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Many scientists believe we are in a golden age of the life sciences. We are unraveling the molecular pathways
underlying many diseases and uncovering new ways to alter the course of illnesses. And researchers in the
biopharmaceutical industry are working to translate this new knowledge into
medicines that help prevent disease, improve health, and save lives.
At the same time, the biopharmaceutical industry faces many hurdles. The cost of
developing new medicines has escalated, in part due to the focus on more complex
conditions and increasing regulatory requirements. Market conditions have also
become more challenging, and generics now account for 80% of prescriptions filled.
The industry is well focused on both the scientific potential and the business challenges. Companies are
working to adapt to the changing conditions through reorganized R&D structures; more efficient drug
discovery methods; new approaches, such as personalized medicine; and growing partnerships with academic
medical centers, foundations, and government.
Biopharmaceutical companies are also continuing to invest in research and development. In 2011, PhRMA
members alone invested an estimated $49.5 billion in R&D, representing the vast majority of private
To enhance the content in the print version Permission to reproduce is granted if proper credit is given.
investment in new medicines in the United States. I am pleased to present the 2012 Pharmaceutical Industry
of this year’s Profile, we have included quick Suggested Citation:
Profile, which tells the evolving story of this complex, vital industry.
response (QR) codes that link you directly Pharmaceutical Research and Manufacturers of America,
to additional materials online. You can Pharmaceutical Industry Profile 2012 (Washington, DC: PhRMA, April 2012).
find QR code readers for your smart phone or tablet in your Copyright © 2012
device’s app store, or you can access the interactive Industry by the Pharmaceutical Research and Manufacturers of America.
Introduction
v Innovative Solutions for Patients and the Economy
1
1 New Medicines: Changing Lives and Managing Health Care Costs
4 Extending Lives
4 Promoting Productive and Healthy Lives
5 Managing Health Care Costs
Innovative Solutions for Patients
and the Economy
2
13 Contributing Strongly to the U.S. Economy Despite a Challenging Environment
14 A Critical Pillar of the U.S. Economy
16 Meeting Challenges Today and Tomorrow
19 The U.S. Biopharmaceutical Industry Is Rising to Its Challenges
E ach year, the U.S. biopharmaceu-
tical industry spends billions of
thousands of jobs and indirectly
supports millions more across the
The 2012 Pharmaceutical Industry
Profile explores the critical role that
3
21 Bringing Medicines to Patients in Need dollars on intensive research to discover United States. The sector contributes biopharmaceutical companies play
22 Medicare Part D: Increasing Access for Beneficiaries new medicines for patients. Though significantly to the economy on the in the lives of patients and in the U.S.
24 The Partnership for Prescription Assistance the research process is long, uncertain, national, state, and local levels. economy. Chapter 1 describes recent
and expensive, the treatments that
eventually result save lives and im-
4
27 The R&D Process: The Road to New Medicines
30 The R&D Process prove the health of people all around
36 PDUFA and Pediatric Research Legislation: Success Stories for Patients the world. Recent decades have seen
38 Collaboration and Innovation Go Hand in Hand enormous progress in the fight against
major causes of death and disability,
Conclusion including cancer, HIV/AIDS, mental
41 Continuing Commitment to World-Class Research and Innovation illness, and diabetes, as well as against
Leads to Better Health and a Strong Economy numerous rare diseases. In addition,
advances by companies in the biophar-
Appendix maceutical sector play an important
44 PhRMA Member Companies role in controlling costs of health care
47 PhRMA Annual Membership Survey Definition of Terms by reducing hospitalizations, surgeries,
49 List of Tables: Detailed Results From the PhRMA Annual Membership Survey and other costly care.
“
I n the past year we have marked two
important anniversaries. Forty years
ago, in 1971, Congress passed the
• 12 million cancer survivors are living
in the United States today.1 Figure 1: HIV/AIDS Death Rates Continue to Decline
Figure 1: HIV/AIDS Death Rates Continue to Decline
• For people diagnosed between Annual HIV/AIDS Death Rate in the United States
National Cancer Act, which unleashed 18
1975 and 1979, the five-year cancer
a dramatic escalation in research efforts 16
survival rate was 49%. For those 16.2
to conquer cancer. Thirty years ago, Thousands of researchers
2 New Medicines: Changing Lives and Managing Health Care Costs New Medicines: Changing Lives and Managing Health Care Costs 3
Chapter 1
contributed to significant reductions disease. People recently diagnosed complications, allowing patients to live
in deaths from many diseases. These with diabetes can now expect to live productive and active lives.
“
medicines bring great value, allowing longer than those diagnosed 10 or 20
• Rheumatoid arthritis (RA).
people to live productive and healthy years ago. And while heart disease
New disease-modifying therapies,
lives and offering new hope and is a frequent complication of diabe-
in combination with older medi-
improved quality of life to millions tes, today people with diabetes who
cines, can dramatically slow disease
of patients. take medicines are 31% less likely to
progression, transforming the lives
develop lipid disorders such as high
In addition to improving and extending of people with this crippling condi-
cholesterol and 13% less likely to
life for patients, proper use of medi- tion. One study showed that patients
develop high blood pressure—two
cines also plays an important role in using combined treatment had a
major risk factors for premature Few years have seen as many important advances for patients.”
limiting health care costs by reducing 50% chance of complete remission,
death from heart disease—than those
chronic disease progression and avoid- compared with a 28% chance among Food and Drug Administration on FY 2011 Approvals 18
a dramatic 28% between 1997 and 1999 • Lupus: The first new medicine for lupus
15%
2005 to a nursing home within a year.20 since 1955 takes a new approach to
2007, due in large part to improved
13
4 New Medicines: Changing Lives and Managing Health Care Costs New Medicines: Changing Lives and Managing Health Care Costs 5
Chapter 1
important role in achieving these criti- significantly more annual hospitaliza- that medicines often are not used as
cal goals. Managing health care costs is tions, office visits, and use of ancillary directed. This can lead to poor
cant.25 More than 6,000 rare diseases are known, and they represent a growing proportion of FDA approvals, accounting pressure were given antihypertensive 200,000
affect 25 million Americans.26 Many of these diseases are for 30% in the most recent five-year period. There has been 89,000
medications as guidelines recom-
serious or life threatening, and often no treatment options great progress in the fight against rare diseases, but many 0 86,000
mend, 89,000 premature deaths and
exist, so development of new medicines for these diseases patients still lack treatment options. Today researchers Hospitalizations for Stroke/Heart Premature Deaths
is particularly important. are working to meet those needs, with 460 medicines for 420,000 hospitalizations could be Attack (2002) (2001)
orphan diseases currently in avoided every year, saving $10.7 bil- Potential Additional Prevention if All Untreated Patients Used Medication
A recent study by researchers at the FDA’s Office of Orphan Hear from a rare disease Actual Prevention Based on Patients Treated With Medication
the development pipeline.28 lion in direct costs from fewer strokes
Products Development found that between 1983—when researcher here.
the U.S. Orphan Drug Act was passed—and 2008, 326 < Scan QR code and $5.8 billion from fewer heart
SOURCE: D.M. Cutler, et al., “The Value of Antihypertensive Drugs: A Perspective on Medical Innovation,”
attacks.30 (See Figure 3.) Health Affairs 26, no. 1 (2007): 97–110.
