Press Release

PhRMA Responds to New York TImes

PhRMA October 14, 2013

Washington, D.C. (October 14, 2013) — Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO John J. Castellani issued the following statement today:

Elizabeth Rosenthal’s New York Times article, “The Soaring Cost of a Simple Breath,” selectively reports facts, misrepresents the role of medicines in health care and fails to identify the underlying challenges facing patients with asthma and other chronic conditions. The need to improve patient access to life saving medicines is worthy of serious dialogue, but the article’s obvious bias obscures important facts rather than contributing to that important conversation.

According to the American Lung Association, asthma causes about 440,000 hospitalizations, 2.1 million emergency room visits, and about 3,400 deaths a year. In total, asthma costs about $56 billion a year, including $5.9 billion in indirect medical costs. Prescription medicines play a vital role in helping control and/or prevent these avoidable health care costs while greatly improving patient health. For example, a study in the journal Clinical Therapeutics found the use of newer inhaled corticosteroids for one year reduced the risk of hospitalization by 50%, the number of outpatient visits by 26%, and monthly health care costs by 24% per patient.

The author focused on concerns about out-of-pocket costs for medicines; we share those concerns. As Ms. Rosenthal pointed out, many insurance policies offer only partial coverage for medicines. To help address this disproportionate cost-sharing, biopharmaceutical research companies offer patient assistance programs and also support the Partnership for Prescription Assistance (PPA), which has helped nearly 8 million people access free or nearly free medicines.

Rather than seriously exploring these challenges and pointing patients to resources to offset high cost-sharing, the article focused on conspiracy theories, such as the false notion that pharmaceutical companies choose to sell medicines as prescriptions rather than over the counter so that insurers can pick up the bulk of the cost.

The article also inaccurately characterizes the differences in access and pricing of medicines across countries, overly simplifying the comparison between U.S. medicine prices and those in Europe and ignoring the fact that many patients are denied access to effective new treatments in other countries. A 2011 study published by the London School of Economics found that the price differences between the U.S. and Europe are not as significant as originally thought. While they do exist, cross national price differentials remain roughly in line with differences in per capita income. Also, the data often does not account for the privately negotiated rebates and discounts made between third parties and manufacturers. In fact, many studies use the “list” or wholesale price when making cross-national comparisons and do not account for the prices that U.S. insurers are actually paying, therefore exaggerating the overall price difference margin.

A study by Tufts University found that between 2000 and 2005, 73 percent of medicines were launched in the U.S before becoming available in Europe, and this is largely due to the lack of price controls in the U.S. Ms. Rosenthal sees these price controls in Europe, where the government sets the prices for medicines, as a cost savings solution whereas they are actually a barrier to patients who need access to vital medicines. Restrictive European formularies are also a significant problem for patients.   

The marketplace for medicines in the U.S. is uniquely structured to balance access and long-term affordability. Medicines are mostly purchased in a national market by very large, powerful, sophisticated purchasers (i.e. insurance plans) who specialize in buying medicines and making aggressive use of various tools to achieve savings, driving utilization to the medicines for which they can negotiate the lowest prices. As a result of these market dynamics, and generic drug utilization, which is projected to account for 87 percent of all prescriptions filled by 2017, costs are growing more slowly than other health care costs. In fact, IMS Health projects that future growth in prescription drug spending will remain at historically low levels, and will continue to grow more slowly than overall health spending through 2017.

Nowhere is this slowing in medicine costs more evident than in the Medicare Part D prescription drug benefit, where expanded access to medicines has resulted in better outcomes and lower costs. Earlier this year, the Congressional Budget Office (CBO) reported that lower projected costs in Part D are the single biggest factor responsible for lower overall Medicare spending projections this year, even though Part D is only about 1/10th of overall Medicare spending. CBO is now also recognizing, for the first time, savings from the increased use of medicines that reduce the need for other costly medical services.

The article also mischaracterizes patents and patent settlements, which, contrary to Ms. Rosenthal’s portrayal, benefit patients by bringing generics to market before the patents for brand-name medication expire. A recent report by the IMS Institute for Healthcare Informatics provides evidence that patent settlements actually save consumers money because they allow for generics to enter the market on a certain date and generally before the patent on the innovator medicine expires. The analysis found that dozens of generic medicines were able to enter the market before innovator patents expired, saving consumers and the federal government more than $25 billion dollars over the last eight years.

Yet another example of the errors in this article is the false statement that the Food and Drug Administration (FDA) “handed out patents to reward drug makers for conducting formal safety and efficacy studies on old drugs that had not been so scrutinized.” The FDA does not issue patents; the FDA reviews safety and efficacy data to determine if medicines should be approved for patient use.

The U.S. leads the world in drug discovery and development, which is a result of unique U.S. public policies that encourage an innovative environment. America’s biopharmaceutical companies have invested over $550 billion in research and development since the year 2000, including nearly $49 billion last year.

PhRMA would welcome a more serious conversation with the New York Times based on an objective assessment of the facts about the role of medicines in U.S. health care.

The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country’s leading innovative biopharmaceutical research and biotechnology companies, which are devoted to discovering and developing medicines that enable patients to live longer, healthier, and more productive lives. Since 2000, PhRMA member companies have invested approximately $550 billion in the search for new treatments and cures, including an estimated $48.5 billion in 2012 alone.

Find PhRMA Online:

For information on how innovative medicines save lives, visit:

For information on the Partnership for Prescription Assistance, visit:

For information on ensuring the flow of medicines during public health emergencies, visit