Transcript IMSA – Value Of Innovative Medicine

Innovative Medicines South Africa (IMSA)
Value of Innovative Medicine
Value of Innovative Medicine.
Definition of Value
“Value is the amount, as of goods,
services, or money, considered to
be a fair equivalent of something
else; a fair price or return.”
The American Heritage® Dictionary of the English Language, Fourth Edition
Copyright © 2000 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved
What is the Value of Innovative Medicine?
Innovative medicines should provide a
state of physical, mental and social
well-being.
Value of Innovative Medicines
“Has a different meaning depending on the Audience”
• Patients May Care About
– Increased Longevity
– Increased Quality of Life
• Payers/Employers May Care About
– Potential for Direct Offset to Other Health Care Costs
– Increased Workplace Productivity
Value of Medicines
The Patient Perspective
Innovative Pharmaceuticals Reduce
Mortality and Morbidity
• Pharmaceuticals (drugs and vaccines) have
eliminated or brought under control many
diseases and conditions that once had high
mortality rates (e.g., influenza, polio,
pneumonia, and diptheria).
• Pharmaceuticals have also helped
dramatically reduce mortality rates for other
diseases and conditions (e.g., AIDS, asthma,
heart attacks, strokes, and ulcers).
New Medicines Have Prolonged Life
Drop in Death Rate for Diseases Treated with
Pharmaceuticals, 1965–1995
80%
75%
Percent Drop in Death Rate
68%
67%
61%
41%
31%
22%
Early
Rheumatic
Infancy
Fever
Diseases and Rheumatic
Heart Disease
Atherosclerosis
Hypertensive
Ulcer of
Heart
Stomach and
Disease
Duodenum
Ischemic
Heart
Disease
Emphysema
Source: PhRMA, Based on Boston Consulting Group, 1993; and US National Center for Health
Statistics, 1998
Hypertension
Study Finds Direct Correlation Between Reductions in Mortality and
Number of New Drugs for Disease
• Over 45 percent of the variation in mortality across
diseases between 1970 and 1991 is explained by
the extent to which new drugs are used to treat
the disease – making new drugs the most
important factor in explaining mortality reductions.
• Each of the 436 new drugs introduced between
1970 and 1991 annually adds 11,200 aggregate
years of life to the U.S. population.
Source: Lichtenberg, Frank, “Pharmaceutical Innovation, Morality Reduction, and
Economic Growth,” Presented at the Conference on the Economic Value of Medical
Research, December 1999.
Pharmaceutical Advances Predicted to Continue to Reduce Mortality
Rates in Future
• Four studies by the Battelle Institute predict disease patterns in
2015 in the U.S., Germany, France and the United Kingdom.
• These studies suggest pharmaceutical innovation will continue
to be a major factor in reducing mortality, accounting for:
– 19 to 40 percent of the projected reduction in
coronary heart disease;
– 15 to 40 percent of the reduction in
cerebrovascular disease;
– 28 to 65 percent of the reduction in breast cancer;
and
– 3 to 26 percent of the reduction in lung cancer.
Source: Hall, M, “The Impact of Behavioral and Biomedical Advance on Health Trends Over the
Next 25 Years,” London, UK: Office of Health Economics; Office of Health Economics Briefing,
No. 31, November 1994.
Innovative Health Care is Saving Lives
In 1950, cardiovascular disease claimed four lives out of every 1,000
annually, today that number has fallen in half. The single most
important factor in increasing the lifespan of the average American
between 1950 and today is the reduction in cardiovascular disease
death.
Heart Disease Mortality Rates
1950-1999
Deaths Per 100,000
Population
•
800
Male, All Ages
600
400
Female, All
Ages
200
0
Ye ars
Source: Health, United States 2001, Centers for Disease Control and Prevention, U.S.
Department of Health and Human Services, August 2001. Data based on National Vital
Statistics System.
Prescription Drugs Save Lives and Money
Where were AIDS Drugs Discovered?
122 drugs to treat AIDS
NIH
9%
Deaths per 100,000 Population
HIV Mortality Declined Dramatically After
Introduction of First “Expensive” Antiretrovirals...