6 New Medicines: Changing Lives and Managing Health Care Costs New Medicines: Changing Lives and Managing Health Care Costs 7
Chapter 1
idemia (including high cholesterol), Drug Spending Medical Spending Total Health Spending
Today 5.1 million Americans are living with this devastating progression could have a
$2,000
adherence to medicines resulted in brain disease, which destroys memory and, ultimately, even profound impact. As Figure
a person’s sense of self.37 The disease robs years of 5 shows, treatments that
significant reductions in emergency $0
quality life from patients, and often from their caregivers could delay the onset of Al-
department visits and inpatient hospital -$2,000 as well. zheimer’s by five years could
days. Total health care savings ranged save $447 billion per year
-$4,000 A 2010 Alzheimer’s Association report examining trends and
from $1,200 to $7,800 per patient per in costs to Medicare, Medicaid, private payers, and patients
projections in Alzheimer’s disease between 2010 and 2050
in 2050. Such a treatment would not only save billions
year, and every additional dollar spent -$6,000
revealed that without new disease-modifying treatments,
but would dramatically improve the health and wellbeing of
on medicines generated between $3 -$8,000
13.5 million Americans will develop Alzheimer’s by 2050.38
people with the disease and their families and caregivers.
and $10 dollars in savings on medical By that year, the total costs of the disease will rise to more
-$10,000 than $1 trillion; Medicare costs to cover care for people with
care.36 (See Figure 4.) ■ Congestive Heart Failure ■ Diabetes ■ Hypertension ■ Dyslipidemia Find out more about the growing
Alzheimer’s disease will increase by more than 600%, burden of Alzheimer’s.
to $627 billion; and Medicaid costs for care will escalate < Scan QR code
SOURCE: M.C. Roebuck, et al. “Medication Adherence Leads to Lower Health Care Use and Costs Despite by 400%, to $178 billion.
Increased Drug Spending,” Health Affairs 30, no. 1 (2011): 91–99.
8 New Medicines: Changing Lives and Managing Health Care Costs New Medicines: Changing Lives and Managing Health Care Costs 9
Chapter X
1
U.S. Department of Health and Human Ser- 12
National Institute of Allergy and Infectious 24
U.S. Food and Drug Administration, “Notable
vices, Centers for Disease Control and Preven- Diseases, Treating HIV-infected People with FY 2011 Approvals,” 15 November 2011,
Medicines Bring Value to Patients—Clinically and Economically tion, “Cancer Survivors—United States, 2007,”
Morbidity and Mortality Weekly Report 60, no. 9
Antiretrovirals Protects Partners from Infection:
Findings Result from NIH-Funded International
http://www.fda.gov/AboutFDA/Reports
ManualsForms/Reports/ucm276413.htm
(2011): 269–272, http://www.cdc.gov/mmwr/ Study, press release, 12 May 2011, http:// (accessed 29 January 2012).
pdf/wk/mm6009.pdf (accessed 6 December www.niaid.nih.gov/news/newsreleases/2011/
2011). Pages/HPTN052.aspx.
25
National Institutes of Health, Office of Rare
Diseases Research, Office of Rare Diseases
2
National Cancer Institute, Surveillance Epidemi- V.L. Roger, et al., “Heart Disease and Stroke
13
Research (ORDR) Brochure, online brochure, 11
ology and End Results, http://seer.cancer.gov/ Statistics—2011 Update: A Report from the March 2009, http://rarediseases.info.nih.gov/
faststats/index.php (accessed 16 December American Heart Association,” Circulation 123, Wrapper.aspx?src=asp/resources/
2011). no. 4 (2011): e18-e209. ord_brochure.html (accessed 5 December
2011).
3
A. Jemal, et al., “Cancer Statistics, 2010,” K.A. Fox, et al., “Decline in Rates of Death
14
CA: A Cancer Journal for Clinicians 60, no. 5 and Heart Failure in Acute Coronary Syndromes, Ibid.
26
Services, Centers for Disease Control and ucm276385.htm. Pediatricians in Private Practices and Asthma
Prevention, National Center for Health Statistics, Morbidity,” Pediatrics 118, no. 5 (2006):
Health, United States, 2003: With Chartbook J.J. Caro, et al., “The Impact of Compliance
19
1880–1887.
on Trends in the Health of Americans (Hyatts- with Osteoporosis Therapy on Fracture Rates in
ville, MD: HHS, 2003); S.L. Murphy, J. Xu, and Actual Practice,” Osteoporosis International 15, K. Davis, et al., “Prevalence and Cost of Medi-
32
Diabetes Patients Can Avoid Painful, Controlling Asthma in Children Saves Costly K.D. Kochanek, “Deaths: Preliminary Data for no. 12 (2004): 1003–1008. cation Nonadherence in Parkinson’s Disease:
Costly Alternatives ER Visits and Parents’ Productivity 2010,” National Vital Statistics Reports 60, no. Evidence From Administrative Claims Data,”
4 (Hyattsville, MD: National Center for Health
20
U.S. Department of Health and Human Ser- Movement Disorders 25, no. 4 (2010):
Statistics, January 2012): 17 (accessed 10 vices, Office of the Surgeon General, The 2004 474–480.
Control of diabetes is possible today with proper treatment, Childhood asthma is controllable, but when not controlled Surgeon General’s Report on Bone Health and
March 2012). L. Osterberg and T. Blaschke, “Adherence to
33
often including medicines. Of the 24 million Americans often leads to serious asthma attacks that can put children Osteoporosis: What It Means To You (Washing-
7
S.L. Murphy, J. Xu, and K.D. Kochanek, ton, DC: HHS, 2004), http://www. Medication,” New England Journal of Medicine
who have diabetes, only 6 million have their diabetes in the hospital. While an asthma-related hospitalization “Deaths: Preliminary Data for 2010,” National surgeongeneral.gov/library/bonehealth/docs/ 353, no. 5 (2005): 487–497.
under control.39 We know that uncontrolled diabetes leads can exceed $7,000,44 the annual cost of providing asthma Vital Statistics Reports 60, no. 4 (Hyattsville, OsteoBrochure1mar05.pdf (accessed 5 34
M.R. DiMatteo, “Variations in Patients’ Adher-
MD: National Center for Health Statistics, Janu- December 2011). ence to Medical Recommendations: A Quantita-
to many complications, including blindness, amputations, control medications to children is $1,500.45 In addition to ary 2012): 17 (accessed 10 March 2012). 21
U.S. Food and Drug Administration, FY2011 tive Review of 50 Years of Research,” Medical
kidney failure, heart attacks, and stroke. In addition to these medical costs, one-third of children’s caregivers miss Care 42, no. 3 (2004): 200–209.
8
U.S. Department of Health and Human Servic- Innovative Drug Approvals, op. cit.
the terrible human toll associated with these outcomes, work because of a child’s asthma.46 This is a particular es, Centers for Disease Control and Prevention, 22
J.K. Jenkins, “CDER New Drug Review: 2011 M.C. Sokol, et al., “Impact of Medication Ad-
35
the avoidable financial costs are enormous. For example, hardship for low-income families,47 where the prevalence National Center for Health Statistics, Health herence on Hospitalization Risk and Healthcare
United States, 2010: With Special Feature on Update,” presentation at the FDA/CMS Summit
the average cost of amputation surgery is nearly $40,000.40 of childhood asthma is 60% greater than in high-income (Washington, DC), 8 December 2011, http:// Cost,” Medical Care 43, no. 6 (2005): 521–530.
Death and Dying, (Hyattsville, MD: NCHS, 2011)
A single year of dialysis for kidney failure patients costs families. Yet medicines can make a huge difference. A http://www.cdc.gov/nchs/data/hus/hus10.pdf. www.fda.gov/downloads/AboutFDA/ M.C. Roebuck, et al., “Medical Adherence
36
CentersOffices/OfficeofMedicalProductsand Leads to Lower Health Care Use and Costs
$83,000,41 and a hospital stay following a heart attack recent study found that inner-city children with asthma who 9
A.S. Fauci, op. cit. Tobacco/CDER/UCM282984.pdf. Despite Increased Drug Spending,” Health
averages $31,000.42 In contrast, a year’s supply of the received appropriate controller medications were nearly 10
A.B. Jena and T.J. Philipson, Innovation and 23
Food and Drug Administration, “FDA Approves Affairs 30, no. 1 (2011): 91–99.
medicines that can help a patient avoid these outcomes 70% less likely to visit the emergency room, saving Technology: Adoption in Health Care Markets Benlysta to Treat Lupus,” press release, 9 37
Alzheimer’s Association, Changing the Trajecto-
(Washington, DC: AEI Press, 2008). March 2011, http://www.fda.gov/NewsEvents/ ry of Alzheimer’s Disease: A National Imperative
typically runs about $2,400.43 approximately $5,000 per child per year.48 Newsroom/PressAnnouncements/ucm246489.
