TABLE OF CONTENTS
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Chapter 1 Advances in Treatment . . . . . . . . . . . . . . . . . . 3
Chapter 2 Research and Development . . . . . . . . . . . . . 21
Chapter 3 Spending and Costs. . . . . . . . . . . . . . . . . . . . 43
Chapter 4 Outcomes and Savings . . . . . . . . . . . . . . . . . .59
Chapter 5 Communications with Patients and Health Care Providers. . . . . . . . . . . . . . . 77
Chapter 6 Economic Impact . . . . . . . . . . . . . . . . . . . . . . 89
INTRODUCTION
This chart pack provides facts and figures about prescription medicines and their role in the health care system. Topics include medicines’ impact on health and quality of life, the drug discovery and development process, health care spending and costs, the challenge of treatment gaps and improving use of prescribed therapies, communications with patients and health care providers, and the role of the biopharmaceutical sector in the U.S. economy.
Data and information found in this publication were drawn from a wide range of sources, including government agency reports, peer-reviewed journals, and the Pharmaceutical Research and Manufacturers of America’s (PhRMA’s) own research and analysis. PhRMA hopes this publication provides useful context for discussions about the role of medicines in the U.S. health care system.
1
1 • Advances in Treatment
1 ADVANCES IN TREATMENT Medicines’ Impact on Health and Quality of Life Prescription medicines continue to yield important advances against serious disease, helping patients live longer and healthier lives. Over the last 25 years, prescription medicines have transformed the trajectory of many debilitating diseases, including HIV/AIDS, cancer, and heart disease, resulting in decreased death rates, improved health outcomes and often better quality of life for patients. Recent advances continue to improve outcomes for patients across a broad range of chronic conditions — including, for example, diabetes and hepatitis C. Medicines today are at the forefront of science with an increasing number of targeted therapies that, in some cases, are providing the very first treatments for patients suffering from a number of rare diseases. Continued advances in biopharmaceutical innovation will be key in addressing future health care challenges and helping patients lead better lives.
3
1 • Advances in Treatment
Increases in U.S. Life Expectancy
4
While nutrition, sanitation, other public health measures, and expanded access to care have been major sources of increasing human health, innovative medicines have also played a profound role in this progress.
— The President’s Council of Advisors on Science and Technology1
Source: President’s Council of Advisors on Science and Technology1; CDC2
71.1 73.1
74.7
77.4 78.8 79.3
81.1
65.6 66.6 67.1
70 71.8
74.1
76.3
60
65
70
75
80
85
1950 1960 1970 1980 1990 2000 2011
At B
irth
(in Y
ears
)
Women
Men
*Life expectancies prior to 1997 were calculated using a slightly different methodology than for those post-1997.
U.S. Life Expectancy 1950–2011*
“ “
1 • Advances in Treatment 5
A Decade of Advances
Sources: FDA3; Analysis Group4
1 • Advances in Treatment
Multiple Sclerosis Oral and biologic treatments approved over the past 15 years have dramatically improved outcomes for MS patients, slowing disability progression and offering fewer relapses.
HIV/AIDS In the last two decades, advances in treatment have contributed to a more than 80% decline in death rates and transformed the disease from an acute, fatal illness to a chronic condition.
Medicines Are Transforming the Treatment of Many Difficult Diseases
6
Sources: National Multiple Sclerosis Society5; Boston Healthcare6; CDC7; American Cancer Society8
Cancer New therapies have contributed to a 20% decline in cancer deaths since the 1990s. Today, 2 out of 3 people diagnosed with cancer survive at least 5 years.
Rheumatoid Arthritis Therapeutic advances have transformed the RA treatment paradigm over the last 20 years, from focusing on symptom management to now aiming for slowed disease progression and even disease remission.
1 • Advances in Treatment
Rheumatoid Arthritis: Medicines Are Transforming the Lives of Patients
7
THEN: Treatments for RA were effective at reducing joint inflammation but were limited to treating the symptoms of the disease, allowing for steady progression from disease onset to disability fairly rapidly.
NOW: Biologic disease-modifying antirheumatic drugs (DMARDs) can target the underlying sources of inflammation, which improves physical functioning and prevents irreversible joint damage — making disease remission possible.
Source: Boston Healthcare9
HEALTHY JOINT HAND WITH RA
1 • Advances in Treatment
HIV/AIDS: Decline in Death Rates The number of U.S. AIDS deaths decreased dramatically following the introduction of highly active antiretroviral treatment (HAART). Today, research shows that 20-year-olds diagnosed with HIV can expect to live into their early 70s — a life expectancy close to that of the general population.10
8
Sources: H. Samji, et al.10; CDC11
16.2
6.0 5.3 5.0 4.7
4.2 3.7
3.1 2.5
0
2
4
6
8
10
12
14
16
18
1995 1997 1999 2001 2003 2005 2007 2009 2011
1996: HAART becomes widely available
Deat
hs P
er 1
00,0
00 P
opul
atio
n
Annual Number of AIDS Deaths in the United States
1 • Advances in Treatment
HIV/AIDS: Treatment Advances Build over Time
9
Dramatic declines in death rates did not occur with one single breakthrough, but rather through a series of advances providing important treatment options for patients over time.
Source: Boston Healthcare12
1 • Advances in Treatment
Cancers: Decline in Death Rates
10
According to the American Cancer Society, improvements in treatment contributed to the increase in cancer survival.13
Source: R. Siegal, et al.13; CDC14
4.7% 3.9%
-7.6%
-15.5% -16%
-11%
-6%
-1%
4%
1970–1980 1980–1990 1990–2000 2000–2011
Percent Change by Decade in U.S. Death Rates from Cancer
1 • Advances in Treatment
Chronic Leukemias: Increased Survival Rates
11
When imatinib was first approved in 2001 to treat chronic myeloid leukemia (CML), the full value of the medicine had not been completely realized.
Sources: Boston Healthcare15; C. Gambacorti-Passerini, et al.16; American Cancer Society17; B. Druker, et al.18; FDA19; CDC20
• After initial approval, continued research revealed that imatinib had an even greater impact when initiated earlier in the progression of the disease.
• Further research also revealed that imatinib was effective in combating other devastating forms of leukemia, as well as gastrointestinal stromal tumors.
• Today, survival rates have improved dramatically and CML patients are living close to normal life spans.17
31%
89%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Prior to Introduction ofImatinib
After Introduction ofImatinib
5-Year Survival Rates for CML Patients19,20
1 • Advances in Treatment
0
50
100
150
200
250
300
350
400
450
500
Number of Drug Approvals for Rare Diseases*
Cumulative Prior Orphan Drug Approvals New Orphan Drug Approvals
Rare Diseases: Drug Approvals for Rare Diseases Have Increased Rare diseases are those that affect 200,000 or fewer people in the United States. There are nearly 7,000 rare diseases affecting a combined 30 million Americans.
12
Source: FDA21
1983: Orphan Drug Act passed
*Approvals for rare diseases include initial approvals of new medicines and subsequent approvals of existing medicines for rare disease areas.
1 • Advances in Treatment
402 397 389 375 356
332 314 310 296
280 267 248
232 211
191 180 174
0
50
100
150
200
250
300
350
400
450
1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Age-
adju
sted
Dea
th R
ates
per
100
,000
Cardiovascular Disease: Declining Rates of Death and Heart Failure
Factors contributing to the decline in heart disease and stroke mortality include better control of risk factors, improved access to early detection, and better treatment and care, including new drugs and expanded uses for existing drugs.
— U.S. Centers for Disease Control and Prevention22
U.S. Death Rates Due to Diseases of the Heart*
*Age-adjusted death rates based on Year 2000 U.S. Standard Population. 1980–1998 causes of death are classified by the Ninth Revision International Classification of Diseases (ICD-9). Beginning in 1999, causes of death are classified by the Tenth Revision International Classification of Diseases (ICD-10).
“ “
Source: CDC22,23
13
1 • Advances in Treatment
Hepatitis C: Recent Treatment Advances Dramatically Improve Outcomes for Patients With baby boomers representing 75% of adults infected with Hepatitis C,24 in the absence of recent treatment advances the impact of the disease would be expected to grow substantially in coming years.
14
Sources: CDC24; Cleveland Clinic25; B. Horoldt, et al.26; E. Lawitz, et al.27
• Hepatitis C kills 5 times as many Americans as AIDS and is the leading cause of liver transplants and liver cancer.24
• With the recent introduction of direct-acting antiviral (DAA) medicines:25
Cure rates have reached 90% or higher Treatment duration has been cut from
48 weeks to as low as 12 weeks Side effects have gone from debilitating
to few.
50%
90%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Interferon-basedTherapy*(2000s)
DAAs(2013)
Potential Cure Rates for Hepatitis C Patients26,27
*Previous standard treatment option.
1 • Advances in Treatment
Future Impact: Need for New Treatments for Alzheimer’s Disease The development of a new treatment that delays the onset of Alzheimer’s could reduce Medicare and Medicaid spending on patients with Alzheimer’s by more than $100 billion annually by 2030.*
Source: Alzheimer’s Association28
15
*Assumes research breakthroughs that delay the average age of onset of Alzheimer’s disease by 5 years beginning in 2010. **Projected savings to Medicare and Medicaid assume research breakthroughs that slow the progression of Alzheimer’s disease. This would dramatically reduce spending for comorbid conditions and expensive nursing home care.
