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Pharmaceutical Manufacturers' Statement on JAMA Generics Study

Washington, D.C. (December 2, 2008) — Pharmaceutical Research and Manufacturers of America (PhRMA) Senior Vice President Ken Johnson issued the following statement today regarding a recent study in the Journal of the American Medical Association on brand-name medicines and generic drugs:

"PhRMA has always supported patients receiving the medicines that are best for them, including both brand-name medicines and generic drugs. The United States already has one of the highest rates of generic drug use in developed countries. According to IMS Health, nearly seven out of every 10 prescriptions in America are now filled with a generic drug.

"While innovative new medicines remain a very small part of total health spending, they play a very big role in improving health and quality of life. Without todays innovative brand-name drugs to legally copy, there would be no generic drug industry. Worse yet, there would be little hope of finding new treatments and cures for a wide range of debilitating — and often deadly — diseases.

"The contention that brand-name medicines drive up the cost of health care is fatally flawed. The growth of prescription drug costs in the U.S. has been modest, as evidenced by Centers for Medicare and Medicaid Services data showing that drug price growth was 1.4 percent in 2007. CMS has also reported that in 2006, prescription drug spending grew at its second lowest level in 11 years. In fact, medicines accounted for roughly 10 percent of total health spending in the U.S. in 2006 — the same proportion as in 1960.

"Price trends for brand-name medicines are influenced by many factors, including the significant investment required to research — and develop and gain regulatory approval of — an innovative drug.

"It takes, on average, 10-15 years to develop a new medicine from the earliest stages of discovery through Food and Drug Administration approval. And only two of every 10 drugs that reach the market ever earn back enough money to match or exceed the average R&D cost of getting them to the marketplace.

"What's more, by the time a medicine makes it through the entire development process, a pharmaceutical innovator often has a limited number of years to recoup its investment and generate the funds needed to re-invest in research and development.

"In addition, pharmaceutical prices in America today are determined by market transactions and health plans and payors are able to negotiate for discounts. The plans bring powerful tools to their side of the price negotiations, including the fact that they are negotiating on behalf of millions of patients and can decide whether to cover a drug and the extent of the coverage.

"The mission of America's pharmaceutical research companies has been and always will be to develop innovative, life-saving and life-improving medicines for patients around the world. Last year, pharmaceutical research companies spent more than $58.8 billion on research and development. Today, Americas pharmaceutical research companies are testing a record 750 new medicines to help treat cancer alone.

"This extensive investment — nearly double the National Institutes of Health's entire operating budget — is a major reason why America leads the world in developing cures and treatments for diseases such as cancer and AIDS. It is also an essential factor in battling chronic disease, which accounts for more than 75 cents of every dollar spent on health care in this country, according to the Centers for Disease Control and Prevention.

"Finally, America's pharmaceutical research companies understand the importance of getting medicine to the patients who need it. Thats why, in 2005, PhRMA created the Partnership for Prescription Assistance. The PPA is a single point of access for struggling Americans to find out about more than 475 patient assistance programs that offer prescription medicines, both brand and generic, for free or nearly free.

"Since April 2005, more than 5 million Americans have been helped by the PPA. People who need help can find out if they may be eligible by calling the PPA's toll-free number at 1-888-4PPA-NOW or visiting the PPAs user-friendly Web site at www.pparx.org."

The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the countrys leading pharmaceutical research and biotechnology companies, which are devoted to inventing medicines that allow patients to live longer, healthier, and more productive lives. PhRMA companies are leading the way in the search for new cures. PhRMA members alone invested an estimated $44.5 billion in 2007 in discovering and developing new medicines. Industry-wide research and investment reached a record $58.8 billion in 2007.

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