D. Donnell, et al., “Heterosexual HIV-1 Trans-
11 (Chicago: Alzheimer’s Association, May 2010),
htm (accessed 29 January 2012). http://www.alz.org/documents_custom/
mission After Initiation of Antiretroviral Therapy:
A Prospective Cohort Analysis,” The Lancet 375, trajectory.pdf (accessed 5 December 2011).
no. 9731 (2010): 2091–2098.
10 New Medicines: Changing Lives and Managing Health Care Costs New Medicines: Changing Lives and Managing Health Care Costs 11
Chapter 1
Ibid.
38
T he biopharmaceutical industry is
an American success story. Despite
a challenging economic and research
generate jobs in a broad range of other
sectors—from construction to banking
to food services to child care.3
Figure6:6:The
Figure
of
The Biopharmaceutical
of aaDynamic
Biopharmaceutical Sector
DynamicInnovation andand
Innovation
SectorIs Is
Business
a Vital
Ecosystem
Business
Part
the Foundation
Ecosystem
environment, this sector stands out in
The Battelle analysis also found that
its total economic impact. The industry
the quality of jobs offered by the sec- Innovation at public, Private Finance, Specialized General
directly and indirectly supported university and capital insurance & professional business
tor is part of the reason the sector is private-sector labs investment
real estate services services
approximately 4 million U.S. jobs in Sustained & supplies
a key driver within the U.S. economy.
“
wage is higher than across all other Chemical Manufacturing Utilities
many important economic & biological technologies and energy
private-sector industries, due to the inputs & equipment inputs
sectors in the United States. New biopharma business
biopharmaceutical industry’s role as a Biopharma start-ups, tech transfer
sector Internal and in-licensing
A Critical Pillar of the U.S “high value-added sector” that requires support and biopharma Contract Transportation Sales,
manufacturing & logistics advertising
sector
Economy a workforce with specialized skills and demand for
R&D services & marketing
innovation services
The impact of biopharmaceutical com- education at all levels, from those of an
panies extends far beyond the more entry-level technician to Ph.D. scien-
Pharma capital
than 650,000 jobs they directly provide. tists. In 2009, the average total com-
R&D Pipeline investment Supply Chain
According to Battelle, the industry has pensation per direct biopharmaceutical The U.S. biopharmaceutical
a high multiplier, meaning that each employee was $118,690, compared with
sector is “well recognized Biopharmaceuticals Sector
sector job supports several additional $64,278 in the overall economy.4
jobs across the economy.2 Many of
as a dynamic and
Impact Beyond Jobs
these jobs are in the larger biomedical innovative business sector
The positive economic contributions
research and innovation ecosystem of generating high quality jobs
of the biopharmaceutical industry are
companies and services (see Figure 6). and powering economic
By providing the funding for research
felt in many ways beyond the direct Market
Demand for new medicines to treat most challenging and costly diseases
benefits of jobs:5 output and exports for the
and development, as well as capital
resources, technology licensing oppor-
• Every dollar in output generated U.S. economy.”
by the biopharmaceutical industry
tunities, and an extensive market access Battelle Technology SOURCE: Battelle Technology Partnership Practice, The U.S. Biopharmaceuticals Sector: Economic Contribution of the Nation (Columbus, OH: Battelle Memorial
generates another $1.40 in output in Institute, July 2011), prepared for the Pharmaceutical Research and Manufacturers of America.
and distribution system, the biophar- Partnership Practice, July 20116
other sectors of the economy.
maceutical industry is the foundation
• The industry’s broad partnerships
of a broader ecosystem vital to the U.S.
and business relationships support
economy. In addition, by putting down
businesses and their workers across
roots in communities across the coun-
the country, contributing to consumer
try, biopharmaceutical companies also
spending in communities nationwide.
14 Contributing Strongly to the U.S. Economy Despite a Challenging Environment Contributing Strongly to the U.S. Economy Despite a Challenging Environment 15
Chapter 2
16 Contributing Strongly to the U.S. Economy Despite a Challenging Environment Contributing Strongly to the U.S. Economy Despite a Challenging Environment 17
Chapter 2
“
The Growth of the Biopharmaceutical Industry Around the World
participants. Patient recruitment and The U.S. Biopharmaceutical
In recent years, a number of countries have made impressive The United Kingdom accounts for about 20% of European
retention in trials is a continual chal- Industry Is Rising to Its
advances in their biomedical research sectors. These advances biopharmaceutical R&D spending.14 Only the
have been nurtured through multiyear plans, which have led to United States and Japan invest more in biophar-
lenge. (See sidebar, “Developing New Challenges
laws and policies to support the research sector, tax changes maceutical R&D. In 2010, the UK re-released Drugs Is Becoming More Challenging,” The U.S. biopharmaceutical industry
to spur R&D investment, scholarship programs to attract top the Life Sciences Blueprint, a comprehensive on page 33.) At the same time, pay- is responding and adapting to these
talent, and venture capital investments. A few examples from strategy to make the country a global leader ers use tools, such as tiered co-pays, challenges in a variety of ways. For
around the world illustrate this new activity: in the life sciences.15 The plan includes calls for building The UK life sciences industry formularies, prior authorization, step example, companies are increasingly
translational research excellence and adopting tax policies
Singapore’s significant biopharmaceutical sector contributed
to encourage research. is a high-tech and innovative therapy, reduced coverage, and finan- focused on targeting the greatest unmet
almost $3.2 billion to its economy in 2007,
industry which is vital to the cial incentives to restrain use of brand- needs in diseases such as Alzheimer’s,
an increase of 230% since the beginning of the China has increased its R&D investment by 10% each year for
name medicines and encourage the use cancer, and Parkinson’s, and are making
decade. Singapore’s current focus is on ex- the last 10 years. It is estimated that China’s economic prosperity and
panding its biologics manufacturing capacity, R&D will reach $154 billion in 2011, making of generics. a strong push to advance new frontiers
and to that end, the country has concentrated it second only to the United States in terms of
growth of the UK. Life sciences
such as personalized medicine.
on workforce development, R&D expansion, engagement of total R&D investment. The most recent five- businesses will help us to meet Global Competition Is Intense
industry leaders, and support for emerging businesses that can year plan, released in early 2011,16 defines These responses, combined with posi-
the big societal challenges of Beginning in the 1980s, the U.S. bio-
commercialize new discoveries. biotechnology as one of seven strategic industries for further
tive, forward-looking public policies
development, and the latest “Medium- to Long-Term Plan for our age from addressing the pharmaceutical industry emerged as
South Africa aims to move its economy from “farmer to
the Development of Science and Technology,” covering 2006 the leader in biomedical innovation, that sustain a market-based system
pharma” by creating opportunities to help needs of an ageing population
through 2020, includes biotechnology as one of eight frontier surpassing European countries, which and incentives for innovators, such as
researchers take advantage of the country’s rich
technologies. The country is trying to reverse “brain drain” through developing advanced strong intellectual property protec-
biodiversity. Its strategy is focused on drug dis- had previously been the dominant
across scientific disciplines by offering Chinese researchers diagnostics and medicines, to
covery, especially research to address prevalent global players.19 The rise of the U.S. tions, will do much to ensure America’s
around the world prestigious positions within the country.
diseases, such as HIV/AIDS, tuberculosis, and improving our sustainability industry resulted from public poli- continued role as the worldwide leader
“
malaria. South Africa also has pursued vigorous efforts to de- in biopharmaceutical research.
velop international collaborations with U.S. and European firms.
and ability to feed a growing cies that encourage strong intellectual
population.” property protections (including patents To foster innovation and the medical
and data exclusivity), favorable eco- advances and economic impact that go
We are confident that we have the human and David Willetts, UK Minister
of State for Universities and Science,
nomic conditions, and top-tier research with it, we must:
infrastructural capacity to reach our goal of Department of Business, Innovation universities that were able to attract
• Continue to advance regulatory
becoming one of the top three emerging economies and Skills, Annual Update on the scientific talent from around the
science and foster the integration of
Bioscience & Health Technology world.20 While the United States has
in the global pharmaceutical industry.” Database18 emerging scientific data and innova-
been the dominant leader in biophar-
Naledi Pandor, South African Minister of Science tive approaches into the development
maceutical research for the last several
and Technology (2010)17 and review of new medicines more
decades, countries around the world
efficiently, promoting public health
are vying to become the next world
in areas such as biomarkers,
leader in biopharmaceutical R&D,
pharmacogenomics and rare and
investing heavily in their own
orphan drug development.
biopharmaceutical industries.
