Castellani: A Long-term Vision for Innovative Biopharmaceutical Research Sector Needed

John Castellani's 2013 Annual Meeting Remarks

04.11.13 | By

John Castellani, PhRMA’s president & CEO, opened today’s afternoon session of PhRMA’s Annual Meeting in San Diego in a speech calling on policymakers, healthcare stakeholders, biopharmaceutical industry critics and sector allies alike to recognize and leverage the value of innovative medicines.

Castellani focused on the need for cooperation and vision to find innovative healthcare solutions – solutions that both address our short-term cost issues but that also encompass a pathway to meeting the long-term healthcare challenges we face.  He specifically invited :

“Our critics and allies alike to join with us to search for solutions that work in the real world and for real patients…[This] means solutions that help patients get innovative medicines faster.  Solutions that stimulate and fund more R&D.  Solutions that foster risky investment. [And] solutions that help us meet and overcome the enormous healthcare challenges ahead.”

One solution in particular – recognizing the short- and long-term value of innovative medicines – is critically important.  Castellani specifically pointed to the evolution of diabetes treatments as an example. 

“Uncontrolled diabetes… can lead to many complications including amputations, kidney failure, heart attack and stroke.  These complications are bad for patients and costly. The average cost of amputation surgery is $40,000. A single year of kidney dialysis runs about $83,000. But a year’s supply of medicine that can help control diabetes averages around $2,400.

“More than the cost, however, I hope we can all agree that it is unquestionably better for patients to treat and control their diabetes, than to amputate or endure endless dialysis.”

Castellani believes that important progress is finally being made in recognizing the long-term value of innovative medicines and their power to help bend the healthcare cost arc.  He noted that after years of work, the U.S. Congressional Budget Office (CBO) is now recognizing the role innovative medicines plan in limiting healthcare costs and that they have changed the cost and value of medicines are calculates.

“This is big.  For the first time, CBO is specifically accounting for the savings from medicines that reduce the need for other costly medical services, like hospitalizations, acute and long-term care.

“The new methodology incorporates a 0.2 percent decrease in spending on medical services for every one percent increase in the number of prescriptions. And, while this may seem small, it represents a sea-change in government thinking. CBO has come around, in a small way, to recognizing what all governments must face if we are to avoid pushing the cost of untreated, un-managed disease down the road.

“The bottom-line is that no nation, no matter how wealthy, can provide innovative health care for its citizens unless it values wellness, prevention and disease management at least as much as it values acute care.

“Similarly, no nation can afford to ignore the looming costs of chronic diseases like diabetes, hypertension and Alzheimer’s disease by dis-incentivizing investment in the innovative therapies that can help reduce those costs.”

Understanding the potential power of innovation and the value of medicines, Castellani believes, has driven biopharmaceutical research companies to make critical R&D investments.  In fact, since 2000, PhRMA member companies have invested more than half a trillion dollars in innovative biopharmaceutical R&D.  This is an investment that continues to grow highlighted by the announcement that last year PhRMA member companies invested an additional $48 billion in new R&D and in a difficult economy.

Concluding his remarks, Castellani proposed a test for measuring the value, utility and the pragmatism of any healthcare policy proposal:

“At the end of the day, whether a proposed [healthcare] policy makes things better for patients – meets their needs and fulfills their hopes for a healthier future and longer life – is the only test that counts.

“…does a proposal help an HIV/AIDS patient get access to medicines needed to manage the disease?  Will it foster the R&D needed to tackle the looming Alzheimer’s disease crisis?  Will it help reduce the enormous cost of treating chronic diseases by providing innovative solutions and treatments?

“…In other words: will a proposed policy ‘solve’ a short-term problem by undermining long-term and on-going progress?”

Vision and a clear focus on fostering the research needed to provide the innovative medicines we will require to meet the healthcare challenges ahead are essential.  The biopharmaceutical research sector is committed to the on-going search for solutions that work for patients but it doesn’t operate in a vacuum.  The sector’s ability to succeed requires policymakers create a scientific, regulatory, investment and economic eco-system that fosters innovation and R&D. 


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