Text of Robert Ingram’s Keynote 
Address at NCCBI Annual Meeting
 
Good afternoon.  I welcome the opportunity to have a few minutes to speak with you today, even though I suspect that some of you here have a bit of a love/hate view of the pharmaceutical industry.  On the one hand, we all love what the pharmaceutical research companies give us: new medicines that lower our cholesterol and blood pressure, that fight our cancer, battle our viruses, and generally keep us and the people we love healthy and active.

But let’s face it - we don’t like paying for pills, no matter how innovative they are or how miraculous their effect on our life.   Many of you have to pay for the health care of your employees, and you’re seeing those costs escalate while other pressures on your business are forcing you to find a way to cut costs overall.  So where do you look? I’ll bet you look back to the money you spend on pharmaceuticals.

Over the next few minutes, I'd like to quickly give you a few reasons why prescription medicines - and the pharmaceutical research industry - provide value to you as an individual, and as an employer.  And I’d like to do that by focusing on a few myths and realities about the industry in general.

The first myth: drug prices are skyrocketing.

The reality is that volume and new products, not price, are driving up costs. Today, the average life span is close to 80 years of age and counting. Thirty-five million Americans are now over age 65, and in just 30 years, that number will double to 70 million. The problem is that elderly patients consume more medicines - up to 12 prescriptions per year on average for a person aged 75.

More people, taking more medicines, leads to increased spending on prescription medicines. But increased drug spending is not the same as an increase in drug prices. In fact, of the total growth in sales of 13.6% in 2000, less than 4% was due to price increases.  Almost 10% was due to increased use of medicines.

Which brings me to my second myth:  pharmaceuticals are to blame for the rising cost of medical care.

The reality is that the more we spend on appropriate pharmaceutical care, the more we save in long term costs for health care. The most expensive item in the health budget is hospital care - 32 cents on the healthcare dollar - followed by physician costs at 22 cents.  Prescription drugs only account for 9 cents of every dollar spent on health care.

The irony is that those 9 cents save a whole lot more money by avoiding the need for you or your employees to seek more expensive medical care - like going to the hospital to treat an asthma attack.

Take AIDS. In the early 90's, most AIDS patients died within two years of diagnosis.  By 1996, AIDS dropped out of the top 10 leading causes of death in the United States.  Why?

Because in 1984, scientists at Burroughs Wellcome discovered AZT – the first treatment to fight HIV/AIDS.  In the first 16 months after AZT came to market, hospital inpatient care dropped 43%.

AIDS therapies today cost approximately $16,000 a year per patient. But before those therapies were available, an AIDS patient could rack up $100,000 a year in hospital bills - before they died.

Are we spending more today on AIDS medicines?  Yes, but we are saving millions in the overall cost of medical care.  And people with AIDS are living - and productive - members of our communities.

A second example: cardiovascular disease.  Sixty-one million Americans have one or more types of heart disease, and nearly one million of them die each year. Heart disease costs almost $300 billion a year in healthcare and lost productivity.  One way to treat the disease is surgery, at costs from $21,000 to $47,000 a pop. Alternatively, you can pop a pill at a cost of around $1,000 a year.  And the added benefits are significant. Beta-blockers, for example, can reduce death rates by 35% and sharply reduce hospital admissions, stays, tests and procedures.

Are we spending more today on medicines to fight cardiovascular disease?  Yes, but investing in prescription medicines to save all those additional costs - and suffering - sounds pretty good to me as both a patient and an employer.

But our critics tell us that we are not spending our money wisely - too much on Direct to Consumer advertising, for example. The truth is that DTC is a minor cost compared to R&D, and has an important role to play in educating the public.

You might be surprised to learn that the pharmaceutical industry is the main provider of patient and physician education. Often patients learn about disease symptoms and new treatments for their condition through DTC advertising, and are prompted to visit their doctor - so patients and their physicians see the value in this kind of advertising.

GSK’s migraine medicine -  Imitrex - was the first innovation in migraine treatment in over 40 years.  Until Imitrex, there was little reason to talk to the doctor - all sufferers could do was pop a pain pill and stay in a dark room for a day or two until the headache went away.  But DTC ads informed patients that a new treatment was available. They visited their doctor, and if Imitrex was right for them, they had access to a powerful new medicine that relieved their pain and gave them back their daily life.

The industry also provides the vast majority of accredited continuing medical education for physicians.  Approved by third parties, these programs keep doctors up to date on new trends and treatments - information that is key to helping them make the best diagnosis for a patient.

And spending on DTC is not out of line.  In fact, the pharmaceutical industry spends 10 times more on R&D than DTC - $26 billion versus $2.5 billion in 2000. GlaxoSmithKline alone spends $4 billion a year on research.  And that research yields benefits. Contrary to popular opinion, it is the research-based pharmaceutical companies - not government or academia - that are responsible for 93 of the top 100 most commonly used medicines in the US.

But isn’t it true that much of that R&D is wasted on “me-too” medicines that have little benefit over existing medicines? The reality is that sometimes even small enhancements can have important benefits for patients.

