Press Release

PhRMA Statement Regarding Benefits of U.S. Innovation

PhRMA August 5, 2009

Washington, D.C. (August 25, 2009) — Pharmaceutical Research and Manufacturers of America (PhRMA) Senior Vice President Ken Johnson issued the following statement today in response to ‘Global Drug Discovery: Europe Is Ahead,’ a paper published in the August 25th edition of Health Affairs:

“Unfortunately, the paper paints a distorted picture that gives short shrift to the medical advances made possible by America’s pharmaceutical research and biotechnology companies and ignores the chilling effect of government price controls on such innovation.

“Let there be no mistake: America leads the world in discovering and developing innovative medical therapies that have revolutionized health care, helping patients to live longer, healthier and more productive lives.

“Cancer patients are living, on average, three years longer – and 83 percent of those survival rate gains are due to new treatments, including medicines. Heart failure and heart attack deaths fell by nearly half from 1999 to 2005. And blood pressure medicines prevented 86,000 premature deaths from cardiovascular disease and avoided 833,000 hospitalizations for heart attack and stroke, according to a 2007 study in Health Affairs.

“These and untold other medical advances were driven by U.S.-based medical innovation. According to the Tufts Center for the Study of Drug Development, a staggering 75 percent of all new drugs approved worldwide from 2005 to 2007 were first introduced in the U.S.

“This home-grown innovation not only saves lives, such research employs millions of Americans and pumps billions of dollars into our nation’s economy. Our thousands of scientists work tirelessly to discover the next medical advance that could help patients. But our innovative lead also has been nurtured by a regulatory environment and public policies that encourage such research.

“In the not-too-distant past, the U.S. was not the world’s medicine chest. A number of changes, including Congressional action, helped to foster a more vibrant biopharmaceutical industry in the U.S. By contrast, European leaders’ embrace of ill-conceived public policies – including government price controls and sluggish regulatory decision-making – chilled innovation on that continent and raised doubts among private investors who help to underwrite research that creates the next generation of life-saving medicines.

“The paper’s author comes to a number of misguided conclusions. The location of global headquarters is one potential metric to consider. It is true that over the last decade, several European-based companies have maintained their global headquarters in Europe. But it’s important to note that many of those companies have moved part or all their research operations to the U.S.

“The author gives disproportionate weight to research that leads to the initial regulatory approval, ignoring thousands of clinical trials and billions spent for post-approval research in support of additional uses for the medicines that aid millions of patients. What’s more, the paper bases its argument regarding Europe’s relative innovativeness, in part, on the premise that Europe has taken the lead in first-in-class drugs.

“While first-in-class drugs represent an important achievement, subsequent drugs in a given therapeutic class also hold promise for patients. According to research by Tufts, ‘approximately one-third of follow-on new drugs received a priority rating from the US FDA.’ Even in classes with four or more follow-on drugs, 48 percent of the follow-ons receiving a priority rating were the fourth or later entrant in that class.

“Regardless of relative productivity between the U.S. and the European Union, in terms of pharmaceutical development, those medical advances hold less promise if people cannot access the cutting-edge medicines. Foreign government price controls, according to independent research, chill innovation, impede patients’ access to the newest cutting-edge medicines, and trigger innovators to relocate to countries with more progressive public policy. For example:

  • The biotechnology start-up sector, from which most successful biotech drugs emerge, is dominated by the U.S. with ‘distressingly little contribution from Europe,’ according to a researcher at the American Enterprise Institute.
  • Eighty-two percent of the world’s R&D in biotechnology medicines that have revolutionized health care is done by U.S. based companies. 
  • Strategies by foreign governments to control prices tend to ‘have the most significant impact on the newest and most innovative medicines,’ according to the U.S. Department of Commerce. 
  • Price controls depress innovation and shorten life expectancy, according to research by RAND that was published in Health Affairs.
  • Patients in the European Union face significant delays in accessing new drugs; in some countries, patients were still waiting in mid-June 2007 for access to medicines approved in 2003, according to IMS Health.

“Last year, America’s pharmaceutical research and biotechnology companies continued to lead the world in research of new medicines, investing a record $65.2 billion in R&D.”

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.

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