$122 $174
$297
$529
$805
$122 $140 $157
$276
$443
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2010 2020 2030 2040 2050
Proj
ecte
d M
edic
are
and
Med
icai
d Sp
endi
ng
(in B
illio
ns)
Current Trajectory
Projection with Delayed Onset Treatment Advance
Projected Annual Medicare & Medicaid Spending, with and Without New Treatment Advances (Billions)**
1 • Advances in Treatment
Notes and Sources
16
1. President’s Council of Advisors on Science and Technology. “Report to the President on Propelling Innovation in Drug Discovery, Development, and Evaluation.” Washington, DC: PCAST, September 2012.
2. U.S. Department of Health and Human Services (HHS), CDC, National Center for Health Statistics (NCHS). "Health, United States, 2008 with Chartbook." Hyattsville, MD: HHS, 2009; 1950–2006 data from M. Heron, et al. "Deaths: Final Data for 2006." National Vital Statistics Reports 2009; 57(14): 5. Hyattsville, MD: NCHS. Available at www.cdc.gov/nchs/data/nvsr/nvsr57/nvsr57_14.pdf (accessed June 2010); 2007 data from J. Xu, et al. "Deaths: Final Data for 2007." National Vital Statistics Reports 2010; 58(19): 13. Hyattsville, MD: NCHS. Available at www.cdc.gov/nchs/data/nvsr/nvsr58/nvsr58_19.pdf (accessed June 2010); 2008–2009 data from K. Kochanek, et al. "Deaths: Final Data for 2009." National Vital Statistics Reports 2011; 60(3): 1. Hyattsville, MD: NCHS. Available at www.cdc.gov/nchs/data/nvsr/nvsr60/nvsr60_03.pdf (accessed March 2013); 2010–2011 data from D.L. Hoyert and J. Xu. "Deaths: Preliminary Data for 2011." National Vital Statistics Reports 2012; 61(6): 5. Hyattsville, MD: NCHS. Available at www.cdc.gov/nchs/data/nvsr/nvsr61/nvsr61_06.pdf (accessed December 2012).
3. U.S. Food and Drug Administration. Available at www.fda.gov (accessed February 2014). U.S. Food and Drug Administration (FDA). “Drugs@FDA: FDA Approved Drug Products.” Available at: www.accessdata.fda.gov/scripts/cder/drugsatfda/.
4. G. Long and J. Works. “Innovation in the Biopharmaceutical Pipeline: A Multidimensional View.” Boston, MA: Analysis Group, Inc., January 2013. Available at www.analysisgroup.com/uploadedFiles/Publishing/Articles/2012_Innovation_in_the_Biopharmaceutical_Pipeline.pdf (accessed December 2013).
5. The National Multiple Sclerosis Society. “The MS Disease-modifying Medications: General Information.” Washington, DC: National Multiple Sclerosis Society, April 2013. Available at www.nationalmssociety.org/NationalMSSociety/media/MSNationalFiles/Brochures/12-3-7_DiseaseModifyingDrugs.pdf.
6. C. Augustyn, B. Walker, and T.F. Goss. “Recognizing the Value of Innovation in the Treatment of Rheumatoid Arthritis.” Boston, MA: Boston Healthcare Associates, March 2013. Available at www.phrma.org/sites/default/files/1888/rawhitepaperfinal2.pdf.
7. U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Health Statistics. “Health, United States, 2010: With Special Feature on Death and Dying, table 35.” Hyattsville, MD: HHS, 2011. Available at www.cdc.gov/nchs/data/hus/hus10.pdf#045 (accessed February 2014).
8. American Cancer Society. “Cancer Treatment and Survivorship Facts & Figures 2012−2013.” Atlanta, GA: American Cancer Society, 2012.
1 • Advances in Treatment
Notes and Sources
17
9. C. Augustyn, B. Walker, and T.F. Goss. Op cit.
10. H. Samji, et al. “Closing the Gap: Increases in Life Expectancy Among Treated HIV-Positive Individuals in the United States and Canada.” PLoSONE 2013; 8(12): e81355. Available at www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0081355;jsessionid=13B02C0B1D51F789C26E04085D6CB98 (accessed March 2014).
11. HHS, CDC, NCHS. "Health, United States, 2003 with Chartbook on Trends in the Health of Americans." Hyattsville, MD: HHS, 2003; HHS, CDC, NCHS. "Health, United States, 2009 With Chartbook on Medical Technology." Hyattsville, MD: HHS, 2010; 2007 data from J. Xu, K.D. Kochanek, and B. Tejada-Vera. "Deaths: Preliminary Data for 2007." National Vital Statistics Reports 2009; 58(1): 5. Hyattsville, MD: NCHS. Available at www.cdc.gov/nchs/data/nvsr/nvsr58/nvsr58_01.pdf (accessed December 2009); 2009 data from K.D. Kochanek et al. "Deaths: Final Data for 2009." National Vital Statistics Reports 2011; 60(3): 41. Hyattsville, MD: NCHS. Available at www.cdc.gov/nchs/data/nvsr/nvsr60/nvsr60_03.pdf (accessed December 2012); 2011 data from D.L. Hoyert and J. Xu. "Deaths: Preliminary Data for 2011." National Vital Statistics Reports 2012; 61(6): 38. Hyattsville, MD: NCHS. Available at www.cdc.gov/nchs/data/nvsr/nvsr61/nvsr61_06.pdf (accessed December 2012).
12. C. Augustyn, B. Walker, and T.F. Goss. “Recognizing the Value of Innovation in HIV/AIDS Therapy.” Boston Healthcare Associates, December 2012.
13. R. Siegel, et al. “Cancer statistics, 2014.” CA: A Cancer Journal for Clinicians; 64(1): 9–29. Available at http://onlinelibrary.wiley.com/doi/10.3322/caac.21208/pdf (accessed March 2014).
14. HHS, CDC, NCHS. "Health, United States, 2011 with Special Features on Socioeconomic Status and Health." Hyattsville, MD: HHS, 2012; K.D. Kochanek et al. "Deaths: Final Data for 2009." National Vital Statistics Reports 2011; 60(3): 32. Hyattsville, MD: NCHS. Available at www.cdc.gov/nchs/data/nvsr/nvsr60/nvsr60_03.pdf (accessed December 2012); D.L. Hoyert and J. Xu. "Deaths: Preliminary Data for 2011." National Vital Statistics Reports 2012; 61(6): 28. Hyattsville, MD: NCHS. Available at www.cdc.gov/nchs/data/nvsr/nvsr61/nvsr61_06.pdf (accessed December 2012).
15. T.F. Goss, E. H. Picard, and A. Tarab. “Recognizing the Value in Oncology Innovation.” Boston, MA: Boston Healthcare Associates, June 2012. Available at www.phrma.org/sites/default/files/flash/phrma_innovation_oncology.pdf (accessed March 2014).
16. C. Gambacorti-Passerini, et al. "Multicenter Independent Assessment of Outcomes in Chronic Myeloid Leukemia Patients Treated with Imatinib." Journal of the National Cancer Institute 2011; 103(7): 553–61.
1 • Advances in Treatment
Notes and Sources
18
17. Thirty-one percent 5-year survival rate reported for cases diagnosed during 1991−1992. American Cancer Society. “Cancer Facts and Figures 2012.” Atlanta, GA: American Cancer Society, 2012.
18. B.J. Druker, et al. “Five-Year Follow-up of Patients Receiving Imatinib for Chronic Myeloid Leukemia.” New England Journal of Medicine 2006; 355(23):2408−17.
19. FDA. "Helping Rare Disease Patients Find Their Voice." 16 November 2013. FDA.gov. At www.fda.gov/ForConsumers/ConsumerUpdates/ucm293213.htm (accessed March 2014); FDA, Office of Orphan Product Development. “Orphan Drug Designations and Approvals Database.” Available at www.accessdata.fda.gov/scripts/opdlisting/oopd/index.cfm (accessed March 2014).
20. HHS, CDC, NCHS. “Health, United States, with Chartbook on Trends in the Health of Americans.” Hyattsville, MD: HHS, 2006. Available at www.cdc.gov/nchs/data/hus/hus06.pdf (accessed December 2012).
21. FDA. "Helping Rare Disease Patients Find Their Voice." 16 November 2013. FDA.gov. At www.fda.gov/ForConsumers/ConsumerUpdates/ucm293213.htm (accessed March 2014); FDA, Office of Orphan Product Development. “Orphan Drug Designations and Approvals Database.” Available at www.accessdata.fda.gov/scripts/opdlisting/oopd/index.cfm (accessed March 2014).
22. HHS, CDC, NCHS. “Health, United States, with Chartbook on Trends in the Health of Americans.” Hyattsville, MD: HHS, 2006. Available at www.cdc.gov/nchs/data/hus/hus06.pdf (accessed December 2012).
23. CDC, NCHS, National Vital Statistics System. "Unpublished table NEWSTAN 79–98S created on 00/03/02: Age-Adjusted Death Rates for 72 Selected Causes by Race and Sex Using Year 2000 Standard Population: United States, 1979–98." Mortality. Atlanta, GA: CDC, 2002. Available at www.cdc.gov/nchs/data/mortab/aadr7998s.pdf (accessed February 2013); D.L. Hoyert, et al. “Deaths: Final Data for 1999.” National Vital Statistics Reports 2001; 49(8): 1–3. Hyattsville, MD: NCHS. Available at www.cdc.gov/nchs/data/nvsr/nvsr49/nvsr49_08.pdf (accessed February 2013); K.D. Kochanek, et al. "Deaths: Final Data for 2009." National Vital Statistics Reports 2011; 60(3): 32. Hyattsville, MD: NCHS. Available at www.cdc.gov/nchs/data/nvsr/nvsr60/nvsr60_03.pdf (accessed December 2012); D.L. Hoyert and J. Xu. "Deaths: Preliminary Data for 2011." National Vital Statistics Reports 2012; 61(6): 28. Hyattsville, MD: NCHS. Available at www.cdc.gov/nchs/data/nvsr/nvsr61/nvsr61_06.pdf (accessed December 2012).
