's generally no longer reflective of reality, he said: "The data show the economy is coming out of the recession robustly. The U.S. will grow faster than any large industrialized country in the world this year. It will once again be the engine of growth."

That's not to say, of course, that companies, governments, and American people aren't still feeling the effects of the downturn, but that we are once again moving toward stability.

It's no secret that the biopharmaceutical research sector is a major contributor to America's economy, even during the downturn. With more than 650,000 employees in the sector throughout America, biopharmaceutical companies support more than 3 million jobs. Contribution to GDP from the sector is roughly $115 billion.

That's why Zarakia's speech was a strong way to end the meeting. So many stakeholders from throughout health care came together at the PhRMA Annual Meeting to evaluate how we can help the economy while helping patients.

Zakaria's message? We're on our way: "We are the most innovative country in the world, we are the most dynamic country in the world, and we are going to find solutions that no one else will find."

Day Two
[10:03 a.m.]

Public health advocates converged on a panel this morning at the PhRMA Annual Meeting to discuss the importance of prevention in the battle against chronic disease. Noting that 75 cents out of every health care dollar is spent treating chronic diseases, moderator Ken Thorpe, Executive Director of the Partnership to Fight Chronic Disease, led the discussion.

Christine Ferguson, Director of the STOP Obesity Alliance, noted that while we've discussed innovation throughout the meeting, we don't always mean medical breakthroughs, but rather can also refer to "the kinds of innovations that are going to be necessary to address the problem" of risk factors for chronic diseases, such as obesity.

John Robitscher, Executive Director of the National Association of Chronic Disease Directors, pointed to government success on this issue: "The Centers for Disease Control and Prevention has provided a lot of innovation in the field of getting communities organized for better nutrition, smoking cessation, and other activities to promote better health."

Ferguson stressed the need for improved control of chronic disease - and its related costs - as a part of the big picture: "If we don't do something about this soon, we will not have a healthcare system left."

Robitscher agreed: "If we spent as much money on prevention as we spend on medical care, we wouldn't be on this panel today."

Matthew Myers, President of the Campaign for Tobacco-Free Kids, added as an example that progress in preventing children from smoking has led to massive future healthcare savings.

All of the panelists concurred that the biopharmaceutical sector can be a major contributor to chronic disease prevention and control. As Ferguson noted, "All of the accomplishments made in the pharmaceutical sector won't be effective unless there's a better infrastructure to support health."

[5:36 p.m.] Three governors came together this afternoon - former North Carolina Governor Jim Hunt, Maryland Governor Martin O'Malley and Virginia Bob McDonnell - to discuss their states' past, current and future efforts to support a biopharmaceutical sector.

McDonnell and O'Malley outlined their strategies, from tax credits to investment in STEM (science, technology, engineering and mathematics) education. Many of their programs and policies were similar, and they agreed on why: Because many of them were modeled after those implemented more than two decades ago by former Governor Hunt.

O'Malley said it outright: "We borrowed, some would say expropriated, the model of North Carolina's biotechnology cluster."

As Hunt said, he led North Carolina's efforts to grow the sector in 1984, making it the first state to do so: "Other states may have done a better job since then," he said, "but we were glad to do that. In North Carolina, we really believe in this industry."

He explained why: "This industry is the most important industry in America. Why do I say that? I say that because of the good it does. It didn't take me long after I was elected governor to realize that the best opportunities we had for growth were in the biopharmaceutical sector. I recruited companies to come to North Carolina for their U.S. headquarters and it was the best idea I ever had."

These sector-stimulating jobs are to good effect. The three states combined in 2008 (the most recent year that data were available) enjoyed biopharmaceutical company employment of more than 70,000 jobs, with more than 270,000 jobs supported overall by the sector.

McDonnell made clear that Virginia's efforts are not just for jobs today, but for growth in the future: "The future of jobs is clearly in technology, including biotechnology."

The governors agreed that despite their best efforts at the state-level, a lack of support at the federal level could, as O'Malley said, "drive innovation abroad."

[4:17 p.m.] This afternoon's panel featuring four former biopharmaceutical research company CEOs, shed some light on the challenges faced by those who are currently leading companies during a time of economic struggles and policy and regulatory challenges.

There is a common misconception that there are two branches in the biosciences: biotech and pharmaceuticals, when in effect those two fields have merged over the last decade or so. This misconception also continues to the assumption that biotech companies are small and pharmaceutical companies are large.

