Press Release

PhRMA Statement on AARP Report

PhRMA March 29, 2011

Washington, D.C. (March 28, 2011) — Pharmaceutical Research and Manufacturers of America (PhRMA) Deputy Vice President Karl Uhlendorf issued the following statement:

“AARP again is ignoring the key facts about the marketplace for prescription medicines.

“Growth in spending for prescription medicines has slowed to historic lows. According to IMS Health, prescription drug spending will grow between three percent and five percent this year, and at 3.5 percent annually through 2013.

“The prices for the ‘top 25’ drugs highlighted in the last AARP report fell by 21 percent from 2006 through 2009, according to researchers at IMS Health and MIT. This reflects the mix of brand and generic drugs used by patients.

"Similarly, the same researchers found that for the top 10 therapy areas in Medicare Part D, average cost per day fell from $1.50 in 2006 to $1.11 in 2009, and is projected to fall to $.54 by 2014.

”What’s more, between 2004 and 2009, medicines represented 10 percent of the growth in total health care spending, compared to 90 percent for all other health care services. This is a decline from the prior decade, when medicines accounted for 14-16 percent of health care spending growth.

“Any analysis of prices must take into account the mix of brand and generic medicines that patients actually use. This approach reflects the way the market works and captures the savings that patients experience when an innovator medicine becomes available as a generic.

“AARP acknowledges that many medicines in their analysis have a generic version available, yet their analysis fails to take into account the patient savings that result. But by ignoring these savings, according to IMS Health and MIT researchers, AARP creates ‘a distorted and inaccurate portrait’ of the prescription drug market.

“Our health care system has been designed to promote both continued medical advances and cost savings. Innovator biopharmaceutical research companies produce medical advances through pioneering scientific work and large-scale investments. The innovators’ work and investment leads over time to generic copies that consumers use at low cost for many years.

“Importantly, despite their small share of health costs – relative to other health services – medicines are yielding major health advances. For instance, prescription medicines have played a key role in the dramatic declines in death rates resulting from cancer, heart disease and HIV/AIDSin recent years. Our companies' continued commitment to innovation is the driving force behind such medical progress.”

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 $49.4 billion in 2010 in discovering and developing new medicines. Industry-wide research and investment reached a record $67.4 billion in 2010.

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