2013 Incoming Chairman's Remarks

Robert Hugin

Mr. Hugin serves as Chairman and Chief Executive Officer of Celgene Corporation. He was elected chairman of the Pharmaceutical Research and Manufacturers of America (PhRMA) on April 12, 2013.

I can't tell you how excited and honored I am to be here this morning. I am truly humbled by the opportunity and responsibility of becoming the Chairman of the Board of  PhRMA.

When I joined the PhRMA Board six years ago, I could have never imagined being on this stage this morning.  I joined the PhRMA Board to give Celgene new insight as to the coming changes in healthcare reform and how they would affect our vision and mission. Hopefully, those insights would help us plan more effectively for we would be buffeted by them to survive and prosper.

I will tell you I have learned much, much more about healthcare reform than I had ever imagined when I first came to the PhRMA Board but I have also learned so much more in these years.  I have learned that PhRMA member companies are vibrant and rapidly changing.  I have learned the leadership of the PhRMA companies are impressive leaders, committed leaders, dynamic leaders.  I have learned that the PhRMA member companies and Celgene share a common mission, to make a meaningful difference in the lives of patients all around the world.  I have learned that PhRMA member companies have a common business proposition, that value can't be created if patients don’t benefit first.

I have learned that despite incredible challenges in our companies and in the environments in which we operate all across the world, this association and this industry is incredibly aligned to face those challenges and strive to make that meaningful difference in patients' lives.

I have also learned that we are so fortunate to have an outstanding, first-rate PhRMA staff. 

I have also learned that I have many new friends to make.  It has been a great six years for me.  I have learned a lot and it has been incredibly rewarding.

During this meeting, John Lechleiter and John Castellani have eloquently articulated the vision, the opportunities, the challenges and the progress that has been achieved by this organization.  As we look forward, we absolutely must commit ourselves to advancing the key priorities that have been set and outlined during this meeting.  The priorities that we, together, planned over the past two years and during our two most recent planning sessions, affirmed. And those imperatives are prioritized by what most directly affects innovation and patient access to medicines. 

I think you have heard about those priorities at all our meetings this week and certainly in the sessions today.  We have to protect Medicare Part D.  It is the role model for market-based solutions as a part of the solution in broader areas of health care.  Competition and patient access have produced great outcomes. 

We also have to defend Part B.  We have to ensure that reimbursement rates don't change so significantly that access for patients to those types of medicines that are physician administered are restricted and lead patients back to hospitals and higher costs.  We have to ensure that the 340(b) program is administered effectively and appropriately.  We have to make sure the 12-year exclusivity for biologics is maintained, not just in this country but in all the trade agreements that our country negotiates.

We have to make sure that we support initiatives within all government health programs, including state and federal exchanges and Medicaid to ensure that patient access to  innovative medicines all across this country is not restricted as healthcare reform is implemented.  We have to make sure that policies are incented to encourage adherence to pharmaceutical products.  It is part of the solution for chronic diseases.  We have to fight inappropriate co-payments that restrict access to treatments that are part of the solution to lower costs and create better outcomes.

We do have to continue to fight to repeal IPAB.  It is a misguided provision that focuses on cutting costs without regard to outcomes and patient access to important therapies.  We have to ensure we support the FDA with proper funding so that we have a 21st century regulatory science system that allows us to, in the most cost-effective and rapid way, bring new therapies to patients.  And we have to assertively defend intellectual property all across the globe.  It is intellectual property that leads to innovation, that leads to better patient care, affordable care and better health outcomes, and ultimately to economic prosperity.

It is important that we do all of these things and much, much more.  It is an incredibly challenging time and a lot of this is defense.  We have to have a good defense and we must recognize these challenges as opportunities. We have to execute on this plan.  We must do more and we can do more by building on the progress that John Castellani and John Lechleiter outlined over this past year and before.  We have to refine the narrative.  We have to begin to go on the offense.  We must create a much more positive environment for progressive policies that encourage and incentivize innovation and patient access. 

John Castellani's talk yesterday began some of that initiative in the precautionary principle.  We have to enhance the environment.  We must educate and inform policy leaders all over the country:  The system works.  When you have strong intellectual property, you spur innovation.  Innovation leads to inventions.  Inventions lead to breakthroughs that create value for patients, and our citizens, and our society and create economic value.  And unique to our business, after a limited period of time, our inventions, our innovations, are gifted to society forever through generics that facilitate broad and low-cost access for our society to the greatest medical innovation in the world for decades to come.