1 • Advances in Treatment
Notes and Sources
19
24. CDC. “Hepatitis C: Why Baby Boomers Should Get Tested.” Atlanta, GA: CDC, March 2013. Available at www.cdc.gov/knowmorehepatitis/Media/PDFs/FactSheet-boomers.pdf (accessed March 2014).
25. Cleveland Clinic. “Top 10 Medical Innovations for 2014: #4 New Era in Hepatitis C Treatment.” October 2013. Available at http://summit.clevelandclinic.org/Top-10-Innovations/Top-10-for-2014.aspx (accessed March 2014).
26. B. Horoldt, et al. "Results of Combination Treatment With Pegylated Interferon and Ribavirin in Cirrhotic Patients With Hepatitis C Infection." Liver International 2006; 26(8):650-659.
27. E. Lawitz, et al. “Sofosbuvir in Combination with Peginterferon Alfa-2a and Ribavirin for Non-cirrhotic, Treatment-Naive Patients with Genotypes 1, 2, and 3 Hepatitis C Infection: a Randomised, Double-Blind, Phase 2 Trial.” The Lancet Infectious Diseases 2013; 13(5): 401−408.
28. Alzheimer's Association. “Changing the Trajectory of Alzheimer's Disease: A National Imperative.” Washington, DC: Alzheimer's Association, May 2010.
2 • Research and Development
2 RESEARCH AND DEVELOPMENT The Process of Drug Discovery and Development More than 5,000 medicines are in development globally with the potential to aid U.S. patients. PhRMA member companies invested $51.1 billion in biopharmaceutical research and development (R&D) in 2013, accounting for the majority of private biopharmaceutical R&D spending. Development of new medicines is a rigorous and long process, and it has become more costly and complex over the last decade. Even among the new drug candidates reaching Phase III trials, about one-third fail. Companies “race” to bring the first medicine in a class to market, and just two in ten approved drugs are ultimately commercial successes. Recent biopharmaceutical advances — driven by scientific research and creative ingenuity — would not have been possible without a system of laws that provide the structure, stability, and opportunity for the needed investment.
21
2 • Research and Development
Medicines in Development by Regulatory Phase Globally In 2011, 5,408 medicines* were in clinical development worldwide with the potential to aid U.S. patients.
22
Source: Analysis Group1 *Defined as single products which are counted exactly once regardless of the number of indications pursued.
Phase I 2,164
Phase II 2,329
Phase III 833 Regulatory
Review in the United States, 82
2 • Research and Development
58
13
30
38
39
34
176
30
25
26
28
58
43
71
0 50 100 150 200 250 300 350
Other
Transplantation
Skin Diseases
Respiratory Disorders
Neurologic Disorders
Musculoskeletal Disorders
Infectious Diseases
Genetic Disorders
Eye Conditions
Digestive Disorders
Diabetes/Related Conditions
Cardiovascular Disease
Cancers/Related Conditions
Blood Disorders
Autoimmune Disorders
More than 900 Biologic Medicines in Development in 2013 Biologic medicines — large, complex molecules derived from living cells — frequently represent novel strategies that have the potential to transform the clinical treatment of disease.
23
Source: PhRMA2
Source: Biotechnology Research Continues to Bolster Arsenal Against Disease with 633 Medicines in Development. PhRMA, 2008.
*Some medicines are being explored in more than one therapeutic category.
338
2 • Research and Development
Personalized Medicines Increasingly Shape the R&D Pipeline Biopharmaceutical companies have increased R&D investment in personalized medicine by 75% between 2005 and 2010.3
24
Sources: Tufts CSDD3; J.T. Aquino4; D. Nelleson, et al.5
Personalized Medicine Trials by Therapeutic Area Initiated on or Before January 20095
Therapeutic Area No. of Trials
Cardiovascular 16
Central Nervous System/Neurology/Behavior
20
Dermatology 1
Endocrinology/Metabolics 8
Gastrointestinal 3
Infectious Disease 10
Oncology/Hematology 85
Ophthalmology 2
Renal 3
Respiratory/Pulmonary 7
Total 155
“
“
Oncology is on fire with [personalized medicine], with treatment selections based on individual molecular characteristics. This is also happening with chronic infectious diseases, and genetic diseases are not far behind.
— Janet Woodcock, Director Center for Drug Evaluation and Research,
U.S Food and Drug Administration4
2 • Research and Development
Potential First-in-Class Medicines in the Pipeline An average of 70% of drugs across the pipeline are potential first-in-class medicines.
25
Source: Analysis Group6
Percentage of Projects in Development that Are Potentially First-in-Class Medicines in Selected Therapeutic Areas, 2011
57%
69%
71%
72%
79%
80%
81%
84%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Infections
HIV/AIDS
Diabetes
Immunology
Psychiatry
Cancer
Cardiovascular
Neurology
2 • Research and Development
0
50
100
150
200
250
300
Antisense RNAiTherapies
CellTherapies
GeneTherapies
ConjugatedmAbs
Cutting-Edge Research Drives Development of Medicines Tomorrow’s medicines are often born from innovative scientific approaches.
26
Source: Analysis Group7
Select examples include:
Antisense RNA interference (RNAi) targets RNA in order to silence gene expression associated with certain diseases.
Cell therapy is a type of regenerative medicine, introducing new cells into a tissue in order to treat a disease.
Gene therapy involves the alteration of genes within cells and tissue, often to counteract genetic defects.
Conjugated Monoclonal Antibodies (mAbs) target and kill tumors while sparing nearby healthy cells.
Medicines in Development by Select Scientific Approach, 2011*
*Medicines in development as of December 2011.
2 • Research and Development
The Research and Development Process Developing a new medicine takes an average of 10 to 15 years.
27
Source: PhRMA8
2 • Research and Development
Government and Industry Roles in Research & Development Government and biopharmaceutical industry research complement one another.
28
Sources: PhRMA9; NIH Office of Budget10; adapted from E. Zerhouni11
Clinical Research
Translational Research
Basic Research
Clinical Research
Translational Research
Basic Research
National Institutes of Health: $29.2 Billion*
PhRMA Member Companies: $51.1 Billion
*NIH spending is for FY 2012. PhRMA member companies’ spending is estimated for CY 2012. PhRMA member companies account for the majority of private biopharmaceutical R&D spending. Nonmember company data are not included.
2 • Research and Development
Innovative Biopharmaceutical Companies Sit at the Heart of a Dynamic R&D Ecosystem in the U.S. While research-based biopharmaceutical companies are responsible for bringing new medicines to patients, they are part of an ecosystem marked increasingly by collaborations with academic institutions, government agencies, venture capital firms, nonprofit foundations, patients and others, as illustrated.
29
Source: PhRMA12
2 • Research and Development
Corporate Venture Capital Helping to Fill Early-Stage Funding Gap Venture capital investments in emerging biotech companies have dropped 22% from 2007 to 2013, with the most rapid declines seen in first-round deals. The corporate venture capital (CVC) arms of established biopharmaceutical companies are helping fill this growing gap. The share of early-stage biotech companies receiving CVC investment has doubled since 2007.
Source: PwC and National Venture Capital Association13
Share of Early-Stage Biotech Deals Involving CVC Funds, 2007 vs. 2012
15%
30%
0%
5%
10%
15%
20%
25%
30%
2007 2012
30
2 • Research and Development
PhRMA Member Company R&D Investment The pharmaceutical industry is one of the most research-intensive industries in the United States. Pharmaceutical firms invest as much as five times more in research and development, relative to their sales, than the average U.S. manufacturing firm.
— Congressional Budget Office14
31
$15.2 $16.9 $19.0
$21.0 $22.7 $26.0
$29.8 $31.0 $34.5
$37.0 $39.9
$43.4
$47.9 $47.4 $46.4 $50.7
$48.6 $49.6 $51.1*
$0
$10
$20
$30
$40
$50
$60
Expe
nditu
res (
Billi
ons o
f Dol
lars
)
PhRMA Member Company R&D Expenditures: 1995–2013
“ “
*Estimated FY 2013. Source: Congressional Budget Office14; PhRMA15
2 • Research and Development
Drug Development Costs Have Increased According to a 2007 study, it costs an average of $1.2 billion to develop one new drug.16 More recent studies estimate the costs to be even higher.17
32
Sources: J.A. DiMasi and H.G. Grabowski16; J. Mestre-Ferrandiz, et al.17; J.A. DiMasi, et al.18
$140M
$320M
$800M
$1.2B
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
mid-1970s mid-1980s late 1990s early 2000s
Billi
ons (
Cons
tant
Dol
lars
, Yea
r 200
0)
The Average Cost to Develop One New Approved Drug — Including the Cost of Failures
2 • Research and Development
Complexity of Clinical Trials Has Increased During the last decade, clinical trial designs and procedures have become much more complex, demanding more staff time and effort, and discouraging patient enrollment and retention.
33
Source: K.A. Getz, et al. and Tufts CSDD19
2000–2003 2008–2011 Increase in Complexity
Total Procedures per Trial Protocol (median) (e.g., bloodwork, routine exams, x-rays, etc.) 105.9 166.6 57%
Total Investigative Site Work Burden (median units) 28.9 47.5 64%
Total Eligibility Criteria 31 46 58%
Clinical Trial Treatment Period (median days)* 140 175 25%
Number of Case Report Form Pages per Protocol (median) 55 171 227%
*These numbers reflect only the “treatment duration” of the protocol.