(See sidebar, page 18.)
18 Contributing Strongly to the U.S. Economy Despite a Challenging Environment Contributing Strongly to the U.S. Economy Despite a Challenging Environment 19
Chapter 2
1
Battelle Technology Partnership Practice, 11
Battelle Technology Partnership Practice, 16
KPMG China, China’s 12th Five-Year Plan:
The U.S. Biopharmaceuticals Sector: Eco- 2010 Evidence and Opportunity: Biotechnol- Overview (March 2011), http://www.kpmg.
nomic Contribution to the Nation (Columbus, ogy Impacts in North Carolina (Columbus, com/CN/en/IssuesAndInsights/
OH: Battelle Memorial Institute, July 2011), OH: Battelle Memorial Institute, September ArticlesPublications/Publicationseries/
prepared for the Pharmaceutical Research 2010). 5-years-plan/Documents/China-12th-Five-
and Manufacturers of America. Year-Plan-Overview-201104.pdf (accessed
Battelle Technology Partnership Practice,
12
6 February 2012).
Ibid.
2
A Report On: The Impact of the Arizona
Biosciences Sector (Columbus, OH: Battelle 17
Department of Science and Technology,
Ibid.
3
Memorial Institute, July 2011). Annual Report 2009/2010 (Pretoria: DST,
Ibid.
4
2010), p. 5–6.
J.A. Vernon, J.H. Golec, and J.A. DiMasi,
13
Ibid.
5 “Drug Development Costs When Financial 18
Strength and Opportunity: The Landscape
Risk is Measured Using the Fama-French
of the Medical Technology, Medical Biotech-
Ibid.
6
Three-Factor Model,” Health Economics
nology and Industrial Biotechnology Sectors
Letters 19, no. 8 (2010): 1002–1005.
7
U.S. International Trade Commission Trade in the UK, Annual Update, December 2010,
Data database, http://dataweb.usitc.gov. 14
The Pharmaceutical Industry in Figures, http://www.bis.gov.uk/assets/biscore/
2010 Edition, The European Federation of business-sectors/docs/s/10-p90-strength-
8
Battelle Technology Partnership Practice, Pharmaceutical Industries and Associa- and-opportunity-bioscience-and-health-
op. cit. tions, http://www.efpia.eu/content/default. technology-sectors.pdf (accessed 2 May
asp?PageID=559&DocID=9158 (accessed 2011).
9
Battelle Technology Partnership Practice,
15 September 2011).
op. cit. 19
R.C. DeVol, A. Bedroussian, and B. Yeo,
15
HM Government, Office for Life Sciences, The Global Biomedical Industry: Preserving
Battelle Technology Partnership Practice,
10
Life Sciences 2010: Delivering the Blueprint U.S. Leadership (Santa Monica, CA: Milken
op. cit.
(January 2010). Institute, September 2011).
Ibid.
20
T he biopharmaceutical industry is
committed to ensuring that medi-
cines are available to all patients who
the average total out-of-pocket cost per
month declined by $31, while the aver-
age number of prescriptions doubled
mind as a result of their coverage.9
(See Figure 8.) The Medicare Today
survey of Part D participants also
need them to prevent and treat disease. following implementation of Part D. 8
found that:
Two primary avenues for ensuring
Beneficiaries Highly Satisfied • 67% said they have lowered their
comprehensive access to medicines
A recent survey from Medicare Today prescription drug spending.
in the United States are the Medicare
shows that Part D beneficiaries are • 34% say they used to skip or reduce
prescription drug benefit, or Part D,
highly satisfied with the program. More their prescription medicine doses to
and the Partnership for Prescription
than 90% of beneficiaries say their plan save money, but now no longer have
Assistance (PPA). Providing compre-
works well and is easy to use, 88% say to do so.
hensive and accurate information about
they are satisfied with the program,
medicines to patients and health care
and 95% say they have greater peace of
providers also is an important aspect
of ensuring that patients get the
medicines they need.
■ Somewhat Satisfied
scription drug program provides more
than just peace of mind. Part D has
2006, seniors’ and disabled beneficia- 24M, 59% ■ Very Satisfied
■ Comprehensive ■ No Comprehensive 90% improved patients’ use of and adher-
ries’ access to medicines has greatly
In 2011, 90% of Medicare beneficiaries had comprehensive drug coverage.
50 89% 88% 88%
Drug Coverage Drug Coverage 78% 83% 84%
29% 27%
29% 31% 36% ence to medicines, which not only
increased. Before the prescription drug 28% 36%
40
program began, 24 million beneficiaries 24M, 59% Medicare Beneficiaries
42M, 90%
With Comprehensive Drug Coverage benefits their health, but can also
reduce the need for hospitalizations
Millions
30
had comprehensive drug coverage, com- 60%
63%
59%
53% and other expensive medical care.
pared with 42 million beneficiaries who 20 50% 52%
■ Comprehensive ■ No Comprehensive 47%
had coverage in 2011.1,2 (See Figure 7.)
10
50 17M, 41%
Drug Coverage Drug Coverage
A 2011 study in the Journal of the
American Medical Association finds
The program has greatly increased af- 5M, 10%
0
that implementation of the Medicare
fordability, particularly for low-income
40 2005 2011
42M, 90%
March September October October November September October prescription drug program in 2006
and previously uninsured beneficiaries.
24M, 59% 2006 2006 2007 2008 2009 2010 2011
was followed by significant decreases
Studies have found that although ben- Note: Comprehensive drug coverage in 2005 is defined as drug coverage through employer-sponsored plans,
Millions
Medicaid, Veterans Health Administration, Indian Health Services, and state pharmaceutical assistance programs. SOURCE: KRC Research Surveys conducted for the Medicare Rx Education Network and Medicare Today. in spending on nondrug medical
eficiaries’ use of prescription medicines 30
Many Medicare beneficiaries had limited drug coverage through Medigap and Medicare Advantage in 2005 (high
deductibles, high copayments, annual benefit limits). Because these Medigap and Medicare Advantage plans did not expenditures among beneficiaries who
increased, patient out-of-pocket spend- offer comprehensive drug coverage, they are excluded in 2005. Drug coverage data obtained from several sources, Learn more about the
including: the Centers for Medicare and Medicaid Services; Current Population Survey; Kaiser State Health Fact impacts of the Medicare previously had no drug coverage or
ing fell.3,4,5,6,7 For example, for seniors Sheets; and the National Conference of State Legislatures. Prescription Drug Program. limited drug coverage.10 A study by
who previously did not have coverage, 20
SOURCE: The Lewin Group, September 2006; Centers for Medicare and Medicaid Services, Medicare Advantage,
< Scan QR code
Cost, PACE, Demo, and Prescription Drug Plan Contract Report—Monthly Summary Report (Data as of January 2011).
