imsa - value of innovative medicine

8/13/2019 IMSA - Value of Innovative Medicine

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Innovative Medicines South Africa (IMSA)

Value of Innovative Medicine


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Value of Innovative Medicine.Definition of Value

Value is the amount, as of goods,services, or money, considered to

be a fair equivalent of somethingelse; a fair price or return.

The American Heritage Dictionary of the English Language, Fourth EditionCopyright 2000 by Houghton Mifflin Company.

Published by Houghton Mifflin Company. All rights reserved


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What is the Value of Innovative Medicine?

Innovative medicines should provide astate of physical, mental and social

well-being.


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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


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Value of Medicines

The Patient Perspective


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Innovative Pharmaceuticals ReduceMortality and Morbidity

Pharmaceuticals (drugs and vaccines) haveeliminated or brought under control manydiseases and conditions that once had highmortality rates (e.g., influenza, polio,pneumonia, and diptheria).

Pharmaceuticals have also helpeddramatically reduce mortality rates for other

diseases and conditions (e.g., AIDS, asthma,heart attacks, strokes, and ulcers).


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Study Finds Direct Correlation Between Reductions in Mortality andNumber of New Drugs for Disease

Over 45 percent of the variation in mortality acrossdiseases between 1970 and 1991 is explained bythe extent to which new drugs are used to treatthe 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 aggregateyears of life to the U.S. population.Source: Lichtenberg, Frank, Pharmaceutical Innovation, Morality Reduction, andEconomic Growth, Presented at the Conference on the Economic Value of MedicalResearch, December 1999.


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Pharmaceutical Advances Predicted to Continue to Reduce MortalityRates in Future

Four studies by the Battelle Institute predict disease patterns in2015 in the U.S., Germany, France and the United Kingdom.

These studies suggest pharmaceutical innovation will continueto be a major factor in reducing mortality, accounting for:

19 to 40 percent of the projected reduction incoronary heart disease;

15 to 40 percent of the reduction incerebrovascular 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.


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Innovative Health Care is Saving Lives

In 1950, cardiovascular disease claimed four lives out of every 1,000annually, today that number has fallen in half. The single mostimportant factor in increasing the lifespan of the average Americanbetween 1950 and today is the reduction in cardiovascular diseasedeath.

Heart Disease Mortality Rates1950-1999

0

200400

600

800

Ye ars

D e a t h s P e

r 1 0 0

, 0 0 0

P o p u l a t i o n Male, All Ages

Female, All Ages

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 VitalStatistics S stem.


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Prescription Drugs Save Lives and Money

Source: Costs - Bozette et al., New England Journal ofMedicine Vol. 344, No. 11, March 15, 2001; Mortality -Centers for Disease Control; data on drug developmentfrom PhRMA and the NIH Office of Technology transfer

0

3

6

9

12

15

18

82 86 90 94 98 Year

D e a

t h s p e r

1 0 0

, 0 0 0 P o p u

l a t i o n

HIV Mortality Declined Dramatically AfterIntroduction of First Expensive Antiretrovirals...

First new drugs introduced, 1995

Highly Active Antiretroviral Therapy

(HAART) introduced, 1996-97

Total: $1804

Total: $1521

$611 $821

$1,193 $700

$0

$400

$800

$1,200

$1,600

$2,000

Jan-96 Mid-1997Rx Drugs All Other Costs

Drug CostsInc rease by34%

Other CostsDecrease by

41%

While Monthly Costs for AIDS Patients Decreased by 16% After HAARTIntroduced

NIH9%

Industry91%

Where were AIDS Drugs Discovered?

122 drugs to treat AIDS


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Centenarians in US Population

Number Per Million

300

250

200

150

100

50

01900 1920 1940 1960 1980 2000

2000 = 262

1900 = 46

Source: Caplow, Theodore, et al. The First Measured Century, Wash DC: AEI, 2001:9


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Cholesterol Fighting Drugs Reduce Risk of Heart Attack orStroke

Cholesterol-lowering drugs, known as statins, safely reducedthe risk of a heart attack or stroke by one- third in the worldslargest study of people at high risk for these conditions.

About 25 million people worldwide take statins today. The newfindings suggest that about 200 million people worldwide wouldbenefit from the drugs.

According to the studys lead investigator, if 10 million high -riskpatients started taking statins, 50,000 deaths would beprevented each year.

Source: Lawrence K. Altman, Cholesterol Fighters Lower Heart Attack Risk, Study Finds,The New York Times , November 14, 2001.