We must ensure that policymakers look at the ecosystem of healthcare and healthcare innovation in its totality. To not look at the policies of one sector that happens to have good cash flow and go after winners, when in fact they don't look at the totality of the system.  There are 800 companies that are trying to cure cancer and only two or three will be successful over the next ten or 15 years.  We have to have policies that address progressive, productive incentives for the entire ecosystem of healthcare and medical innovation.

And we have to educate and inform these policy makers all over this country about the facts.  This industry has a proven track record of delivering for the members of this society.  We need to do a much better job.  Many young people don’t spend little time thinking about an AIDS epidemic that ravished this country thirty years ago.  They don't know that the deaths from heart attack and heart failure from 1999 to 2006 are down by 45 percent in this country.  They don't know enough.  They are the same as policymakers.  They don't understand the proven track record of success.  This country is so much better off.

And even though some have said that America is not healthy, some of those statistics aren't right.  We have the highest handgun violence deaths.  If you take violent deaths and that kind of activity out, you have great life expectancy in America.  This industry has delivered value for its citizens.

We heard yesterday from Lieutenant Governor Newsom about the economic impact of the life sciences industry.  It is a crown jewel.  The life science industry is a crown jewel of the American economy.  Its impact is dramatic and he did a more eloquent job than I could ever do, and we need to hear more from policy influencers like the Lieutenant Governor.

It would be devastating to us to have short-sighted policies drive this crown jewel of the American economy to other shores.  And that is what will happen if we don't have a progressive environment that really supports medical innovation and access to therapies.

Most importantly, we must inform and educate policymakers, legislators and the public across this country, the best we possibly can, of the power of our pipelines.  We have the ability and we will, if the environment is right, make a transformational difference in the lives of patients in many diseases with such impact over the next 10 or 20 years.  We will prevent that tsunami from Alzheimer's that will overtake the economics of healthcare because of the innovative solutions that we are working on.  We will change cancer in so many different ways and we will transform many chronic cancers and we will have many cures in cancers, if the right policies are pursued. 

Our pipelines will change the lives of Americans -- lengthen them and improve their quality. Policymakers need to know that our pipelines are the solution to healthcare and the economy, not the problem.  We need to invest more in them.  When they have reimbursement policies that lead us to cut R&D spending, it ultimately increases the cost to our society, and the quality and length of life. It damages by the loss of solutions, economic solutions and not just in healthcare. We won't have as vibrant an economy in this country if we don't support these progressive and appropriate policies to support innovation.

We have a great, great opportunity and we have so much more to do.  And it is because of the progress of the past year that we can build on that and we can dare to be bold and courageous and tackle these very tough challenges. We can move from defense, while staying a very defense-oriented team because we have to as that is the world we live in.  But we must become more proactive and find constructive long-term solutions so we can stop talking about protecting and defending innovation and we can talk about accelerating innovation and expanding innovation and expanding the life curve and amplifying the benefits that we can produce to this society.

Let me close with two final thoughts.  First, I want to thank you in advance for your support and engagement over the coming year.  Together we can do great things and we must do great things for our healthcare system and our economy, failure is not an option, we must be aligned.  We must be focused and we must work together to tackle these challenges and opportunities.

But, most importantly, I want to close by thanking John Lechleiter for his leadership.  He has been, and I have seen it firsthand, a strong and passionate leader of PhRMA.  He has provided us with an insightful vision for the future and he, along with John Castellani, have helped us navigate some difficult challenges this past year, whether it be the fiscal cliff, the very successful PDUFA reauthorization, sequestration, the beginnings of the implementation of healthcare reform or many, many other challenges.

John Lechleiter has been a tireless and highly effective advocate for medical innovation and for intellectual property strengthening.  He has been a solution-seeker, a collaborative leader, and a team leader.

So John, from me personally, and from all of us here, I want to offer you a heartfelt thank you and immense appreciation for all that you have done.

I am incredibly excited.  It is hard for me to believe that I am here but I really do look forward over this coming year to work closely with all of you as we really strive to make a difference in the lives of patients.

My last thought is that the people in our laboratories, the people out in the field, and most importantly, all the patients that we seek to serve are counting on us.

Thank you very much.

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