22 Bringing Medicines to Patients in Need 17M, 41% Bringing Medicines to Patients in Need 23
10
Chapter 3
X
“
Figure9:9:Nondrug
Figure Nondrug Medical
Medical Spending
SpendingFell
FellAfter
AfterPart
PartD D
Began
Began Disseminating Information About New Medicines
Marketing and promotion efforts by biopharmaceutical com- The sector has been supportive of congressional efforts to
Total nondrug medical spending among newly insured Medicare Part D enrollees
was about $1,200 per year less than expected–an overall savings panies can provide patients and health care professionals increase transparency of interactions between companies
to Medicare of $13.4 billion in 2007, the first full year of the Part D program. with access to important information about medicines. Such and health care professionals. In fact, some companies
information helps ensure that patients are appropriately have already begun releasing information about payments to
In concert with previous Average Annual Reduction in Medical Spending in 2006 and 2007,
for Beneficiaries Gaining Drug Coverage Through Part D treated for their conditions and that health care profession- health care professionals, such as payments for important
studies, these findings Total Nondrug
als have the most up-to-date information on medicines. services like clinical trial investigators, consultants, peer
Part A Part B Other Nondrug* speakers, and other valuable work performed on behalf
suggest that increased $0
Medical Spending
Biopharmaceutical companies have focused on ensuring that of companies. These interactions help advance patient
medication use and educational and promotional efforts and interactions with care and can lead to scientific discoveries and innovative
-$200
health care professionals meet high ethical and professional advances in medical treatments. Company representatives
adherence achieved through
-$400 standards. In addition to extensive government regulations also provide scientifically accurate and up-to-date information
expanded drug coverage that cover marketing activities, the biopharmaceutical in- on the benefits and risks of medicines. The vast majority of
-$600 dustry has developed principles to guide direct-to-consumer physicians consider these interactions valuable for dissemi-
for seniors have been
-$816 advertising and a Code on Interactions with Healthcare nating and exchanging information to improve patient care,
associated with decreased -$800
Professionals. yet they rely more on their clinical practice and experience
spending for nondrug -$1,000
-$268 when choosing the best treatment options for their specific
-$140
-$1,224
patients.15
medical care.” -$1,200
Harvard Medical School researchers A follow-up study by the same authors afford them. Since 2005, the Partner-
echoed these findings. After Medicare found that the number of avoidable ship for Prescription Assistance has
Part D started, nondrug medical spend- hospitalizations declined by at least provided a central point of access for
ing in this group was about $1,200 per 1,000 in more than half the U.S. states, assistance programs.
patient per year less than expected. and seven states had declines of 2,500
PPA offers financially struggling
The savings were driven principally by or more.13
patients a single point of access
seniors making less use of hospitals and
The Partnership for Prescription to information about 475 patient
skilled nursing facilities. (See Figure 9.)
Assistance assistance programs, almost 200
Combined with other research showing
Biopharmaceutical of which are sponsored by
that nearly 11 million seniors gained
companies have a long biopharmaceutical companies.14
comprehensive drug coverage under
history of providing More than 2,500 brand-name
Part D, these savings imply a potential
access to medicines to and generic medicines are available
overall savings to Medicare of $13.4
patients who cannot through these programs.
billion in 2007.12
1
The Lewin Group, Beneficiary Choices 6
W. Yin, et al., “The Effect of the Medicare 12
C.C. Afendulis and M.E. Chernew,
in Medicare Part D and Plan Features in Part D Prescription Benefit on Drug Utiliza- “State-Level Impacts of Medicare Part
2006 (Falls Church, VA: The Lewin Group, tion and Expenditures,” Annals of Internal D,” American Journal of Managed Care
September 2006). Medicine 148, no.3 (2008): 1–14. 17, suppl. 12 (October 2011).
2
Centers for Medicare and Medicaid 7
F. Lichtenberg and S.X. Sun, “The Impact 13
C.C. Afendulis, et al., “The Impact
Services, Medicare Advantage, Cost, PACE, of Medicare Part D on Prescription Drug of Medicare Part D on Hospitalization
Demo, and Prescription Drug Plan Contract Use by the Elderly,” Health Affairs 26, Rates,” Health Services Research 46,
Report—Monthly Summary Report (Data no. 6 (2007): 1735–1744. no. 4 (2011): 1022–1038.
as of January 2011), http://www.cms.
gov/MCRAdvPartDEnrolData/EP/
8
Amundsen Group, Verispan Longitudinal 14
Partnership for Prescription Assistance,
itemdetail.asp?filterType=none&filterByDID Data, analysis for PhRMA, May 2008. Facts About PPA (web page), http://www.
=-99&sortByDID=2&sortOrder= pparx.org/en/about_us/facts_about_ppa
9
Medicare Today, Seniors’ Opinions About (accessed 29 January 2012).
descending&itemID=CMS1243102&intNu
Medicare Rx: Sixth Year Update (Washing-
mPerPage=10.
ton, DC: KRC Research, October 2011), 15
KRC Research, Survey of Physicians
3
G.F. Joyce, et al., “Medicare Part D After 2 http://www.medicaretoday.org/Oct%20 About Pharmaceutical Biotech Research
Years,” American Journal of Managed Care 2011%20KRC%20Medicare%20Today%20 Company Activities and Information:
15, no. 3 (2009): 536–544. Survey%20of%20Seniors%20with%20 Nationally Representative Survey of 508
Medicare%20Rx%2010-14-11%20FINAL. Physicians (Washington, DC: KRC,
4
M.G. Duggan and F.M. Scott Morton, pdf (accessed 31 October 2011). March 2011).
“The Effect of Medicare Part D on Phar-
maceutical Prices and Utilization,” NBER
10
J.M. McWilliams, A.M. Zaslavsky, and
Working Paper W13917 (National Bureau H.A. Huskamp, “Implementation of Medi-
of Economic Research, April 2008). care Part D and Nondrug Medical Spend-
ing for Elderly Adults With Limited Prior
5
J.D. Ketcham and K. Simon, “Medicare Drug Coverage,” Journal of the American
Part D’s Effects on Elderly Drug Costs and Medical Association 306, no. 4 (2011):
Utilization,” NBER Working Paper 14326 402–409.
(National Bureau of Economic Research,
September 2008).
11
Ibid.
D
expensive process, but biopharmaceuti-
iscovering and developing new
medicines is a long, difficult and
continuing commitment to improv-
ing health through innovation. (See
Figure 10.) PhRMA members’ R&D
1
With our rapidly increasing understand-
ing of disease at the molecular level,
science holds more promise for progress
However, numbers cannot tell the full
story of innovation within the pipeline.
Here are two examples of innovative
Figure 11: Medicines in Development in 2012:
Figure 11: Medicines in Selected Categories
Development in 2012: Selected Categories
cal researchers around the country are spending represents the majority of all against many diseases today than at any approaches that companies are taking
dedicated to that lofty goal. Knowing biopharmaceutical R&D investment time in history. The biopharmaceutical to attack difficult-to-treat diseases: Alzheimer’s Cancer Colorectal
that their work can result in new medi- in the United States. This investment
2
pipeline is demonstrating that promise. Disease Cancer
72 948 85
• Immunotherapy in cancer: The idea
cines that save lives, expand treatment supported more than 3,200 medicines For example, a survey by the Tufts Center
of enlisting the immune system to
options, and improve quality of life in clinical development or FDA review, for the Study of Drug Development found
fight cancer first gained significant
drives researchers to work tirelessly plus thousands more in preclinical that 12% to 50% of drugs in the pipeline
research attention in the 1990s.7 Cardiovascular Arthritis Lung Cancer
through the many challenges of the testing. The biopharmaceutical sector
3
are personalized medicines.5 Another
Tumors use multiple approaches to Disorders
252 76 141
process. is the most research-intensive industry report found that 460 medicines are in
suppress and hide from the body’s
in the country, investing more than 10 development for rare diseases,6 which
In 2011, PhRMA members invested immune system. Scientists reasoned
times the amount of R&D per em- affect fewer than 200,000 people in the
an estimated $49.5 billion in research that these mechanisms to stymie the
ployee than manufacturing industries United States and often do not have good HIV/AIDS Diabetes Leukemia
and development, a reflection of their immune system suggested that the
on average.4 treatment options. (See Figure 11.) Mellitus
88 212 139
body itself has the potential to fight
off cancer. After years of research
Figure 10: Biopharmaceutical Companies Continue to Invest Strongly in R&D dead ends, the approach is now gain-
Figure 10: Biopharmaceutical Companies Continue to Invest Strongly in R&D ing momentum, with two recently Parkinson’s Mental Skin
PhRMA Member R&D:* 1995–2011 approved immunotherapies and 23 Disease Disorders Cancer
24 255 85
$70
more in development. Some oncolo-
$60 gists now believe this form of treat-
Expenditures (Billions of Dollars)
28 The R&D Process: The Road to New Medicines The R&D Process: The Road to New Medicines 29
Chapter 4
treatable with existing medicines and pipeline, but the road to approval is The R&D Process
are particularly promising for some long and difficult, with many setbacks The R&D process for a new medicine
genetic diseases. Two RNA thera- and challenges. In fact, for every 5,000 is long and complex. Many steps are
peutics have received approval and to 10,000 compounds that enter the involved to thoroughly assess the safety
several more are currently in clinical discovery pipeline, only five make it to and efficacy of each new medicine. In
trials. clinical trials, and only one receives total, it takes about 10 to 15 years to go
approval from the FDA. through the drug discovery and clinical
Innovative approaches like these are
plentiful throughout the development development process and bring a Learn more about the ins
and outs of drug discovery.