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New Drugs Improving Quality of Life

Pharmaceuticals help patients improve theirquality of life in numerous ways: Reducing hospitalizations, including

emergency room visits Avoiding surgery Helping patients remain more active and

independent


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New Medicines are Reducing SideEffects

New medicines have been found to reduce side effects, oftenleading to improved compliance and better health outcomes.

For example, gastrointestinal side effects from conventionalnonsteroidal anti-inflammatory drugs (NSAIDs) are estimated to beresponsible for 107,000 hospitalizations and 16,500 deathsannually in the U.S. (Source: Adverse Upper Gastrointestinal Effects of RofecoxibCompared with NSAIDs, The Journal of the American Medical Association , Vol. 282, No. 20,November 24, 1999.)

Approximately 20% to 30% of patients who take conventionalNSAIDs develop persistent side effects, and more than 10% areestimated to discontinue treatment as a result. (Source: Anti -Inflammatoryand 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 ofcomplications than conventional NSAIDs.


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Value of Medicines

The Employer/Payer Perspective


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Greater Use of Pharmaceuticals is Leading to Declines in HospitalAdmissions, Lengths-of-Stay, and Surgical Procedures

Hospital admissions, length-of-stay, and surgicalprocedures declined most rapidly for those diagnoseswith the greatest increase in the total number ofdrugs prescribed and the greatest change in thedistribution of drugs.

The estimates imply that an increase of 100prescriptions is associated with 16.3 fewer hospitalstays.

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 AnnualMeeting of the American Economic Association, May 1996.


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Prescription Medicines May Help Avert Asthma-RelatedHospitalization and Emergency Room Visits

Treatment of allergic rhinitis may keep patients out of thehospital and away from emergency rooms according to a recentstudy.

The study, using claims data from 4,944 privately-insuredpatients diagnosed with both allergic rhinitis and asthma, foundthat patients treated with nasal inhaled steroids, sedatingantihistamines, and/or non-sedating antihistamines were abouthalf as likely to have an asthma-related event (hospitalization oremergency 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.

Di M & F A Di b


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Disease Management & Free Access to DiabetesMedicines 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


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New Drugs Particularly Cost Effective Relative to theProducts They Replace

Illustration of Estimated Savings from Use of Newer Medications(assumes average age of drug decreases by about 10 years)

Source: Professor Frank Lichtenberg, Benefits and Costs of Newer Drugs: AnUpdate,NBER Working Paper 8996, June 2002

$3

$10

$12

$24

$80

-$18 Drug Cost Increase

Inpatient Savings

Office Visit Savings

Home Health Savings

Outpatient Savings

ER Savings

Net Impact: $18 Investment Returns $129 in Savings -Ratio of $7 Saved for Every $1 Invested


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New Drugs Increasing Worker Productivity

For employers, the value of pharmaceuticals isreflected in increased worker productivity, reducedabsenteeism, and overall improvements in workforcehealth.

Researchers at MIT studied pre- and post-treatmentwork records for employees with four conditions todetermine the number of hours worked in a two-weekperiod.

Employees receiving treatment with pharmaceuticalswere able to significantly increase the number ofhours worked.


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Medicines Provide ROI to Employers Through Improved WorkforceProductivity

4.01.5

9.27.3

34.9

17.5

7.25.6

Diabetes Depression Asthma High BloodPressure

Down-time Per Patient, in Days

Poorly-controlled Well-controlled

12.0

2.5

43.0

23.6 21.2

10.6

6.5 4.9

Diabetes Depression Asthma High BloodPressure

Absences Per Patient, in Days

Poorly-controlled Well-controlled

Source: National Committee for Quality Assurance,Quality Dividend Calculator, 2001;http://www.ncqacalculator.com/Ncqa/Index.asp


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Pharmaceuticals Help Increase

Worker Productivity

5860626466687072

D e p r e s s

i o n

A n x i e

t y

M i g r a i

n e

H y p e r t e

n s i o n

H o u r s

W o r

k e d O v e r 2

W e e k

P e r i o

d

Pre-Treatment

Post-Treatment

Source: Berndt, et al., Illness and Productivity: Objective Workplace Evidence,Working Paper #42-97, Massachusetts Institute of Technology (MIT), May 1997.


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Are Advances in Medicine Worth the Cost?