Trends in Clinical Trial Protocol Complexity
2 • Research and Development
Illustrative Pharmaceutical Lifecycle New pharmaceutical medicines face competition after a relatively short period on the market.
34
Sources: PhRMA20; H. Grabowski, et al.21
Drug Development
FDA Approval
Generics Enter Market
Average time to develop a new medicine
= 10–15 yrs
Average time on market before generic entry
= 12.6* yrs
Brand Drug Lifespan Generics
*For brand medicines with more than $100 million in annual sales in 2008 dollars, which account for 97% of sales of the brand medicines analyzed.
Most brand drugs face competition
from other brands
2 • Research and Development
Earlier and More Frequent Patent Challenges by Generic Companies As early as 4 years after brand launch, a generic company may file with FDA a Paragraph IV certification to “challenge” patents associated with the brand-name medicine, often allowing generic market entry before the patent expiration date.
35
Sources: H.G. Grabowski, et al.22 All numbers are three-year moving averages.
Patent challenges are occurring earlier…
Average Time from Brand Launch to Paragraph IV Patent Challenge
… and are more common
Share of Brand Products Experiencing at Least One Paragraph IV Patent Challenge Prior to Generic Entry
15.6
7.7 6.9
0
5
10
15
20
25
1996 2004 2012
14%
41%
81%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1996 2004 2012
Num
ber o
f Yea
rs
Brands by Year of First Generic Entry Brands by Year of First Generic Entry
2 • Research and Development
Competing Medicines Race for Approval By 1995, nearly all first-in-class medicines being approved already had potential competitors in Phase II clinical testing.
36
Source: J.A. DiMasi and L.B. Faden23
23%
50%
71% 77%
90%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1970s 1980–1984 1985–1989 1990–1994 1995–1999
Percentage of First-in-Class Medicines with a Competitor Already in Phase II Clinical Testing at Time of Approval
2 • Research and Development
Increasing Competition Within Therapeutic Categories The time a medicine is the only drug available in its therapeutic class has declined dramatically — from a median of more than 10 years in the 1970s to less than two years by 1998.
37
Source: Tufts CSDD24
10.2
4.1
1.2 0
2
4
6
8
10
12
1970s 1980s 1990–2003
Med
ian
Num
ber o
f Yea
rs
Year of Approval of First-in-Class Medicine
Time Between Approval of First and Second Drugs in a Therapeutic Class
2 • Research and Development
$1,880
$701
$434 $299
$162 $87 $39 $21 $6
$0
$500
$1,000
$1,500
$2,000
1 2 3 4 5 6 7 8 9 10
Afte
r-Ta
x Pr
esen
t Val
ue o
f Sal
es
(Mill
ions
of 2
000
Dolla
rs)
New Medicine Introduced Between 1990 and 1994, Grouped by Tenths, by Lifetime Sales
-$1
After-Tax Average R&D
Few Approved Medicines Are Commercially Successful Ongoing investment in R&D depends on the commercial success of a few products that must make up for all the rest, including those that never reach the market.
38
Source: J.A. Vernon, et al.25
Just 2 in 10 Approved Medicines Produce Revenues that Exceed Average R&D Costs
2 • Research and Development
Notes and Sources
40
1. Analysis Group. "Innovation in the Biopharmaceutical Pipeline: A Multidimensional View." Boston, MA: Analysis Group, January 2013. Available at www.analysisgroup.com/uploadedFiles/Publishing/Articles/2012_Innovation_in_the_Biopharmaceutical_Pipeline.pdf (accessed March 2014).
2. Pharmaceutical Research and Manufacturers of America. "Medicines in Development: Biologic Medicines." Washington, DC: PhRMA, 2013.
3. Tufts Center for the Study of Drug Development. “Personalized Medicine Is Playing a Growing Role in Development Pipelines.” Impact Report. 2010; 12(6).
4. J.T. Aquino. “Personalized Medicine: Targeted Therapies Said Now Mainstream; Reimbursement, Clinical Trial Hurdles.” Life Sciences Law and Industry Report, 31 May 2013. Available at www.personalizedmedicinecoalition.org/sites/default/files/files/BloombergBNA.pdf (accessed March 2014).
5. D. Nellesen, et al. “Personalized Medicine: Trends in Clinical Studies Based on National Registry Data.” Poster presented at the 14th Annual International Meeting of the International Society of Pharmacoeconomics and Outcomes Research, Orlando, FL, May 16–20, 2009. Available at www.analysisgroup.com/personalized_medicine_trends (accessed March 2014).
6. Analysis Group, Op. cit.
7. G. Long and J. Works. “Innovation in the Biopharmaceutical Pipeline: A Multidimensional View.” Boston, MA: Analysis Group, January 2013. Available at www.analysisgroup.com/uploadedFiles/Publishing/Articles/2012_Innovation_in_the_Biopharmaceutical_Pipeline.pdf (accessed March 2014).
8. Pharmaceutical Research and Manufacturers of America. "Drug Discovery and Development: Understanding the R&D Process." Washington, DC: PhRMA, 2014.
9. Pharmaceutical Research and Manufacturers of America. “PhRMA Annual Membership Survey.” 2014.
10. National Institutes of Health, Office of Budget. 2013 Budget Appropriations. Bethesda, MD: NIH 2013. Available at http://officeofbudget.od.nih.gov/pdfs/FY13/FY%202013%20Full-Year%20NIH%20Mechanism%20Table%20Posting%20.pdf (accessed March 2014).
11. Adapted from E. Zerhouni. “Transforming Health: Fulfilling the Promise of Research.” Washington, DC, 16 November 2007. Keynote Address. Available at www.researchamerica.org/transforming_health_transcript (accessed March 2014).
12. PhRMA 2014.
2 • Research and Development
Notes and Sources
13. PricewaterhouseCoopers and the National Venture Capital Association, 2013 MoneyTree™ National Data, 2014.
14. Congressional Budget Office. “Research and Development in the Pharmaceutical Industry.” Washington, DC: CBO, October 2006. Available at www.cbo.gov/sites/default/files/cbofiles/ftpdocs/76xx/doc7615/10-02-drugr-d.pdf (accessed March 2014).
15. Pharmaceutical Research and Manufacturers of America. PhRMA Annual Membership Survey, 1996–2014.
16. J.A. DiMasi and H.G. Grabowski. "The Cost of Biopharmaceutical R&D: Is Biotech Different?" Managerial and Decision Economics 2007; 28: 469–479.
17. More recent estimates range from $1.5 billion to more than $1.8 billion. See J. Mestre-Ferrandiz, J. Sussex, and A. Towse. “The R&D Cost of a New Medicine.” London: Office of Health Economics, 2012; S.M. Paul, et al. “How to Improve R&D Productivity: The Pharmaceutical Industry’s Grand Challenge.” Nature Reviews Drug Discovery 2010; 9: 203–214.
18. J.A. DiMasi, et al. “The Price of Innovation: New Estimates of Drug Development Costs.” Journal of Health Economics 2003; 22: 151–185. Study findings originally reported in 2005 dollars. Based on correspondence with the study author, these figures were adjusted to 2000 dollars.
19. K.A. Getz, R.A. Campo, and K.I. Kaitin. “Variability in Protocol Design Complexity by Phase and Therapeutic Area.” Drug Information Journal 2011; 45(4): 413–420; updated data provided through correspondence with Tufts Center for the Study of Drug Development.
20. Pharmaceutical Research and Manufacturers of America. "Drug Discovery and Development: Understanding the R&D Process." Washington, DC: PhRMA, 2014.
21. H. Grabowksi, G. Long, and R. Mortimer. “Recent Trends in Brand-Name and Generic Drug Competition.” Journal of Medical Economics 2014; 17(3): 207–214. Available at http://informahealthcare.com/doi/abs/10.3111/13696998.2013.873723 (accessed March 2014).
22. Ibid.
23. J.A. DiMasi and L.B. Faden. "Follow-On Drug R&D: New Data on Trends in Entry Rates and the Timing of Development." Tufts Center for the Study of Drug Development Working Paper. Boston, MA: Tufts Center for the Study of Drug Development, September 2009.
24. Tufts Center for the Study of Drug Development, unpublished data, March 2010. Median data for shorter time periods published in: Tufts Center for the Study of Drug Development. “Marketing Exclusivity for First-in-Class Drugs Has Shortened to 2.5 Years.” Impact Report 2009; 11(5).
25. J.A. Vernon, J.H. Golec, and J.A. DiMasi. “Drug Development Costs When Financial Risk Is Measured Using the Fama-French Three-Factor Model.” Health Economics 2010; 19(8): 1002–1005; Drug development costs represent after-tax, out-of-pocket costs in 2000 dollars for drugs introduced from 1990 through 1994. The same analysis found that the total cost of developing a new drug was $1.3 billion in 2006. Average R&D costs include the cost of the approved medicines as well as those that fail to reach approval.
41
3 • Spending and Costs
3 3 SPENDING AND COSTS Understanding Spending on Medicines Prescription medicines represent a small share of national health spending. Since 2000, growth in prescription drug spending has slowed markedly, while prices for prescription medicines have risen in line with overall medical inflation.
Innovator pharmaceutical companies produce medical advances through pioneering scientific work and large-scale investments. The innovators’ work and investment lead both to new medicines and, over time, to generic copies that consumers use at low cost for many years.
Health plans use many tools — such as tiered formularies and cost sharing — to steer use toward generics and lower-cost medicines. Payers also typically require patients to pay a higher share of the costs of medicines out of pocket compared with other health services.