< Scan QR code
Scale-Up to Post-Marketing medicine to the market.9 The process is understanding of the disease, they ment with changes in the compound’s
Drug Discovery Preclinical Clinical Trials FDA Review Manufacturing Monitoring and
Research also costly—the average R&D invest- select a target for a potential medicine. chemical structure to discover struc-
ment for each new medicine is $1.2 A target is usually a molecule or gene tures that might make the compound
billion, including the cost of failures.10 that plays an important role in the dis- more available, safe, and effective in the
Figure 12 shows the typical R&D ease. Researchers then conduct studies human body.
process that potential new medicines in cells, tissues and in animal models to
Even at this early stage, researchers
must go through. determine whether that target can be
PRE-DISCOVERY
5,000–10,000
COMPOUNDS
250 5 begin to think about the final product,
acted upon by a drug.
including its formulation (the recipe for
ONE FDA- Drug Discovery
APPROVED Next, researchers search for a promis- making the medicine) and its delivery
The first step of this stage involves
DRUG ing molecule—a lead compound—that mechanism (whether it is taken by
basic studies that allow scientists to
could become a medicine. They do this mouth, injection, inhaler, etc.).
understand the disease as thoroughly
in various ways, such as finding com-
as possible—its cause or causes, its
pounds from nature, creating mole- Preclinical Testing
natural development, and its impacts
cules from scratch, using high-through- Having whittled thousands of potential
PHASE 1 PHASE 2 PHASE 3 on the entire human body. This basic
put screening, or using biotechnology compounds down to a few hundred,
research can take many years, and
NDA SUBMITTED
IND SUBMITTED
NUMBER OF VOLUNTEERS
to genetically engineer living systems researchers begin the preclinical testing
20–100 100–500 1,000–5,000
builds on work by scientists all across
to produce disease-fighting molecules. phase. They conduct many laboratory
3–6 YEARS 6 –7 YEARS 0.5–2 YEARS INDEFINITE
academia, the government, and the
Lead compounds go through a series studies and tests in animals to deter-
biopharmaceutical industry.
of safety tests. Teams of biologists and mine whether a candidate compound is
SOURCE: Pharmaceutical Research and Manufacturers of America, Drug Discovery and Development: Understanding the R&D Process, www.innovation.org. Once scientists have a sufficient chemists also work together to experi- suitable to be tested in humans.
30 The R&D Process: The Road to New Medicines The R&D Process: The Road to New Medicines 31
CHAPTER 4
70%
60% 64%
57%
50%
48%
40%
At the end of this process, which can This process involves both benefits and and benefits to potential participants so
30%
take several years, researchers may have risks to clinical trial participants, so that they can provide informed consent
between one and five compounds that companies take great care to protect to their participation. 20%
are deemed safe and ready to be tested the safety of trial participants, ensure
The clinical trials process typically takes 0
in clinical trials. The company submits that the trials are conducted correctly
6 to 7 years and involves thousands of Unique Procedures Total Procedures Execution Burden
an Investigational New Drug Applica- and with integrity, and to disclose
participants in several stages of testing.
tion to the FDA to seek approval for trial results. All clinical trials must be
clinical trials. reviewed and approved by an Insti- • Phase 1 clinical trials test a candidate DEFINITIONS
tutional Review Board (IRB) at the medicine in a small group (20 to 100) Procedures: Including lab & blood work, routine exams, x-rays & imaging, questionnaire & subjective assessments, invasive procedures, heart assessment, etc. Execution
Clinical Trials burden: Clinical trial staff work burden. Enrollment rate: Percentage of volunteers meeting the increasing number of protocol eligibility criteria (percentage screened who
institution where the trial takes place. of healthy volunteers. The main pur- were then enrolled). Retention rates: Percentage of volunteers enrolled who then completed the study; declining retention rates mean that firms must enroll more patients
During the clinical trials stage, a com- initially and/or recruit more patients during the trial.
As part of the IRB process, study staff pose of these trials is to determine the SOURCE: M. Allison, “Reinventing Clinical Trials,” Nature Biotechnology 30, no. 1 (2012): 41–49.
pound is tested in human volunteers.
thoroughly explain the trial and its risks safety of the compound.
32 The R&D Process: The Road to New Medicines The R&D Process: The Road to New Medicines 33
Chapter 4
• Phase 2 clinical trials involve a larger granting approval. The FDA may ask highest quality standards, each facility
group (100 to 500) of participants an independent panel of experts to con- must adhere to FDA regulations outlin- The Emergence of Personalized Medicine
who have the disease or condition sider data presented by the company ing Good Manufacturing Practices
Personalized medicine has received a lot of attention • According to the Personalized Medicine Coalition, in
under study. These trials determine and FDA representatives and advise the (GMPs). GMPs are built on the under-
in recent years, but in the past year new research and 2006 there were 13 prominent examples of personal-
the effectiveness of the medicine, ex- agency on whether to approve the ap- lying premise that quality cannot be advances have shown that the approach is picking up ized medicine drugs, treatments and diagnostic products
amine possible short-term side effects plication and under what conditions. inspected or tested into a product, but steam: available; by 2011, 72 prominent examples were
and risks, and determine optimal must be built in every step of the way.13 available for patients.16
• In 2011 we saw two new personalized medicines
dose and schedule. Manufacturing approved: one for patients with late-stage melanoma • A recent study from the Tufts Center for the Study of
In many cases, companies must build
An approved medicine may be used whose tumors express a gene mutation called BRAF Drug Development found a 75% increase in personalized
• Phase 3 clinical trials test the medi- new facilities or overhaul existing facili- V600E,14 and one for patients with late-stage medicine investment by biopharmaceutical companies in
cine in a much larger group (1,000 to for many years by millions of people.
ties, because the manufacturing process non-small-cell lung cancer who express an abnormal the past five years.17
5,000) of people to generate statisti- Planning and scaling up facilities for
for a new medicine can be very differ- anaplastic lymphoma kinase (ALK) gene.15
cally significant information about manufacturing is a highly complicated, (See sidebar on new approvals in Chapter 1, page 5.)
ent from those for previous medicines.
safety, effectiveness, and the overall long-term undertaking. Even as early as
34 The R&D Process: The Road to New Medicines The R&D Process: The Road to New Medicines 35
Chapter 4
“
Biologic License Applications that have
pediatric populations.