I sometimes say working in a pharmaceutical company is a lot like playing golf:  It costs a lot and takes a long time to play.  You will likely never hit a hole in one.  And you always feel like you’re playing with a handicap.

By far the greatest percentage of R&D spend - 79% - is dedicated to the search for innovation. But more often than not, after years of testing, you learn that your medicine isn’t a breakthrough; but it may offer fewer side effects, work a little faster, or come in a pill that is easier for patients to swallow.  These incremental advances can, and do, provide real value for patients.

Trizivir, for example, combines three existing AIDS drugs in one tablet.  No scientific breakthrough, but taking one pill twice a day - instead of four or six pills or more - is a big breakthrough in terms of making it easier for patients to stay on treatment.

But if incremental breakthroughs are OK, then why is the pharmaceutical research industry so against generics?  After all, we sue constantly to keep generics off the market, right? Not exactly. There is a place for generics, but only after the patents on brand name medicines from innovator companies expire.  Generic companies are taking advantage of the system to challenge those patents earlier and earlier so they don’t have to wait for expiration to get to market.

Generics today make up about half of all prescriptions sold in the US.  Under current law, generic companies can copy our science, make their own product, and be ready to ship to pharmacies the day the patent expires. In every other industry, a copier has to wait until the patent expires on a technology before they can even think about planning to copy that product. Generic drug companies also don’t have to do any clinical trials to prove their product is safe and effective. They only have to show the FDA that their product works about the same way a brand name product does - give or take 20%.

The first generic company to market gets 6 months without competition. During that time they often charge almost as much as the brand name drug.  Once the other companies enter, the price drops to 90% of the brand name drug.  So there’s a real financial incentive to be the first generic company to market.

The problem is, generic companies don’t want to wait until the patents expire.  They challenge innovator patents in an attempt to declare those patents invalid so they can come to market sooner. In the case of our anti-depressant, Paxil, the first generic company challenged our patents just five and a half years into what should have been a 14-year patent term.  In the next 3 years, seven other generic companies entered the fray.

We have to sue to defend our patent rights.  The result is millions of dollars and years spent on litigation that would be better spent developing new lifesaving medicines. Meanwhile the time the innovator companies have to recoup their massive return on investment is getting shorter and shorter - in some cases down to 6 years from what is supposed to be a 20-year patent term for pharmaceuticals. It’s important to remember that generic companies do not discover new medicines - yet it’s the innovative pharmaceutical research industry that is at risk.

Which brings me to the final myth.  Generic companies are often portrayed as being for the people, and the pharmaceutical research companies as caring more about profits. But in fact, the generic companies are designed solely to make profits.  Pharmaceutical research companies put patients first - in our research, and in our programs to help people get access to medicines, here in the US and across the globe.

Last year, the pharmaceutical industry helped to fill 6.5 million prescriptions for more than 2.4 million needy patients through our patient assistance programs. That adds up to more than $1 billion worth of medicine. At GlaxoSmithKline, we gave away over $168 million in free medicines though our Patient Assistance Programs last year. GlaxoSmithKline was also the first company to create a senior savings card - the Orange card - which offers a way for Medicare eligible seniors without a drug benefit to save of 20-40% or more on our medicines. A similar card - Together Rx - offers savings on more than 150 medicines from 7 different pharmaceutical companies. The cards are free, and easy to get and use, but they are only a stopgap until comprehensive Medicare reform can pass Congress, which we are actively working to progress.

We favor reform to make Medicare look more like the marketplace.  A template already exists in the benefits enjoyed by our Senators and Congress people - and those in private industry. A system like the Federal Employee Health Benefits Program would be menu-based, offering seniors a choice of the kind of plan that makes the most sense for them.

Of course skeptics will say that passage of real Medicare reform is a bit like the story of the doctor who went to heaven and met God. God granted him one question, so the physician asked, "Will health-care reform ever occur?" "I have good news and bad news," God replied.  "The answer is yes, there will be health care reform.  The bad news is, it won’t be in my lifetime."

We in the research-intensive industry hope passage of a meaningful benefit does occur, not just in our lifetime, but in this election year. So why should you care about the health of the pharmaceutical industry?  First, because we discover and develop the medicines that keep you healthy and may someday lengthen or even save your life, and because we haven’t conquered disease just yet.

Second, the medicines we have today offer you a cost effective way to keep yourself and your employees productive, and save you a lot of money in the overall cost of healthcare. Third: we are significant employers in our communities. More than 72,000 state citizens work at pharmaceutical companies, biotech or contract research organizations. Those payrolls total almost $4 billion.  The pharmaceutical companies alone pay about $400 million in taxes.

We also invest heavily in support of state and local programs. GSK makes clinical grants in North Carolina that total $27.5 million, corporate contributions of $8.8 million, and record total business expenditures here of $1.5 billion. But most importantly, we offer hope for millions of patients across the world.  Particularly in a world where bioterrorism is added to the threat of disease that we still face, the pharmaceutical industry works daily to both protect and build a better world for all of us.  Thank you.