First new drugs introduced, 1995
18
Highly Active Antiretroviral Therapy
15
Industry
91%
(HAART) introduced, 1996-97
12
…While Monthly Costs for AIDS Patients Decreased by 16% After HAART
9
Introduced
6
$2,000
Total: $1804
Total: $1521
3
$1,600
0
82
86
90
94
98
$1,200
$1,193
Other Costs
Decrease by
41%
$700
Year
$800
Source: Costs - Bozette et al.,New England Journal of
Medicine Vol. 344, No. 11, March 15, 2001; Mortality Centers for Disease Control; data on drug development
from PhRMA and the NIH Office of Technology transfer
$400
$611
Drug Costs
Increase by
34%
$821
$0
Jan-96
Rx Drugs
Mid-1997
All Other Costs
Centenarians in US Population
Number Per Million
300
2000 = 262
250
200
150
100
1900 = 46
50
0
1900
1920
1940
1960
1980
Source: Caplow, Theodore, et al. The First Measured Century, Wash DC: AEI, 2001:9
2000
Cholesterol Fighting Drugs Reduce Risk of Heart Attack or
Stroke
• Cholesterol-lowering drugs, known as statins, safely reduced
the risk of a heart attack or stroke by one-third in the world’s
largest study of people at high risk for these conditions.
• About 25 million people worldwide take statins today. The new
findings suggest that about 200 million people worldwide would
benefit from the drugs.
• According to the study’s lead investigator, if 10 million high-risk
patients started taking statins, 50,000 deaths would be
prevented each year.
Source: Lawrence K. Altman, “Cholesterol Fighters Lower Heart Attack Risk, Study Finds,”
The New York Times, November 14, 2001.
New Drugs Improving Quality of Life
• Pharmaceuticals help patients improve their
quality of life in numerous ways:
– Reducing hospitalizations, including
emergency room visits
– Avoiding surgery
– Helping patients remain more active and
independent
New Medicines are Reducing Side
Effects
•
•
New medicines have been found to reduce side effects, often
leading to improved compliance and better health outcomes.
For example, gastrointestinal side effects from conventional
nonsteroidal anti-inflammatory drugs (NSAIDs) are estimated to be
responsible for 107,000 hospitalizations and 16,500 deaths
annually in the U.S. (Source: “Adverse Upper Gastrointestinal Effects of Rofecoxib
Compared with NSAIDs,” The Journal of the American Medical Association, Vol. 282, No. 20,
November 24, 1999.)
•
Approximately 20% to 30% of patients who take conventional
NSAIDs develop persistent side effects, and more than 10% are
estimated to discontinue treatment as a result. (Source: “Anti-Inflammatory
and Upper Gastrointestinal Effects of Celecoxib in Rheumatoid Arthritis,” The Journal of the American
Medical Association, Vol. 282, No. 20, November 24, 1999.)
•
A new family of NSAIDs known as Cox-2 inhibitors have been
proven to cause less stomach irritation and carry a lower risk of
complications than conventional NSAIDs.
Value of Medicines
The Employer/Payer Perspective
Greater Use of Pharmaceuticals is Leading to Declines in Hospital
Admissions, Lengths-of-Stay, and Surgical Procedures
• Hospital admissions, length-of-stay, and surgical
procedures declined most rapidly for those diagnoses
with the greatest increase in the total number of
drugs prescribed and the greatest change in the
distribution of drugs.
• The estimates imply that an increase of 100
prescriptions is associated with 16.3 fewer hospital
stays.
Source: Frank R. Lichtenberg, “Do (More and Better) Drugs Keep People Out of Hospitals?”
The American Economic Review, Papers and Proceedings of the Hundredth and Eighth Annual
Meeting of the American Economic Association, May 1996.
Prescription Medicines May Help Avert Asthma-Related
Hospitalization and Emergency Room Visits
• Treatment of allergic rhinitis may keep patients out of the
hospital and away from emergency rooms according to a recent
study.
• The study, using claims data from 4,944 privately-insured
patients diagnosed with both allergic rhinitis and asthma, found
that patients treated with nasal inhaled steroids, sedating
antihistamines, and/or non-sedating antihistamines were about
half as likely to have an asthma-related event (hospitalization or
emergency room visit) than those not treated.