Passage of the 1992 Prescription Drug been approved for existing adult indica-
User Fee Act (PDUFA I) reversed that Growing recognition of the need for tions. Both laws were reauthorized in
course. PDUFA authorized the FDA to pediatric-specific information prompt- 2007, but are set to expire on October
collect user fees from biopharmaceuti- ed action. Congress enacted two laws— 1, 2012 unless reauthorized or made
cal companies to hire additional drug the Best Pharmaceuticals for Children permanent by Congress.
reviewers and safety specialists. These Act (BPCA) and the Pediatric Research
As a result of these laws, a wealth
funds are intended to supplement, but Equity Act (PREA)—to improve testing
of useful information now exists for
Personalized medicine offers enormous potential to address Companies often conduct continued do not replace, Congressional appropri- of medicines intended for the treatment
administering drugs in children, includ-
unmet medical needs of patients with cancer, HIV/AIDS, and research on approved medicines to ations. Since its initial passage, PDUFA of children.
ing information on dosing, safety, and
better understand their full benefits has been reauthorized in 1997, 2002,
many other serious diseases. It also holds potential to help BPCA, passed in 2002, provides effectiveness. Prior to the passage of
and potential to address unmet medical and 2007.
us meet the challenge of rising health care costs by avoiding needs. Research into potential uses in
treatment complications and making sure each patient gets PDUFA has had an enormous benefi-
other indications, earlier in the disease
cial impact on the availability of needed
the most effective care possible.” process, or in combination with other
new medicines by dramatically decreas-
medicines is common and important to
John J. Castellani, Remarks ing the time necessary for FDA review
to the Personalized Medicine Coalition,
medical progress.
without compromising safety. In the 20
9 June 201118
PDUFA and Pediatric Research years since PDUFA began, the FDA has
Legislation: Success Stories approved more than 1,500 new medi-
for Patients cines, and the median approval time for
Ensuring timely access to new medicines review of new product applications has
and the safety of patients who use them dropped from 29 months in the early
is of paramount importance. Two legisla- 1990s to an estimated 13 months in
tive programs that are due for reauthori- fiscal year 2009.19
zation in 2012 have played an important
role in helping the FDA fulfill its core
mission—to promote and protect public
health and safety.
36 The R&D Process: The Road to New Medicines The R&D Process: The Road to New Medicines 37
Chapter 4
38 The R&D Process: The Road to New Medicines The R&D Process: The Road to New Medicines 39
Chapter 4
1
Pharmaceutical Research and Manufacturers Food and Drug Administration, Current Good
13
A merica’s biopharmaceutical
companies remain committed
to discovering and developing new
the country are developing more than
3,200 new medicines. 2
deficiency. These medicines have
transformed health care, allowing
people to live longer, healthier, and
Advances have led to medicines across
medicines that save lives and improve more productive lives.
a broad spectrum, from well-known
health. In 2011, research and develop-
and chronic diseases such as cancer, Despite challenges on many fronts—
ment spending by PhRMA member
heart disease, Alzheimer’s disease, and economic, regulatory, and competi-
companies reached an estimated
HIV/AIDS, to rare diseases such as the tive—the biopharmaceutical indus-
$49.5 billion,1 and researchers across
genetic defect congenital factor XIII try continues to lead the world and
Conclusion 41
CONCLUSION
42 Conclusion
Appendix
APPENDIX
44 Appendix Appendix 45
APPENDIX
Research and Development Domestic R&D: Expenditures within Approval Phase: From New Drug
Expenditure Definitions the United States by all PhRMA Application (NDA)/Biologic License
R&D Expenditures: Expenditures member companies. Application (BLA) submission to
within PhRMA member companies’ U.S. • Externally Researched: Agreements NDA/BLA decision.
and/or foreign research laboratories plus with other companies/universities/ Phase 4 Clinical Testing: Any post-
research and development (R&D) funds research institutions to develop, marketing R&D activities performed.
contracted or granted to commercial lab license or acquire promising com
Uncategorized: Represents data for
oratories, private practitioners, consul pounds, technologies or
which detailed classifications were
tants, educational and nonprofit research capabilities. Includes initial pay
unavailable.
institutions, manufacturing and other ments and milestones for new and
companies, or other research-perform ongoing partnerships, collaborations, Biologics and Biotechnology R&D:
ing organizations located inside/outside alliances and license agreements and R&D expenditures devoted to biolog
of the U.S. Includes basic and applied acquisitions. ics and biotechnology products made
Horizon Pharma, Inc. United Therapeutics research, as well as developmental activi • Self-originated: Products for from living material (plant, animal or
Northbrook, IL Corporation ties carried on or supported in the phar which the company originates microorganism). These products may
Silver Spring, MD maceutical, biological, chemical, medical, the compound. be derived from natural sources or
Ikaria, Inc. and related sciences, including psycholo engineered in a laboratory. Excluded
R&D Abroad: Expenditures outside
Hampton, NJ Vertex Pharmaceuticals Incorporated gy and psychiatry, if the purpose of such are R&D expenditures for biotech
the United States by U.S.-owned
Cambridge, MA activities is concerned ultimately with nology techniques used to produce
PhRMA member companies and R&D
Orexigen Therapeutics, Inc. the utilization of scientific principles in non-biotechnology products. Biotech
conducted abroad by the U.S. divisions
La Jolla, CA Vifor Pharma understanding diseases or in improving nology-derived therapeutic proteins
of foreign-owned PhRMA member
Basking Ridge, NJ health. Includes the total cost incurred includes recombinant protein products
companies. R&D performed abroad by
Shionogi Inc. for all pharmaceutical R&D activities, and monoclonal antibodies.
the foreign divisions of foreign-owned
Florham Park, NJ Vivus, Inc. including salaries, materials, supplies
PhRMA member companies Sales Definitions
Mountain View, CA used, and a fair share of overhead, as well
is excluded. Sales: Product sales calculated as billed,
Sucampo Pharmaceuticals, Inc. as the cost of developing quality control.
Bethesda, MD Xoma Ltd. Prehuman/Preclinical Testing: free on board (FOB) plant or ware
However, it does not include the cost of
Berkeley, CA From synthesis to first testing house less cash discounts, Medicaid
routine quality control activities, capital
Theravance, Inc. in humans. rebates, returns, and allowances. These
expenditures, or any costs incurred for
South San Francisco, CA include all marketing expenses except
drug or medical R&D conducted under a Phase 1/2/3 Clinical Testing: From
transportation costs. Also included is
grant or contract for other companies or first testing in designated phase to first
the sales value of products bought and
organizations. testing in subsequent phase.
46 Appendix Appendix 47
APPENDIX
List of Tables
Detailed results from the PhRMA
resold without further processing or Annual Membership Survey
repackaging, as well as the dollar value
of products made from the firm’s own
materials for other manufacturers’ re
sale. Excluded are all royalty payments,
interest, and other income.
R&D, PhRMA Member Companies
Domestic Sales: Sales generated
within the United States by all PhRMA 1 Domestic R&D and R&D Abroad: 1975–2011..................................................... 50
member companies.
2 R&D as a Percentage of Sales: 1975–2011 ....................................................... 51
• Private Sector: Sales through regu
lar marketing channels for end-use 3 Domestic R&D and R&D Abroad: 2010 ................................................................... 52
other than by government agency 4 Domestic R&D by Source: 2010 .................................................................................... 53
administration or distribution.