43
3 • Spending and Costs
Sharply Declining Prescription Medicine Spending Growth: 1999–2011* Spending growth for prescription medicines has slowed dramatically over the past decade, with historically low rates of growth observed in recent years.
44
Source: CMS1 *Total retail sales including brand medicines and generics.
15.4% 14.7%
14.0%
11.9%
9.0%
6.4%
9.3%
5.1%
2.8%
4.9%
0.4%
2.5%
0.4% 0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
3 • Spending and Costs
Medicines Account for a Small and Declining Share of Health Spending Growth
Growth in Health Care Expenditures Attributable to Prescription Drugs, 1998–2012
45
Source: CMS2
84% 89% 95%
16% 11% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1998–2002 2003–2007 2008–2012
Prescription Drugs
All Other Health care
3 • Spending and Costs
Retail Spending on Prescription Medicines Is a Small Share of Total U.S. Health Care Spending
46
Source: PhRMA analysis based on CMS3 *Other includes dental, home health, and other professional services as well as durable medical equipment costs.
Prescription Drugs $0.09
Hospital Care $0.32
Physician and Clinical Services
$0.20 Home Health and
Nursing Home Care $0.08
Government Admin. & Net Cost of Private Health
Insurance $0.07
Other* $0.23
Health Care Dollar, 2012
3 • Spending and Costs
95
115
135
155
175
195
Growth in Prescription Medicine Prices Has Been in Line with Other Health Care Prices
Consumer Price Index (2003 = 100)
47
Source: PhRMA analysis based on Bureau of Labor Statistics4
Prescription Medicines
All Medical Costs
Hospital & Related Services
Consumer Price Index
3 • Spending and Costs
More Than Four Out of Five U.S. Prescriptions Are Filled with Generics
48
Source: IMS Health5
19%
33%
43%
52%
72%
86%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1984 1990 1996 2002 2008 2013
Generic Share* of Prescriptions Filled 1984–2013
*Generic share includes generics and branded generics. “Other” category from IMS NPA not included in calculation.
3 • Spending and Costs
Innovator pharmaceutical companies produce medical advances through pioneering scientific work and large-scale investments. The innovators’ work and investment lead both to new medicines and, over time, to generics that consumers use at low cost for many years.
49
*Ten therapeutic classes most commonly used by Part D enrollees in 2006 were: lipid regulators, ACE inhibitors, calcium channel blockers, beta blockers, proton pump inhibitors, thyroid hormone, angiotensin II, codeine and combination products, antidepressants, and seizure disorder medications. Source: M. Kleinrock6
Daily Cost of Top 10 Therapeutic Classes* Most Commonly Used by Medicare Part D Enrollees
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
Cost
Per
Day
($) $1.00
$0.47
$1.50
Actual Estimated
The U.S. Prescription Drug Lifecycle Promotes Innovation and Affordability
3 • Spending and Costs
Insurance Covers a Lower Share of Prescription Drug Costs than of Other Medical Services On average, privately insured consumers pay out-of-pocket more than 20% of their total prescription drug spending, compared to 4% of spending for inpatient hospital care and 7% on hospital outpatient care.7
50
Sources: PhRMA analysis based on Medical Expenditure Panel Survey (MEPS)7; P.J. Cunningham8
4% 7%
9%
17%
22%
0%
10%
20%
30%
40%
Hospital Inpatient Hospital Outpatient Emergency Room Physicians Prescription Drugs*
*Includes brand & generic.
Average Patient Cost-Sharing by Type of Service in the Commercial Market7
3 • Spending and Costs
Powerful Purchasers Negotiate on Behalf of Patients
51
A small number of large purchasers dominate the U.S. prescription drug market.
*Figures may not sum to totals due to rounding. **Medco was acquired by Express Scripts in April 2012. Figure for Express Scripts/Medco is the sum of the individual script totals for each entity for the most recently reported 12-month period in 2012.
Company Number of Prescriptions Market Share (%)*
1. Express Scripts/Medco Health Solutions** 1,411 million 29.5%
2. CVS/Caremark 775 million 16.2%
3. Argus Health Systems 504 million 10.5%
4. OptumRx, Inc. 319 million 6.7%
5. ACS, Inc. 250 million 5.2%
Top 5 PBMs Total 3,259 million 68.2%
Top 10 PBMs Total 4,107 million 85.9%
Top 15 PBMs Total 4,584 million 95.9%
All PBMs in U.S. 4,780 million 100%
Source: Atlantic Information Services, Inc.9
Prescription Volume by Pharmacy Benefit Management (PBM) Companies, 2012
3 • Spending and Costs
In the U.S. System, Health Plans Have Powerful Tools to Reduce Spending on Medicines
52
Payers drive nearly all use of medicines to generics and
“preferred” brands.
Formularies List of covered drugs
Tiered Copays Higher cost to patients for
brands than for generics and preferred brands
Prior Authorization Physicians required to justify
medicine’s use before it’s covered
Concentrated Purchasing Power Individual Pharmacy Benefit Managers buy medicines for more people than
in entire European countries
Source: IMS Health10
Financial Incentives Payments to physicians and/or
pharmacies for generic prescribing or switching patients to preferred drugs
Step Therapy Patients must try and fail on alternatives before certain
medicines are covered
3 • Spending and Costs
Plans Increasingly Subject Certain Medicines to Higher Cost Sharing Patients taking medicines placed on a 4th tier or higher can be subject to higher cost sharing relative to lower tiers. Patients needing these medicines commonly face serious and challenging health conditions.
53
Source: KFF/HRET11
23%
14%
14%
13%
11%
7%
7%
5%
4%
3%
0% 5% 10% 15% 20% 25%
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
Share of Plans with Four or More Tiers
3 • Spending and Costs
Newly Introduced Generics Are Adopted Rapidly
54
When a generic version of a medicine becomes available for the first time, it capture an average of three quarters of the market within 3 months,12 and some capture as much as 90% by that time.13
Sources: H. Grabowski, et al.12; Express Scripts13
0%
20%
40%
60%
80%
100%
Mo.BeforeGeneric
Entry
Mo. ofGeneric
Entry
First FullMonth
2 3 4 5 6 7 8 9 10 11 12
Number of Months After First Generic Entry
Gene
ric U
se R
ate
Average Generic Share of Total Use Following Launch of a Brand Medicine’s First Generic, 2011–2012*
*Average monthly generic share of total standardized units of a unique molecule/form combination.
3 • Spending and Costs
Medicines Account for a Small Share of Health Spending Differences Between the United States and Other Countries
Per Capita Health Care Spending 2011 in United States, Canada and Germany
55
Source: PhRMA analysis based on Organisation for Economic Co-operation and Development14
Rx Medicines Rx Medicines Rx Medicines
All Other Health Care
All Other Health Care
All Other Health Care
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
United States Canada Germany
$8,508
$4,521 $4,495
For example, medicines account for 6% of the difference in total health care spending between the U.S. and Canada, and 9% between U.S. and Germany.
3 • Spending and Costs
Notes and Sources
56
1. Centers for Medicare & Medicaid Services (CMS). "National Health Expenditures by Type of Service and Source of Funds, CY 1960–2011." Baltimore, MD: CMS, 2012. Available at www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/NHE2011.zip (accessed March 2014).
2. Ibid.
3. PhRMA analysis based on CMS. "National Health Expenditures by Type of Service and Source of Funds, CY 1960–2012." Baltimore, MD: CMS, 2013. Available at www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/NHE2012.zip (accessed March 2014).
4. PhRMA analysis based on U.S. Bureau of Labor Statistics. “Consumer Price Index—All Urban Consumers, History Table.” Washington, DC: BLS, 2013. Available at www.bls.gov/cpi/#tables (accessed March 2014).
5. PhRMA analysis based on IMS Health. “IMS National Prescription AuditTM.” Danbury, CT: IMS Health, 2014.
6. M. Kleinrock. Daily Cost of Medicare Part D December 2013 Update. December 2013. IMS Institute for Healthcare Informatics.
7. PhRMA analysis of Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey, 2009. Available at www.meps.ahrq.gov/mepsweb/ (accessed March 2014). Prescription drug spending includes brand and generic ingredients, pharmacy, and distribution costs. Estimates are not restricted to individuals who have private coverage that includes prescription coverage, which can be expected to account for less than 2%.
8. P.J. Cunningham. “Despite the Recession's Effects on Incomes and Jobs, the Share of People with High Medical Costs was Mostly Unchanged.” Health Affairs 2012; 31(11): 2563–2570.
9. Atlantic Information Services, Inc. (AIS). “Pharmacy Benefit Survey Results: 4th Quarter 2012.” 2012. AIS Health (blog). At www.AISHealth.com (accessed February 2013).
10. IMS Health, Inc. “IMS National Prescription Audit™.” Danbury, CT: IMS Health, 2004–2012.
11. Kaiser Family Foundation/Health Research & Educational Trust. “Employer Health Benefits: 2013 Annual Survey.” August 2013, p. 150.
3 • Spending and Costs
Notes and Sources
57
12. H. Grabowksi, G. Long, and R. Mortimer. “Recent Trends in Brand-Name and Generic Drug Competition.” Journal of Medical Economics 2014; 17(3): 207–214. Available at http://informahealthcare.com/doi/abs/10.3111/13696998.2013.873723.
13. For example, a new generic version of an osteoporosis treatment launched in 2009 captured more than 90% of the mail-order market in the first week, and more than 90% of all prescriptions in the first 3 months. See: Express Scripts, Inc. “2009 Drug Trend Report.” St. Louis, MO: Express Scripts, April 2010. Available at www.express-scripts.com/research/research/dtr/archive/2009/dtrfinal.pdf (accessed March 2014).
