PhRMA Statement on NEJM Study

PhRMA Statement on NEJM Study

Washington, D.C. (June 10, 2010) — Pharmaceutical Research and Manufacturers of America (PhRMA) Senior Vice President Ken Johnson today issued the following statement:

"Prescription medicines – which represent a small share of overall health care costs in the U.S. – play an essential role in keeping patients healthy, often by helping patients and their physicians effectively manage chronic illnesses. Medicines prove their value every day by saving lives and improving health and advances in medicines have greatly improved medical care. Many studies also have found that use of medicines helps patients avoid unnecessary hospitalizations and nursing home admissions, and also can help achieve savings on overall health care costs.

"For example, a 2009 report published in Health Services Research found that Medicare beneficiaries' use of prescription medicines significantly reduced Medicare spending for inpatient hospitalizations. In a separate study, researchers concluded that every $1 spent by Medicare beneficiaries on prescription medicines lowered their hospital spending by $2.06. Numerous other studies have reported similar results, particularly for patients with chronic illnesses such as diabetes, hypertension, and high cholesterol.

“The new study in the New England Journal of Medicine does not report offsets in a portion of the Medicare prescription drug insurance program during its second year of operation. No one study, however well done, is definitive. This study needs to be considered in the context of the large body of academic research on the relationship between medicines, health outcomes, and cost savings.

"The development of new medicines is also crucial to achieving future savings. For instance, a recent report from the Alzheimer's Association estimated that development of a new treatment that delayed the onset and progression of Alzheimer's disease could save Medicare and Medicaid $210 billion by 2030.

"With regard to regional variation in Medicare spending, the New England Journal of Medicine study identifies new information about geographical differences in spending for innovative treatments and finds less variation than for other types of medical care. In 2009, the Centers for Medicare and Medicaid Services, based on analysis it commissioned from Acumen LLC, concluded that variation in beneficiaries' use of medicines among regions was 'relatively modest' and did not find 'enough regional variation in either price or utilization of prescription drugs to warrant any kind of geographic adjustment to the national average monthly bid amount.' We welcome additional research that helps provide a better understanding of the sources of such variation and its relationship to the quality of health care for Medicare beneficiaries.

"Medicare Part D was designed to achieve better access to needed care and to reduce beneficiaries’ out of pocket costs. These goals are being accomplished. Studies show that Part D has improved adherence among seniors, while significantly reducing their out-of-pocket costs. What’s more, Part D has cost far less than initially projected, according to government agencies."


The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country’s leading pharmaceutical research and biotechnology companies, which are devoted to inventing medicines that allow patients to live longer, healthier, and more productive lives. PhRMA companies are leading the way in the search for new cures. PhRMA members alone invested an estimated $50.3 billion in 2008 in discovering and developing new medicines. Industry-wide research and investment reached a record $65.2 billion in 2008.

PhRMA Internet Address: www.phrma.org

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