• Public Sector: Sales or shipments
5 R&D by Function: 2010 ......................................................................................................... 53
made directly to federal, state, or Scientific, Professional, and Techni- engaged in technical work at a level 6 R&D by Geographic Area: 2010 ..................................................................................... 54
local government agencies, cal Staff: Full-time employees, as well that requires knowledge in one of
hospitals, and clinics. as full-time equivalents for part-time the above-mentioned fields who are 7 Biologics and Biotechnology R&D: 2010 ................................................................ 55
48 Appendix Appendix 49
APPENDIX
TABLE 1: Domestic R&D and R&D Abroad,* PhRMA Member Companies: 1975–2011 TABLE 2: R&D as a Percentage of Sales, PhRMA Member Companies: 1975–2011
2011** $38,529.9 -5.3% $10,946.0 9.2% $49,475.9 -2.4% 2011* 21.1% 16.7%
2010 40,688.1 15.1 10,021.7 -9.6 50,709.8 9.2 2010 22.0 17.4
2009 35,356.0 -0.6 11,085.6 -6.1 46,441.6 -2.0 2009 19.5 16.8
2008 35,571.1 -2.8 11,812.0 4.6 47,383.1 -1.1 2008 19.4 16.6
2007 36,608.4 7.8 11,294.8 25.4 47,903.1 11.5 2007 19.8 17.5
2006 33,967.9 9.7 9,005.6 1.3 42,973.5 7.8 2006 19.4 17.1
2005 30,969.0 4.8 8,888.9 19.1 39,857.9 7.7 2005 18.6 16.9
2004 29,555.5 9.2 7,462.6 1.0 37,018.1 7.4 2004 18.4 16.1**
2003 27,064.9 5.5 7,388.4 37.9 34,453.3 11.1 2003 18.3 16.5**
2002 25,655.1 9.2 5,357.2 -13.9 31,012.2 4.2 2002 18.4 16.1
2001 23,502.0 10.0 6,220.6 33.3 29,772.7 14.4 2001 18.0 16.7
2000 21,363.7 15.7 4,667.1 10.6 26,030.8 14.7 2000 18.4 16.2
1999 18,471.1 7.4 4,219.6 9.9 22,690.7 8.2 1999 18.2 15.5
1998 17,127.9 11.0 3,839.0 9.9 20,966.9 10.8 1998 21.1 16.8
1997 15,466.0 13.9 3,492.1 6.5 18,958.1 12.4 1997 21.6 17.1
1996 13,627.1 14.8 3,278.5 -1.6 16,905.6 11.2 1996 21.0 16.6
1995 11,874.0 7.0 3,333.5 *** 15,207.4 *** 1995 20.8 16.7
1994 11,101.6 6.0 2,347.8 3.8 13,449.4 5.6 1994 21.9 17.3
1993 10,477.1 12.5 2,262.9 5.0 12,740.0 11.1 1993 21.6 17.0
1992 9,312.1 17.4 2,155.8 21.3 11,467.9 18.2 1992 19.4 15.5
1991 7,928.6 16.5 1,776.8 9.9 9,705.4 15.3 1991 17.9 14.6
1990 6,802.9 13.0 1,617.4 23.6 8,420.3 14.9 1990 17.7 14.4
1989 6,021.4 15.0 1,308.6 0.4 7,330.0 12.1 1989 18.4 14.8
1988 5,233.9 16.2 1,303.6 30.6 6,537.5 18.8 1988 18.3 14.1
1987 4,504.1 16.2 998.1 15.4 5,502.2 16.1 1987 17.4 13.4
1986 3,875.0 14.7 865.1 23.8 4,740.1 16.2 1986 16.4 12.9
1985 3,378.7 13.3 698.9 17.2 4,077.6 13.9 1985 16.3 12.9
1984 2,982.4 11.6 596.4 9.2 3,578.8 11.2 1984 15.7 12.1
1983 2,671.3 17.7 546.3 8.2 3,217.6 16.0 1983 15.9 11.8
1982 2,268.7 21.3 505.0 7.7 2,773.7 18.6 1982 15.4 10.9
1981 1,870.4 20.7 469.1 9.7 2,339.5 18.4 1981 14.8 10.0
1980 1,549.2 16.7 427.5 42.8 1,976.7 21.5 1980 13.1 8.9
1979 1,327.4 13.8 299.4 25.9 1,626.8 15.9 1979 12.5 8.6
1978 1,166.1 9.7 237.9 11.6 1,404.0 10.0 1978 12.2 8.5
1977 1,063.0 8.1 213.1 18.2 1,276.1 9.7 1977 12.4 9.0
1976 983.4 8.8 180.3 14.1 1,163.7 9.6 1976 12.4 8.9
1975 903.5 13.9 158.0 7.0 1,061.5 12.8 1975 12.7 9.0
Average 11.2% 12.3% 11.4%
*Estimated.
*R&D Abroad includes expenditures outside the United States by U.S.-owned PhRMA member companies and R&D conducted abroad by the **Revised in 2007 to reflect updated data.
U.S. divisions of foreign-owned PhRMA member companies. R&D performed abroad by the foreign divisions of foreign-owned PhRMA member Source: Pharmaceutical Research and Manufacturers of America,
companies are excluded. Domestic R&D, however, includes R&D expenditures within the United States by all PhRMA member companies. PhRMA Annual Membership Survey, 2012.
**Estimated.
***R&D Abroad affected by merger and acquisition activity.
Note: All figures include company-financed R&D only. Total values may be affected by rounding.
Source: Pharmaceutical Research and Manufacturers of America, PhRMA Annual Membership Survey, 2012.
50 Appendix Appendix 51
APPENDIX
TABLE 3: Domestic R&D and R&D Abroad,* PhRMA Member Companies: 2010 TABLE 4: Domestic R&D by Source, PhRMA Member Companies: 2010
*R&D abroad includes expenditures outside the United States by U.S.-owned PhRMA member
companies and R&D conducted abroad by the U.S. divisions of foreign-owned PhRMA member
companies. R&D performed abroad by the foreign divisions of foreign-owned PhRMA member companies
are excluded. Domestic R&D, however, includes R&D expenditures within the United States by all
PhRMA member companies. TABLE 5: R&D by Function, PhRMA Member Companies: 2010
Note: All figures include company-financed R&D only. Total values may be affected by rounding.
Source: Pharmaceutical Research and Manufacturers of America, PhRMA Annual Membership
Survey, 2012.
(dollar figures in millions)
Note: All figures include company-financed R&D only. Total values may be affected by rounding.
Source: Pharmaceutical Research and Manufacturers of America, PhRMA Annual Membership
Survey, 2012.
52 Appendix Appendix 53
APPENDIX
APPENDIX
TABLE 6: R&D by Geographic Area,* PhRMA Member Companies: 2010 TABLE 7: Biologics and Biotechnology R&D, PhRMA Member Companies: 2010
Asia-Pacific
Japan $695.8 1.4%
China 142.9 0.3
India 43.9 0.1
Taiwan 26.7 0.1
South Korea 57.7 0.1
Other Asia-Pacific 424.3 0.8
Australia
Australia and New Zealand $205.2 0.4%
Europe
France $308.4 0.6%
Germany 538.9 1.1
Italy 158.7 0.3
*R&D abroad includes
Spain 191.2 0.4 expenditures outside the United
United Kingdom 1,922.6 3.8 States by U.S.-owned PhRMA
member companies and R&D
Other Western European 4,003.6 7.9 conducted abroad by the U.S.
Czech Republic 34.3 0.1 divisions of foreign-owned
Hungary 30.9 0.1 PhRMA member companies.
R&D performed abroad by the
Poland 49.2 0.1 foreign divisions of foreign-owned
Turkey 38.2 0.1 PhRMA member companies
are excluded. Domestic
Russia 60.0 0.1 R&D, however, includes R&D
Central and Eastern Europe (Cyprus, Estonia, expenditures within the United
Slovenia, Bulgaria, Lithuania, Latvia, Romania, Slovakia, Malta, and 107.3 0.2 States by all PhRMA member
other Eastern European countries and the Newly Independent States) companies.
Middle East Note: All figures include
company-financed R&D only.
Saudi Arabia $16.6 0.0% Total values may be affected by
Middle East (Yemen, United Arab Emirates, Iraq, Iran, 26.7 0.1 rounding.
Kuwait, Israel, Jordan, Syria, Afghanistan, and Qatar)
SOURCE: Pharmaceutical
Uncategorized $1.1 0.0% Research and Manufacturers
of America, PhRMA Annual
Total R&D $50,709.8 100.0% Membership Survey, 2012.
54 Appendix Appendix 55
APPENDIX
APPENDIX
TABLE 8: Domestic Sales and Sales Abroad,* PhRMA Member Companies: 1975–2011 TABLE 9: Sales by Geographic Area,* PhRMA Member Companies: 2010
56 Appendix Appendix 57
TABLE 10: Domestic R&D Scientific, Professional and Technical Personnel
by Function, PhRMA Member Companies: 2010
58 Appendix