14. PhRMA analysis based on Organisation for Economic Co-operation and Development. “OECD Health Data 2013—Frequently Requested Data.” Paris: OECD Publishing, November 2013. Available at www.oecd.org/health/health-systems/oecdhealthdata.htm (accessed March 2014).
4 • Outcomes and Savings
4 4 OUTCOMES AND SAVINGS Overcoming Gaps in Treatment, Improving Outcomes, and Reducing Costs Through Better Use of Medicines Undertreatment of chronic disease and suboptimal use of prescribed medicines are significant public health problems, costing the U.S. economy hundreds of billions of dollars each year. An ever growing body of evidence demonstrates that improved use of prescribed medicines recommended to treat chronic conditions can result in better health outcomes, lower costs for other health care services, and increased worker productivity.
59
4 • Outcomes and Savings
Most Americans Use Few or No Medicines — a Small Share of People Fill the Majority of Prescriptions The top 20% of people who used medicines accounted for almost two-thirds of all prescriptions filled in 2010.
60
Source: PhRMA analysis based on MEPS1
80%
36%
20% 64%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% of Population % of Prescription Fills
(39% of the population
uses no medicines)
4 • Outcomes and Savings
Medicines’ Changing Role in Recommended Care
61
Revisions to clinical guidelines based on the latest research have resulted in appropriate increases in the use of medicines in recent years.
Source: R.W. Dubois and B.B. Dean2
4 • Outcomes and Savings
Failure to Prescribe the Indicated Treatment Is the Most Common Prescribing Quality Problem RAND researchers report that failure to prescribe an indicated treatment is a far more common quality problem than is inappropriate medicine use.
62
Source: RAND Health3 *Quality indicators were developed and implemented based on systematic literature reviews and multiple layers of expert judgment.
3%
19%
36%
50%
0% 10% 20% 30% 40% 50% 60%
Inappropriate medication
Inadequate education/continuity/documentation
Inadequate monitoring
Failure to prescribe whencalled for by guidelines
Percentage of Quality Indicators Failed*
Quality Problems Among Vulnerable Older Patients
4 • Outcomes and Savings
Diabetes: An Example of Underdiagnosis and Undertreatment
63
Uncontrolled diabetes can lead to kidney failure, amputation, blindness, and stroke.
Sources: CDC4; Analysis based on National Health and Nutrition Examination Survey (NHANES)5
4 • Outcomes and Savings 64
Better Use of Medicines Improves Patient Health
Source: T.B. Gibson, et al.6
4.0%
8.0%
10.1%
15.9%
10.8%
15.7%
1.8%
4.0%
7.8%
11.8%
5.8%
13.0%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Acute MyocardialInfarction
Amputation/ Ulcer CerebrovascularDisease
Neuropathy Renal Events Retinopathy
Like
lihoo
d of
Eve
nt
Nonadherent Patients Adherent Patients
Diabetes patients who take their medicines as prescribed experience fewer diabetes-related complications.
4 • Outcomes and Savings
Recommended Medicines Can Save Lives and Dramatically Improve Health
...achieving effective blood pressure control would be approximately equivalent to eliminating all deaths from accidents, or from influenza and pneumonia combined.
— David Cutler, Ph.D., Harvard University
65
Source: D.M. Cutler, et al.7
Annual Hospitalizations Avoided Annual Premature Deaths Avoided
Prevention Achieved: Based on Current Treatment Rates 833,000 86,000
Potential Additional Prevention: If Untreated Patients Received
Recommended Medicines 420,000 89,000
Annual Hospitalizations and Deaths Avoided Through Use of Recommended Antihypertensive Medications
“ “
4 • Outcomes and Savings
Prescription Medicines Are Part of the Solution to Reducing Medical Spending Better use of medicines reduces use of avoidable medical care, resulting in reductions in medical spending.
66
Source: M.C. Roebuck, et al.8
$1,058
-$8,881
$656
-$4,413
$429
-$4,337
$601
-$1,860
-$10,000
-$8,000
-$6,000
-$4,000
-$2,000
$0
$2,000Drug Spending Medical Spending
Congestive Heart Failure Diabetes Hypertension Dyslipidemia
Adherence to Medicines Lowers Total Health Spending for Chronically Ill Patients
Diffe
renc
e in
Ann
ual S
pend
ing
Betw
een
Ad
here
nt a
nd N
onad
here
nt P
atie
nts
4 • Outcomes and Savings
Gaining Drug Coverage Reduced Other Medical Spending
67
The Medicare drug benefit increased access to medicines for those previously without drug coverage, resulting in reduced non-drug medical spending9 and overall savings of $13.4 billion in 2007, the first full year of the program.10
Sources: J.M. McWilliams, et al.9; C.C. Afendulis and M.E. Chernew10
*Home health, durable medical equipment, hospice, and outpatient institutional services.
Average Reduction in Medical Spending in 2006 and 2007, for Beneficiaries Gaining Drug Coverage Through Part D
-$816
-$268
-$140
-$1,224
Average Total
Spending Reduction
per Beneficiary
4 • Outcomes and Savings
Improving Adherence Could Yield Large Savings
68
Improving adherence to congestive heart failure (CHF) medicines could result in federal savings of $22.4 billion over 10 years.
Source: T.M. Dall, et al.11
$0
$10
$20
$30
$40
$50
$60
Billi
ons
$26.9 Billion
Additional savings to Medicare if adherence reached recommended levels
$22.4 Billion
Savings to Medicare from gaining Part D Coverage
Estimated 10-Year Savings to Medicare from Improved Adherence to CHF Medications, 2013–2022
4 • Outcomes and Savings
Better Use of Medicines Yields Significant Health Gains and Savings on Other Services Due to a growing body of evidence, CBO’s budget estimates now recognize reductions in other medical expenditures associated with increased use of prescription medicines in Medicare.
69
Sources: CBO12; J.E. Bailey, et al.13; A.K. Jha, et al.14; J.F. Van Boven, et al.15; L. Simoni-Wastila, et al.16; R. Halpern, et al.17; M.C. Roebuck, et al.18; A. Bitton, et al.19; B.C. Stuart, et al.20; and W.H. Shrank, et al.21
Numerous studies demonstrate that medicines can improve health outcomes and reduce use of other medical services:
• Better adherence to antihypertensive medications could save approximately 200,000 lives over 5 years.13
• Improved medication adherence among diabetes patients could prevent more than 1 million emergency department visits and hospitalizations annually, for potential savings of $8.3 billion each year.14
• Nonadherence has also been linked to excess hospitalizations for conditions such as chronic obstructive pulmonary disease,15,16 osteoporosis,17 congestive heart failure, hypertension, diabetes, and dyslipidemia,18,19,20 with costs of roughly $170 billion per year.21
Pharmaceuticals have the effect of improving or maintaining an individual’s health...adhering to a drug regimen for a chronic condition such as diabetes or high blood pressure may prevent complications…taking the medication may also avert hospital admissions and thus reduce the use of medical services.
— Congressional Budget Office12
“
“
4 • Outcomes and Savings
High Cost Sharing Reduces Adherence
70
RAND researchers found that doubling co-pays reduced patients’ adherence to prescribed medicines by 25% to 45% and increased emergency room visits and hospitalizations.
Source: D.P. Goldman, et al.22
-45% -44%
-34% -33% -32%
-26% -26% -25%
-50%
-45%
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
Percent Change in Adherence from Doubling Medicine Co-Pays
Perc
ent C
hang
e in
Day
s Sup
plie
d of
Med
icin
e
4 • Outcomes and Savings
Patients Facing High Cost Sharing Commonly Abandon Their Medicines Patients taking medicines on a specialty tier, such as medicines to treat rheumatoid arthritis and multiple sclerosis, face higher out-of-pocket expenses than patients taking medicines not on this tier. These patients also commonly abandon their medicines at the pharmacy.
71
Source: A. King and L. Mitchell23
56% 55%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Rheumatoid Arthritis* Multiple Sclerosis*
Average Abandonment Rates, 2009–2011
*Select therapies include those treating patients with Parkinson's disease and dyslipidemia.
Abandonment rate for select oral therapies*
4 • Outcomes and Savings
Improving Adherence Increases Productivity
-6
-3.6
-6.3
-9.8
-3.6 -3.1
-2.7 -3.6
-10
-9
-8
-7
-6
-5
-4
-3
-2
-1
0Diabetes Hypertension High Cholesterol Asthma/COPD
Miss
ed D
ays P
er Y
ear
Absenteeism Short-Term Disability
72
Fewer Days of Absence and Short-Term Disability for Adherent Patients as Opposed to Nonadherent Patients
Adherent patients miss fewer days of work and experience less short-term disability. For workers with Asthma/COPD alone, adherence averages over $3100 in savings per worker annually.
Source: G.S. Carls, et al.24
4 • Outcomes and Savings
Notes and Sources
1. IHS Global Insight analysis based on Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey, 2010. Available at http://meps.ahrq.gov/mepsweb/ (accessed March 2014).
2. R.W. Dubois and B.B. Dean. “Evolution of Clinical Practice Guidelines: Evidence Supporting Expanded Use of Medicines.” Disease Management 2006; 9(4): 210–223.
3. RAND Health. "U.S. Healthcare Facts About Cost, Access, and Quality." Santa Monica, CA: RAND Corporation, 2005, citing T. Higashi, et al. "The Quality of Pharmacologic Care for Vulnerable Older Patients." Annals of Internal Medicine 2004; 140(9): 714–720.