$(100,000) $(50,000) $- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000

Breast Cancer

Cataracts

Depression

Low BirthweightInfants

Heart Attack

Ratio of Value toIncreased Cost

7:1

6:1

6:1

32:1

1:1

Change inTreatment Cost

Increase in Value

Source: Cutler & McClellan, Health Affairs, Sept/Oct 2001


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Drugs are one Component of a Comprehensive approach tothe Cost of Treating Disease

Direct Costs Drugs Provider

Hospital Nursing Home Other

Indirect CostsDecreased Productivity Absenteeism

Caregiver Issues

Are all these cost factors taken into considerationwhen treatment is decided on for the patient?


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New Drug Development


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New Product Development - A Risky andExpensive Proposition

Source: Tufts Center for the Study of Drug Development

5,000 10,000Screened

250Enter Preclinical

Testing

5Enter

Clinical

Testing

1Approved by

the FDA

Compound SuccessRates by Stage

16

14

12

10

8

6

4

2

0

Phase II100 300 Patient VolunteersUsed to Look for Efficacy andSide Effects

Phase III1,000 5,000 Patient

Volunteers Used toMonitor Adverse Reactions

to Long-term Use Regulatory Approval

AdditionalPost-marketing

Testing

Phase I20 80 Healthy VolunteersUsed to Determine Safety

and Dosage

Preclinical Testing Laboratory and

Animal Testing

Discovery(2 10 Years)

Years

Net Cost: $802 million

invested over 15 years

Th C t f D D l t C ti t


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The Cost of Drug Development Continues toIncrease

$54$125

$231

$359

$500

$802

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

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 DrugDevelopment (2002); Office of Technology Assessment (1993)

Average Capitalized Development Cost per NCE, 1976-2001

N o m

i n a

l D o

l l a r s (

M i l l i o n s

)


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Shrinking Time Without Competition

So- Called Me -Too Drugs Create a HighlyCompetitive Marketplace

BetaBlockers H2 Antagonists

ACEInhibitors Statins SSRIs PPIs

Next-GenAntihistami

nesProteaseInhibitors Cox-2

PioneerDrug

Inderal Tagam et Capoten Mevacor Prozac Prilos ec Claritin Inviras e C elebrex

1 NorvirCrixivan

Vioxx

2 Zyrtec Viracept3 Allegra Fortovase Bextra4 Vasotec Pravachol Zoloft Agenerase5 Zocor Paxil Kaletra6 Prinivil Lescol Prevacid7 Zantac Zestril Luvox8 Aciphex9 Pepcid Lipitor

10 Altace Baycol11 Tenormin Axid Monopril Celexa12 Lopressor Lotensin

YearsAfterEntry

1965 1975 1985 1995

Year of Therapeutic Class Launch

Source: FDA Orange Book


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Private Industry - Invents the Vast Majority of New Medicines

NIH9%

Industry91%

Industry93.3%

Academia/non-profit

3.5%

Government3.2%

Source: DiMasi, Hansen, and Grabowski, Tufts CSDD R&D Cost Study, 2002 (overalldata); Data on AIDS drug development from PhRMA and the NIH Off ice of Technologytransfer

Where Did All New Drugs Approvedfrom 1990-1999 Come From?

Where Did AIDS Drugs Come From?


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Investments in New Drug Development

Public sector cannot afford the hugeinvestments needed for new productdevelopment.

The world still needs new drugs for treatmentof ailments such as HIV/AIDS,Cancer,TB andMalaria.

The incentive to invest in new product

development should be maintained andnurtured.


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Major Degenerative Diseases

Source: Caplow, Theodore, et al. The First Measured Century, Wash DC: ADI, 2001:137

Number of Deaths Per 100,000 Population Per Year

600

01900

400

1920 1940 1960 1980 2000

200

Major Cardiovascular Diseases(Heart Disease, Stroke,High Blood Pressure)

1900=345

1972=352

Cancer

1900=64

1972=201


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Intellectual Property

Protection of intellectual Property provides anincentive for investing in new drugdevelopment.

The period of exclusivity provided by apatent:

Allows innovators to recoup their investmentcosts.

Achieve a reasonable return. Allows for more money to be invested in futuredrug development.


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Intellectual Property

Failure to protect/enforce Intellectual Property will leadto the following:Less incentive to invest in new drug developmentresulting in no hope for cure and treatment of highburden diseases such as HIV/AIDS, Cancer,Malaria and TB.Counterfeits leading to severe exposure tountested,unsafe and ineffective medicines


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Summary - A Few Key Points

Treatment cost is rising! Thats 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 Returnsfrom Medical Innovation and have an Enormous Stake in itsContinued 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

imsa - value of innovative medicine

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