In reality, just as pipelines are mixed, so are the companies. Interestingly, the former CEOs agreed that the new reality of the business model - such as the evolving science - has led to a sector in which companies need to be, in effect, both large and small.

Fred Hassan, former CEO of Schering-Plough, began the dialog with his theory that "whether a CEO is a scientist or not, he or she needs to have a passion for science and develop a culture of sharing, in which anyone can bring an idea to the table."

Later, he elaborated, acknowledging that size can be a barrier for some companies to cultivate such a climate. "We need to change the way we think and the way we act. We need to recognize that a lot of the work gets done at the front line. The underlying goal should be to operate as a small company within a big company, yet have the advantages of a big company, like when confronting a 90 percent failure rate in Phase 2 and Phase 3 clinical trials. But ultimately, you still need a fluid culture where information moves easily."

Roy Vagelos, who had been the CEO of Merck, added that Phase 2 and Phase 3 lead to significant loss of resources for companies - whether in the form of the investment expenses lost or in terms of time and intellectual capital.

Bob Ingram, one-time CEO of GlaxoWellcome, conveyed another way that clinical trial success or failure means to company executives: "When you fail, in Phase 2b let alone Phase 3, you have to look in the mirror and ask yourself, 'What did we do wrong and what didn't we do?' I've never met people that lead these companies who didn't want to bring better medicines to patients."

Sidney Taurel, formerly of Eli Lilly, added that as the science is changing, by necessity, "Biopharma is becoming more diversified, getting involved in substituting or supplementing what venture capital was doing and potentially working on more basic research, for example."

Vagelos added a positive message to the conversation: "If you have strong leadership and strong research, then with all of the science out there, you can meet that unmet medical need."

[3:23 p.m.] PhRMA President and CEO John Castellani had the daunting task of following Duke University's Mike Krzyzewski today at the annual meeting, and while Coach K emphasized the importance of biopharmaceutical research companies working together, Castellani reminded us of what we, as a community, are facing.

Together, he said, we play a vital role "in saving lives, boosting performance of the healthcare system, and creating an economy that produces economic growth and job creation."

Because of this important role, he said, "manufacturers, patient groups, and other stakeholders should not have to constantly defend against poorly thought out short-term budget cuts and regulations, which raise long-term costs and put the brakes on progress."

As an example, Castellani referred to reimbursement, which has been a common theme at this meeting, reflecting its importance to the sector. He called it a system that was designed for acute care, when today's focus should be on disease prevention and control. He argued that it is a short-sighted system that does not appreciate how investment in care today can prevent tomorrow's healthcare costs.

This is something he believes that we can - and should - change. "Instead of being relegated to arguing about reimbursement rates, we have to take the lead in shifting the debate. We have to move it toward creating a system more focused on chronic care, that more honestly analyzes the true costs of treatment both long term and short term, and which gives a true accounting of benefits and risks. We can't afford to continue a system that, like Oscar Wilde's description of a cynic, 'knows the price of everything and the value of nothing.'"

Ultimately, it comes down to two things: patient access to the best care possible and the continued development of tomorrow's groundbreaking new medicines.

To put the impact of that development work into perspective, Castellani spoke of hearing the CEO of GE speaking recently. The executive had announced that the company had increased its R&D budget up to five percent of gross revenues last year - admittedly an admirable accomplishment, but one that is dwarfed by the biopharmaceutical sector's R&D budget, which reached 20.5 percent of revenue last year.

There are challenges throughout the sector, from unsuccessful clinical trials to funding. But Castellani's remarks reminded me of another challenge: spreading the word of the many values of the biopharmaceutical sector.

[1:49 p.m.] In the panel about "Bringing Science to Life," moderator Alan Leshner, CEO of the American Association for the Advancement of Science, asked the speakers what various companies can do to make research more effective and more efficient in order to meet the common goal of groundbreaking new therapies.

Garry Neil, Corporate VP in Johnson & Johnson's Office of Science and Technology, agreed that efficiencies are needed now more than ever: "We've had to recognize that science is evolving and changing, and we've been configuring ourselves to take advantage of that. We can always be more efficient."

Alkermes CEO Richard Pops pointed out the challenges faced by a company that needs to raise $1 billion in order to pursue clinical research, commenting that "we don't have the luxury to be inefficient."

After all, said Martin Mackay, President of R&D for AstraZeneca, "People accuse us of being risk-averse, but they're wrong. This entire business is about risk."

Panelists also addressed the need for a strong biopharmaceutical upcoming workforce in order to better support the research of the future.