4. Centers for Disease Control and Prevention. "National Diabetes Fact Sheet: National Estimates and General Information on Diabetes and Prediabetes in the United States, 2011." Atlanta, GA: CDC, 2011. Available at www.cdc.gov/diabetes/pubs/pdf/ndfs_2011.pdf (accessed March 2014).
5. IHS Global Insight analysis based on 2010 National Health and Nutrition Examination Survey (NHANES).
6. T.B. Gibson, et al. “Cost Sharing, Adherence, and Health Outcomes in Patients with Diabetes.” American Journal of Managed Care 2010; 16(8): 589–600.
7. D.M. Cutler, et al. “The Value of Antihypertensive Drugs: A Perspective on Medical Innovation.” Health Affairs 2007; 26(1): 97–110.
8. M.C. Roebuck, et al. “Medication Adherence Leads to Lower Health Care Use and Costs Despite Increased Drug Spending.” Health Affairs 2011; 30(1): 91–99.
9. J.M. McWilliams, A.M. Zaslavsky, and H.A. Huskamp. “Implementation of Medicare Part D and Nondrug Medical Spending for Elderly Adults with Limited Prior Drug Coverage.” Journal of the American Medical Association 2011; 306(4): 402–409.
10. C.C. Afendulis and M.E. Chernew. “State-Level Impacts of Medicare Part D.” American Journal of Managed Care 2011; 17 Suppl 12:S.
11. T.M. Dall, et al. "The Economic Impact of Medicare Part D on Congestive Heart Failure.” American Journal of Managed Care 2013; 19: S97–S100.
12. Congressional Budget Office. “Offsetting Effects of Prescription Drug Use on Medicare’s Spending for Medical Services.” Washington, DC: CBO, November 2012.
13. J.E. Bailey, et al. “Antihypertensive Medication Adherence, Ambulatory Visits, and Risk of Stroke and Death." Journal of General Internal Medicine 2010; 25(6): 495–503.
74
4 • Outcomes and Savings
Notes and Sources
75
14. A.K. Jha, et al. “Greater Adherence to Diabetes Drugs is Linked to Less Hospital Use and Could Save Nearly $5 Billion Annually.” Health Affairs 2012; 31(8): 1836–1846.
15. J.F. Van Boven, et al. “Clinical and Economic Impact of Non-Adherence in COPD: A Systemic Review.” Respiratory. Medicine 2014; 108(1):103−13.
16. L. Simoni-Wastila, et al. “Association of Chronic Obstructive Pulmonary Disease Maintenance Medication Adherence With All-Cause Hospitalization and Spending in a Medicare Population.” American Journal of Geriatric Pharmacotherapy 2012; 10(3): 201–210.
17. R. Halpern, et al. “The Association of Adherence to Osteoporosis Therapies with Fracture, All-Cause Medical Costs, and All-Cause Hospitalizations: A Retrospective Claims Analysis of Female Health Plan Enrollees with Osteoporosis.” Journal of Managed Care Pharmacy 2011; 17(1): 25–39.
18. M.C. Roebuck, et al. “Medication Adherence Leads to Lower Health Care Use and Costs Despite Increased Drug Spending.” Health Affairs 2011; 30(1): 91–99.
19. A. Bitton, et al. “The Impact of Medication Adherence on Coronary Artery Disease Costs and Outcomes: A Systematic Review.” American Journal of Medicine 2013; 126(4): 357.e7−357.e327.
20. B.C. Stuart, et al. “Increasing Medicare Part D Enrollment in Medication Therapy Management Could Improve Health and Lower Costs.” Health Affairs 2013; 32(7): 1212−1220.
21. W.H. Shrank, et al. "A Blueprint for Pharmacy Benefit Managers to Increase Value." American Journal of Managed Care 2009; 15(2): 87−93.
22. D.P. Goldman, et al. “Pharmacy Benefits and the Use of Drugs by the Chronically Ill.” Journal of the American Medical Association 2004; 291(19): 2344–2350.
23. A. King and L. Mitchell. “Who Pays for Specialty Medicines?” Pharmaceutical Executive 2012; 32(11): 38–42. Available at www.pharmexec.com/pharmexec/Article/Who-Pays-for-Specialty-Medicines/ArticleStandard/Article/detail/796497 (accessed March 2014).
24. G.S. Carls, et al. "Impact of Medication Adherence on Absenteeism and Short-Term Disability for Five Chronic Diseases." Journal of Occupational and Environmental Medicine 2012; 54(7): 792–805.
5 • Communications with Patients and Health Care Providers
5 5 COMMUNICATIONS WITH PATIENTS AND HEALTH CARE PROVIDERS Informing Consumers and Providers About Medicines
Biopharmaceutical marketing and promotion are important and extensively regulated ways of informing consumers and health care professionals about medicines.
Biopharmaceutical company representatives help speed the dissemination of advances in medical care, and many physicians value this information.
Direct-to-consumer advertising (DTCA) by biopharmaceutical companies often leads patients to seek additional information and consult their doctors about previously untreated conditions; it also informs patients about medicines’ risks and benefits.
While effective communication can increase awareness of medical treatment options, other factors, including formulary design and utilization management strategies, often have a greater impact on prescribing decisions.
77
5 • Communications with Patients and Health Care Providers 78
Many Factors Affect Physicians Prescribing Decisions
Source: KRC Research1
Factors Influencing Prescribing Decisions in the United States in 2013
10%
10%
11%
38%
39%
48%
50%
89%
91%
35%
53%
47%
54%
44%
44%
42%
9%
8%
Information from insurance and prescription benefitsmanager representatives
Information from pharmaceutical company representatives
Pharmaceutical company-sponsored educational programsfeaturing physician speakers, not CME
Information from colleagues and peers
Patient's insurance coverage and formulary
Clinical practice guidelines
Articles in peer-reviewed medical journals
Patient's particular situation, including drug interactions,side effects, and contraindications
Clinical knowledge and experience
A great deal Some
5 • Communications with Patients and Health Care Providers
Physicians Find Biopharmaceutical Representatives’ Information Up to Date, Useful, and Reliable
79
Source: KRC Research2
Up to date and timely 94%
Useful 92%
Reliable 84%
43%
22%
22%
52%
71%
55%
Strongly agree Somewhat agree
Physicians’ Assessment of Biopharmaceutical Representatives’ Information
5 • Communications with Patients and Health Care Providers
Direct-to-Consumer Advertising Often Prompts Patients to Seek Additional Information
80
Source: Princeton Survey Research Associates International3
47%
27%
14%
8%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Sought Information Initiated Conversationwith Doctor
Newly Aware ofMedical Condition
Requested SpecificMedication
Consumer Responses to Viewing Advertisements for Prescription Medicines
5 • Communications with Patients and Health Care Providers
Direct-to-Consumer Advertising Increases Awareness of the Benefits and Risks of New Medicines
76%
55%
87%
70%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Seen/heard Pay a lot/someattention
Seen/heard Pay a lot/someattention
Perc
enta
ge o
f Pop
ulat
ion
Awareness of Benefit Information Awareness of Risk Information
81
Source: Prevention Magazine National Survey Data4
Awareness of Benefit and Risk Information Among People Who Saw an Advertisement on TV
5 • Communications with Patients and Health Care Providers 82
Physicians Respond to Patients’ Requests for Specific Treatments with a Broad Range of Alternatives
Source: Kaiser Family Foundation5
When Asked by a Patient About a Specific Treatment, Physicians Frequently...
5%
14%
14%
18%
50%
0% 10% 20% 30% 40% 50% 60%
Give prescription for requested drug
Recommend a different prescription drug
Recommend no treatment
Recommend over-the-counter drug
Recommend lifestyle or behavior changes
5 • Communications with Patients and Health Care Providers
Direct-to-Consumer Advertising Encourages Appropriate Use of Medicines Study finds Direct-to-Consumer Advertising (DTCA) promoted appropriate use of oral breast cancer therapies and did not promote inappropriate use.*
83
Source: G.A. Abel, et al.6
*Study measured the effect of DTCA on patients and doctors regarding the use of aromatase inhibitors (AIs) consistent with medical practice guidelines. Study found that DTCA spending on AIs was associated with an overall new AI prescription increase of 0.18% after 3 months (approximately 118 new AI prescriptions per million dollars spent). There was “no significant change associated with DTCA spending for AIs for those aged 40 years or less at any time from 0 to 6 months.”
5 • Communications with Patients and Health Care Providers
Patients Benefit from Direct-to-Consumer Advertising
84
DTCA increases the likelihood that patients will seek and receive treatment for undiagnosed conditions.
Source: J. Jayawardhana7 *“Consumer welfare” refers to the population-wide net value to consumers (patients) from their use of health care services.
• A study examining DTCA and cholesterol-reducing medications found that patients between the ages of 50 and 70, who are more likely to have high cholesterol levels, experienced the greatest welfare gains of 12–13% of the average cost of a prescription.
• The study’s author notes that “DTCA helps bring the under-diagnosed consumers to physicians' offices, which in turn helps to improve consumer welfare.”
