Press Release

Statement on President Obama's Debt Reduction Speech

PhRMA April 14, 2011

Washington, D.C. (April 13, 2011) – Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO John J. Castellani today released the following statement:

"PhRMA firmly supports a viable, comprehensive policy framework to cultivate an environment that encourages innovative biopharmaceutical companies to remain and grow in the U.S. And we welcome the opportunity to work with the President and Congress to achieve this shared goal.

“Unfortunately, the President’s approach to reducing our deficit fails to consider the impact on the entire policy tapestry – local and federal – that influence our industry’s current and future health. Specifically, proposals to expand rebates, saddle seniors with higher premiums and slash data protection for biologics are bad for patients and are bad for innovation.

“The President has missed the opportunity to give the nation a long-term vision for a sustainable Medicare program that can truly protect seniors over the next decade and beyond.

“Since its inception, Medicare Part D has provided seniors and disabled Americans with unprecedented access to medicines at affordable costs. Thus far, more than 27 million enrollees have joined the program and benefited from the negotiated discounts between biopharmaceutical research companies and Part D plans.

“Implementing government price controls in the Medicare prescription drug program would not achieve better patient care, sustainably cut the deficit, foster the development of future medical advances or grow the economy. A strategy of reducing the deficit by simply cutting existing Medicare funding will adversely impact American jobs and medical innovation.

“It should be noted that the Congressional Budget Office (CBO) has stated that imposing price controls in Part D could ‘reduce the amount of funds that manufacturers invest in research and development of new products.’ CBO has also stated that price controls in the program will lead to higher premiums for Medicare beneficiaries.

“Part D also is coming in about 40% below projected costs. According to the Medicare Trustees’ annual report, Part D spending projections are lower in part due to a reduction in the projected growth in prescription drug spending in the U.S. for the next 10 years.

“In addition, medicines play a key role in improving health outcomes while containing overall health costs. Prescription medicines account for around 10 percent of total health care spending, a much lower share than other major sectors, and research shows that the appropriate use of medicines can reduce costly hospitalizations and emergency room visits, resulting in lower health care costs.

“Furthermore, development of biologics is an expensive and risky endeavor, and a diverse group, including leading economists, bipartisan members of Congress and PhRMA, believes that 12 years of data protection provides a fair incentive for brand-name companies to start or continue their important work on these promising therapies.

“Reducing the 12 years of data protection that was approved in strong, bipartisan votes by Congress – as the President has proposed – would seriously jeopardize innovative companies’ ability to fund research on future treatments and cures. If the proposal were successful, the U.S. would then provide less data protection for new, innovative biologics than is currently bestowed in Europe.

“We are disappointed the President is calling for strengthening the Independent Payment Advisory Board (IPAB). We continue to have significant concerns about the overly broad powers of the unelected IPAB, which could enact sweeping Medicare changes without congressional oversight and which would not be subject to judicial or administrative review.

“We believe IPAB will result in access problems for Medicare beneficiaries. Therefore, IPAB in its current form must be repealed.

“Opposition to IPAB is clearly a bipartisan issue. Members of both parties in Congress do not support retaining the board as it currently stands. And more than 75 organizations nationwide, including hospital and physician groups, have publicly expressed either concern or outright opposition to IPAB.

“PhRMA is committed to working with policymakers to restructure the health care delivery system so that all patients can receive high-quality, affordable health care without impairing innovation and jobs.”

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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