Source: Jodi Crystal-Peters, et al., “Treating Allergic Rhinitis in Patients with Comorbid Asthma: The Risk of
Asthma-Related Hospitalizations and Emergency Department Visits,” J Allergy Clin Immunology 109
(January 2002) 1: 57-62.
Disease Management & Free Access to Diabetes
Medicines Lowers Employee Medical Costs
Total Medical Costs for Employees Diagnosed with Diabetes, City of
Asheville, NC (USA) 1996 - 2001
Source: John Miall, City of Asheville
New Drugs Particularly Cost Effective Relative to the
Products They Replace
Illustration of Estimated Savings from Use of Newer Medications
(assumes average “age” of drug decreases by about 10 years)
Drug Cost Increase
-$18
Inpatient Savings
$80
$24
Office Visit Savings
Home Health Savings
$12
Outpatient Savings
ER Savings
$10
$3
Net Impact: $18 Investment Returns $129 in Savings Ratio of $7 Saved for Every $1 Invested
Source: Professor Frank Lichtenberg, “Benefits and Costs of Newer Drugs: An
Update,”NBER Working Paper 8996, June 2002
New Drugs Increasing Worker Productivity
• For employers, the value of pharmaceuticals is
reflected in increased worker productivity, reduced
absenteeism, and overall improvements in workforce
health.
• Researchers at MIT studied pre- and post-treatment
work records for employees with four conditions to
determine the number of hours worked in a two-week
period.
• Employees receiving treatment with pharmaceuticals
were able to significantly increase the number of
hours worked.
Medicines Provide ROI to Employers Through Improved Workforce
Productivity
Absences Per Patient, in Days
43.0
23.6
12.0
21.2
10.6
2.5
Diabetes
Depression
Poorly-controlled
Asthma
Down-time Per Patient, in Days
6.5
34.9
4.9
High Blood
Pressure
17.5
Well-controlled
9.2
4.0
7.2
7.3
5.6
1.5
Diabetes
Depression
Poorly-controlled
Asthma
High Blood
Pressure
Well-controlled
Source: National Committee for Quality Assurance,
Quality Dividend Calculator, 2001;
http://www.ncqacalculator.com/Ncqa/Index.asp
72
70
68
66
64
62
60
58
Pre-Treatment
An
x ie
ty
Mi
gr
ain
Hy
e
pe
rte
ns
ion
ion
Post-Treatment
De
pr
es
s
Hours Worked Over 2
Week Period
Pharmaceuticals Help Increase
Worker Productivity
Source: Berndt, et al., “Illness and Productivity: Objective Workplace Evidence,”
Working Paper #42-97, Massachusetts Institute of Technology (MIT), May 1997.
Are Advances in Medicine Worth the Cost?
Change in
Treatment Cost
Ratio of Value to
Increased Cost
Increase in Value
Heart Attack
7:1
Low Birthweight
Infants
6:1
6:1
Depression
32:1
Cataracts
1:1
Breast Cancer
$(100,000)
$(50,000)
$-
$50,000
$100,000
$150,000
$200,000
$250,000
Source: Cutler & McClellan, Health Affairs, Sept/Oct 2001
$300,000
Drugs are one Component of a Comprehensive approach to
the Cost of Treating Disease
Direct Costs
Indirect Costs
•
•
•
•
•
•Decreased Productivity
•Absenteeism
•Caregiver Issues
Drugs
Provider
Hospital
Nursing Home
Other
Are all these cost factors taken into consideration
when treatment is decided on for the patient?