8%
12–13%
0%
2%
4%
6%
8%
10%
12%
14%
Average welfare gain of overallpopulation
Average welfare gain of patientsbetween 50 and 70 years old
Percentage Increase in Consumer Welfare* from DTCA for Cholesterol-Reducing Medicines
5 • Communications with Patients and Health Care Providers
According to Government and Academic Experts, Marketing Costs Do Not Add to Prescription Drug Prices
85
Sources: Federal Trade Commission8; J.P. Newhouse9
[Direct-to-consumer advertising] can empower consumers to manage their own health care by providing information that will help them, with the assistance of their doctors, to make better informed decisions about treatment options.... Consumers receive these benefits from DTC advertising with little, if any, evidence that such advertising increases prescription drug prices. 8
— Federal Trade Commission One sometimes hears it said that the industry would have more money for R&D if it would cut down its marketing costs. This comment reflects misunderstanding of the economics of the industry. If a firm did so, it would be less profitable and would attract less capital for R&D or would have fewer internally generated funds to invest [in R&D]. 9
— J.P. Newhouse, Harvard University
“
“
“
“
5 • Communications with Patients and Health Care Providers
Notes and Sources
87
1. KRC Research. “Survey of Physicians About Pharmaceutical and Biotech Research Company Activities and Information.” Washington, DC: KRC, March 2011. Available at www.phrma.org/sites/default/files/pdf/krcsurveyofphysicians_1.pdf (accessed March 2014).
2. Ibid.
3. Princeton Survey Research Associates International for Prevention Magazine, Men’s Health, and Women’s Health. “Consumer Reaction to DTC Advertisements of Prescription Medicines.” 10th Annual Presentation, 2007.
4. “National Survey on Consumer Reaction to DTC Advertising of Prescription Medicines.” Prevention Magazine, 2012.
5. Kaiser Family Foundation. “National Survey of Physicians, Toplines.” November 2006. Available at www.kff.org/kaiserpolls/upload/7584.pdf (accessed March 2014).
6. G.A. Abel, et al. “Impact of Oncology-Related Direct-to-Consumer Advertising: Association with Appropriate and Inappropriate Prescriptions.” Cancer 2013; 119(5): 1065–1072.
7. J. Jayawardhana. “Direct-to-Consumer Advertising and Consumer Welfare.” International Journal of Industrial Organization 2013; 31(2): 164–180.
8. Federal Trade Commission. Comments of the Staff of the Bureau of Consumer Protection, the Bureau of Economics, and the Office of Policy Planning of the Federal Trade Commission in the Matter of Request for Comments on Consumer-Directed Promotion, Docket No. 2003N-0344. 1 December 2003.
9. J.P. Newhouse. “How Much Should Medicare Pay for Drugs?” Health Affairs 2004; 23(1): 89–102.
6 • Economic Impact
6 6 ECONOMIC IMPACT The Biopharmaceutical Sector’s Role in the Economy America’s biopharmaceutical research companies serve as the foundation for one of the country’s most dynamic innovation and business ecosystems. The biopharmaceutical industry is among the most R&D-intensive industries in the United States and accounts for 20% of all domestic R&D funded by U.S. businesses. The industry and its large-scale research and manufacturing supply chain supports high-quality jobs across the U.S. economy.
American biopharmaceutical research companies are leaders in charitable contributions, including significant support for education efforts in science, technology, engineering, and mathematics (STEM).
89
6 • Economic Impact
The Biopharmaceutical Sector is the Single Largest Funder of Business R&D in the United States The biopharmaceutical sector accounts for the single largest share of all U.S. business R&D, representing nearly 20% of all domestic R&D funded by U.S. businesses.
90
Source: National Science Foundation1
*The remaining 43% share of business R&D spending is conducted by other industries including subsectors of the machinery sector, the electrical equipment sector, and the professional, scientific, and technical services sector among others.
20%
12% 10%
5% 5% 5%
0%
5%
10%
15%
20%
25%
Pharmaceuticals andMedicines
Software Semiconductors Automobiles CommunicationsEquipment
Aerospace
Share of Total U.S. Business R&D by Industry, 2010*
6 • Economic Impact
The Biopharmaceutical Sector is the Most R&D-Intensive in the United States Biopharmaceutical companies invested more than ten times the amount of R&D per employee than manufacturing industries overall.
91
Source: National Science Foundation2
R&D Expenditures per Employee, by Manufacturing Sector, 2000–2010
$11,222
$15,294
$19,772
$46,888
$63,975
$104,567
All manufacturing
Motor vehicles, trailers, parts
Aerospace products
Semiconductors
Communications equipment
Pharmaceuticals and medicines
6 • Economic Impact 92
The Economic Reach of the U.S. Biopharmaceutical Industry
Source: Battelle Technology Partnership Practice3
6 • Economic Impact
U.S. Leads in Biopharmaceutical Intellectual Property
United States, 52.6%
European Union, 25.9%
Japan, 9.9%
All Others, 7.3% Asia,* 3.6%
China, 0.7%
93
Source: National Science Foundation4
The intellectual property related to more than half of new medicines resides in the United States.
U.S. Patents Granted in Pharmaceutical Technology, Selected Years 1997–2012, Location of Inventor by Region/Country
*Asia includes India, Malaysia, Singapore, South Korea, Taiwan and others (but excludes China and Japan).
6 • Economic Impact
U.S. Biopharmaceutical Exports Have Grown Biopharmaceutical exports have nearly doubled over the 10-year period between 2004 and 2013, accounting for 3.2% of all U.S. exports by 2013.
94
Source: U.S. Dept. of Commerce, International Trade Administration5
$28
$38
$49 $52
$0
$10
$20
$30
$40
$50
$60
2004 2007 2010 2013*
U.S. Biopharmaceutical Goods Exports (Billions)
*Estimated
6 • Economic Impact
Accounting Treatment of R&D Overstates Biopharmaceutical Profits
Correctly accounting for R&D as a long-lived investment tends to reduce substantially, if not to eliminate altogether, the inference that pharmaceutical companies are on average achieving supranormal profit returns. 7
— F.M. Scherer, AEI-Brookings Joint Center for Regulatory Studies
...the standard accounting measure of profits overstates true returns to R&D-intensive industries, such as pharmaceuticals, and makes it difficult to meaningfully compare profit levels among industries. Accounting measures treat most R&D spending (except for capital equipment) as a deductible business expense rather than as a capitalized investment. But the intangible assets that research and development generate — such as accumulated knowledge, new research capabilities, and patents — increase the value of a company’s asset base. Not accounting for that value overstates a firm’s true return on its assets. 8
— Congressional Budget Office
Usual profit figures greatly overstate the industry’s economic profit rate. 9
— J.P. Newhouse, Harvard University
95
Sources: F.M. Scherer6; CBO7; J.P. Newhouse8
“
“
“
“
“
“
6 • Economic Impact
Biopharmaceutical Industry Advancing STEM Education in the U.S. The science, technology, engineering, and mathematics (STEM) workforce accounts for over 50% of the nation’s sustained economic growth. Over the past 5 years, PhRMA member companies and their foundations have supported over 90 STEM education programs across the U.S., impacting over 1.6 million students and 17,500 teachers.
96
Source: Battelle Technology Partnership Practice9
PhRMA member company and foundation contributions to STEM education in the U.S. include:
6 • Economic Impact
Biopharmaceutical Companies Lead Corporate Giving Biopharmaceutical companies led corporate giving* in 2011. Nearly 90% of these contributions were in the form of in-kind product donations.
97
Source: Committee Encouraging Corporate Philanthropy10
Average Corporate Giving by Sector Total Giving as % of Pre-Tax Profit Total Giving per Employee
All Companies 1.0% $695
Biopharmaceuticals 13.0% $18,273
Energy 0.5% $2,766
Utilities 1.1% $1,027
Information Technology 0.8% $702
Consumer Staples 1.2% $673
Industrials 0.7% $255
*Domestic giving makes up the largest portion of total corporate giving across all sectors surveyed. Domestic giving comprised 79% of total giving in 2012.
6 • Economic Impact
Notes and Sources
1. PhRMA analysis of National Center for Science and Engineering Statistics. “Business Research and Development and Innovation: 2008–2010.” Washington, DC: National Science Foundation, 2013; PhRMA analysis of National Center for Science and Engineering Statistics. “Business Research and Development and Innovation: 2008–2010.” Washington, DC: National Science Foundation, 2013.
2. PhRMA analysis of National Science Board. “Science and Engineering Indicators.” Washington, DC: National Science Foundation, 2012. Available at www.nsf.gov/statistics/seind14/ (accessed March 2014).
3. Battelle Technology Partnership Practice. “The U.S. Biopharmaceuticals Sector: Economic Contribution of the Nation.” Columbus, OH: Battelle Memorial Institute, July 2013.
4. PhRMA analysis of National Science Foundation. “Science and Engineering Indicators.” Washington, DC: National Science Foundation, 2014.
5. PhRMA analysis of data from U.S. Department of Commerce, International Trade Administration. “TradeStats Express™: National Trade Data.” Export.gov. At http://tse.export.gov/TSE/TSEhome.aspx (accessed March 2014).
6. F.M. Scherer. “Pharmaceutical Innovation.” AEI-Brookings Joint Center for Regulatory Studies Working Paper 07–13. July 2007.
7. Congressional Budget Office. “Research and Development in the Pharmaceutical Industry.” Washington, DC: CBO, October 2006. Available at www.cbo.gov/sites/default/files/cbofiles/ftpdocs/76xx/doc7615/10-02-drugr-d.pdf (accessed March 2013).
8. J.P. Newhouse. “How Much Should Medicare Pay for Drugs?” Health Affairs 2004; 23(1): 89–102.
9. Battelle Technology Partnership Practice. “STEM: Building a 21st Century Workforce to Develop Tomorrow’s New Medicines.” Columbus, OH: Battelle Memorial Institute, January 2014. Available at www.phrma.org/sites/default/files/pdf/stem-education-report-2014.pdf (accessed March 2014).
10. Committee Encouraging Corporate Philanthropy. “Giving in Numbers: 2013 Edition.” New York: CECP, 2013. Available at www.philanthropynw.org/s_pnw/bin.asp?CID=6398&DID=63878&DOC=FILE.PDF (accessed March 2014).
98