The promise remains strong, Pops said: "It's hard to be pessimistic about the future of the industry when you meet the young scientists throughout academia and see what amazing work they're doing."

Mackay foresees a promising future for those scientists and what they might accomplish: "With the tools and technologies that we have now and the way that we approach drug discovery, if a biologist really wants to make a difference in terms of discovery and development of new therapies, the industry is the way to do it."

He also added that a future workforce won't just benefit the private sector directly, but also indirectly by strengthening the government and academic research capacity, which plays a strong role in the collaborative research ecosystem on which America's medical innovation leadership is partially based.

[10:42 a.m.] Earlier today, sharing his experience of his first week in office, New Jersey Governor Chris Christie referred to the importance of private businesses, such as biopharmaceutical companies, when the state was confronting a massive deficit.

Rather than attacking private businesses, Gov. Christie said, he focused on the economic benefit that they provide: "It's not government that creates jobs, it's business."

He specifically highlighted the role of the sector, which employs roughly 45,000 workers throughout the state and supports a total of nearly 200,000 jobs and which "provides so much economic industry and life-saving treatments for the citizens of New Jersey and across the world."

He also spoke of the role that the sector can play in the coming years: "Our economic future and our ability to innovate for a prosperous future will depend in large measure on the continued growth and success of the pharmaceutical industry."

Unfortunately, he said, not all of our policymakers share his opinion: "To impose more regulation on the pharmaceutical industry is an insane approach," he said to laughter. "People's entrepreneurial spirit and innovation must be let loose to succeed. Let's be bold, let's be strong, let's be forward-looking and put the interests of future generations before our self-interest."

[10:30 a.m.] AstraZeneca CEO David Brennan spoke with CNBC's Squawk Box this morning at PhRMA's Annual Meeting. During the conversation, he addressed the threat of government price controls that President Obama referenced during yesterday's speech on deficit reduction.

To see what he had to say, check out AZ Health Connections here.

Watch the interview here:

[10:05 a.m.] Innovation Isn't Enough: The Challenge of Implementation

During the annual meeting's first panel, speakers discussed the challenges of making the best use of innovations that are the result of biopharmaceutical R&D.

Moderator Martin Murphy, CEO of the CEO Roundtable on Cancer and Chairman of the Board and CEO of AlphaMed Consulting, asked: "That which is done so successfully by the biopharmaceutical industry - how can we leverage it so that it can be used to the best benefit of patients?"

James Firman, CEO of the National Council on Aging, lauded innovation, but noted that "the missing piece of the U.S. healthcare system is health management programs and delivery systems - individually tailored approaches that better empower the patient." He added, "Making patients self-manage would benefit the entire healthcare system."

Similarly, Gail Hunt, President and CEO of the National Alliance for Caregiving, looked toward collaboration not just between industry, government and academia, but also between companies and caregivers, suggesting that "industry support of the patient and family" could positively alter the treatment paradigm.

Nancy Brown, CEO of the American Heart Association, spoke about how they focus on implementation of innovation: "We're trying to understand what makes people take control of their own healthcare. We look for what we can do together to make that happen. Research is the engine of what everyone cares about, but we also have to truly understand the application of science."

Speaking about the needs of people with chronic diseases, Marc Boutin, Executive Vice President and COO of the National Health Council, said: "The United States is used to being the first and the best. But we're last when it comes to implementation of healthcare. It's not just about innovation, it's about tearing down the barriers that we have in place."

Murphy concluded about companies, healthcare providers and patients: "We are all on the same team."

[9:45 a.m.] Delivering the opening remarks at the PhRMA Annual Meeting, sanofi-aventis CEO and PhRMA Chairman of the Board Chris Viehbacher delivered some thoughtful commentary about the importance of focusing on prevention and disease control for the well-being of patients and to avoid heightened healthcare costs down the road.

"Unless we move to a true health care system, rather than the 'sick care system' we have now, the system is not sustainable," he said.

"We'll spend tens of thousands of dollars to make a sick patient well, but we won't spend money to keep them well in the first place," he added.

At the same time, we must balance this with a system that supports innovation, he stressed, so that we have the potential for groundbreaking new medicines in the future.

He reminded attendees about Germany's experience and cautioned against letting the United States follow the same path: "In the 1980s, Germany was the world's pharmacy." However, without policy and regulatory support, former leading German firms have faltered. That's why, he said, we need support in the U.S.

His comments mirrored one note written in the "listening room," where meeting attendees can write their thoughts about what innovation is: "Innovation is the American spirit."

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