New Drug Development
New Product Development - A Risky and
Expensive Proposition
Compound Success
Rates by Stage
Years
Discovery
(2–10 Years)
0
2
4
Preclinical Testing
Laboratory and
Animal Testing
6
Phase I
20–80 Healthy Volunteers
Used to Determine Safety
and Dosage
Phase III
1,000–5,000 Patient
Volunteers Used to
Monitor Adverse Reactions
to Long-term Use
8
10
12
14
Additional
Post-marketing
Testing
Phase II
100–300 Patient Volunteers
Used to Look for Efficacy and
Side Effects
Regulatory Approval
5,000–10,000
Screened
250
Enter Preclinical
Testing
5
Enter
Clinical
Testing
16
1
Approved by
the FDA
Net Cost: $802 million
invested over 15 years
Source: Tufts Center for the Study of Drug Development
The Cost of Drug Development Continues to
Increase
Average Capitalized Development Cost per NCE, 1976-2001
$900
Nominal Dollars (Millions)
$802
$800
$700
$600
$500
$500
$359
$400
$300
$231
$200
$100
$125
$54
$0
1976
1986
1987
1990
1997
2001
Sources: R. Hansen, Ph.D., University of Rochester; S.N. Wiggins, Ph.D.,
Texas A&M University; J.A. DiMasi, Tufts Center for the Study of Drug
Development (2002); Office of Technology Assessment (1993)
So-Called “Me-Too” Drugs Create a Highly
Competitive Marketplace
Year of Therapeutic Class Launch
1965
Pioneer
Drug
Beta
Blockers
Inderal
1
Years
After
Entry
2
3
4
5
6
7
8
9
10
11 Tenormin
12 Lopressor
1975
1985
1995
H2 Antagonists
ACE
Inhibitors
Statins
SSRIs
PPIs
Tagamet
Capoten
Mevacor
Prozac
Prilosec
Next-Gen
Antihistami Protease
nes
Inhibitors
Claritin
Invirase
Celebrex
Vioxx
Zyrtec
Allegra
Norvir
Crixivan
Viracept
Fortovase
Agenerase
Kaletra
Shrinking Time Without Competition
Vasotec
Zantac
Prinivil
Zestril
Pravachol
Zocor
Lescol
Zoloft
Paxil
Prevacid
Luvox
Aciphex
Pepcid
Axid
Altace
Monopril
Lotensin
Cox-2
Lipitor
Baycol
Celexa
Source: FDA Orange Book
Bextra
Private Industry - Invents the Vast Majority of New Medicines
Where Did All New Drugs Approved
from 1990-1999 Come From?
Academia/
non-profit
3.5%
Industry
93.3%
Government
3.2%
Where Did AIDS Drugs Come From?
NIH
9%
Industry
91%
Source: DiMasi, Hansen, and Grabowski, Tufts CSDD R&D Cost Study, 2002 (overall
data); Data on AIDS drug development from PhRMA and the NIH Office of Technology
transfer
Investments in New Drug Development
• Public sector cannot afford the huge
investments needed for new product
development.
• The world still needs new drugs for treatment
of ailments such as HIV/AIDS,Cancer,TB and
Malaria.
• The incentive to invest in new product
development should be maintained and
nurtured.
Major Degenerative Diseases
Number of Deaths Per 100,000 Population Per Year
600
Major Cardiovascular Diseases
(Heart Disease, Stroke,
High Blood Pressure)
1972=352
400
1900=345
200
1972=201
Cancer
1900=64
0
1900
1920
1940
1960
1980
Source: Caplow, Theodore, et al. The First Measured Century, Wash DC: ADI, 2001:137
2000
Intellectual Property
• Protection of intellectual Property provides an
incentive for investing in new drug
development.
• The period of exclusivity provided by a
patent:
 Allows innovators to recoup their investment
costs.
 Achieve a reasonable return.
 Allows for more money to be invested in future
drug development.
Intellectual Property
Failure to protect/enforce Intellectual Property will lead
to the following:
 Less incentive to invest in new drug development
resulting in no hope for cure and treatment of high
burden diseases such as HIV/AIDS, Cancer,
Malaria and TB.
 Counterfeits leading to severe exposure to
untested,unsafe and ineffective medicines
Summary - A Few Key Points
• Treatment cost is rising!
– That’s good! Because as demonstrated, overall health care
costs can potentially be reduced
• Prescription drugs are not the key cost drivers in health care
• Health care is a Dynamic Good
– Patients and Society Have Reaped Exceptional Returns
from Medical Innovation and have an Enormous Stake in its
Continued Progress
• New drug development is a very risky business
• The Challenge of the Future
– Maintain/Enhance Progress Against Illness
– Provide Incentives for Innovation of medicine