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Continuing Our Progress Depends on Today’s Health Care Policy Decisions

New Brunswick, NJ, October 7, 2002 — The proliferation of prescription drugs and medical devices has dramatically changed health care over the past quarter century.  It also has dramatically changed the HealthCare Institute of New Jersey’s member companies.

Once revered as the most admired companies on the planet, New Jersey’s pharmaceutical and medical technology industry faces ever-growing scrutiny — from government, the medical community, and from patients — as the quest for better medicine intensifies. 

Never before has New Jersey’s pharmaceutical and medical technology industry faced such pressures:  

  • The increased length and complexity of the R&D process
  • The increased use of medicines and devices to treat and prevent diseases
  • Increasing access and affordability to the public
  • Private- and public-sector financing and the preservation of intellectual property, which are the very incentives to discover new medicines and devices.

Despite the challenges, New Jersey’s pharmaceutical and medical technology industry continues to be among the world’s most innovative, research-intensive industries.  Last year’s statistics bear out that fact:  More than 1/3 of all new drugs were discovered right here in New Jersey, and the state’s medical technology industry ranked 3rd among all 50 states developing new medical devices.  

That is good news for patients who are eagerly awaiting the cure for Cancer, Parkinson’s disease or Alzheimer’s.  Or those who are optimistic about advances in spinal cord research that may soon enable patients like Christopher Reeve to regain full mobility and walk again.  New Jersey’s pharmaceutical and medical technology industry will no doubt play a role in those next breakthroughs.  

But the industry has also been a victim of its own success.  The drug and device pipeline continues to outperform R&D expectations. 

Yet the public is growing more impatient for better (and cheaper) drugs and devices.  At the center of the debate is how to nurture innovation, while providing easy and affordable access to it. 

This year, key legislative priorities — at the state and federal level — were addressed that will enable seniors and our disabled to have access to the most-cutting edge medicines available.  The Medicare Modernization and Prescription Drug Act is just one example. 

This past summer, both Houses of Congress passed a Medicare reform and prescription drug coverage bill giving seniors and the disabled a prescription drug benefit that will help combat mounting prescription drug bills from those least able to afford it.  The modernization of Medicare is long overdue and recognizes the increased role that prescription drugs play in prolonging our lives and preventing disease.

However, there is still great debate on how to accomplish this — whether through private, competition-driven plans or through the federal government.  As we go to press, Congress is conferencing on several important components of the bill and the industry is hopeful that a viable Medicare Prescription Drug benefit can be delivered this year. 

On the state legislative front, the industry narrowly escaped the imposition of a Preferred Drug List (PDL) in this year’s state budget.  Preferred Drug Lists (formularies), are hotly contested by the industry (as well as patient advocacy groups) because they do not offer the newest, safest drugs to patients. 

Under the guise of containing costs for state prescription drug programs: Senior Gold, PAAD and Medicaid, PDLs on the surface look attractive.  Many states have implemented them in order to rein in healthcare costs.  But the measure is penny-wise and pound-foolish.  As many states have found, PDLs contain prescription drug costs, but drive other more expensive health delivery costs such as emergency room visits, frequent doctors visits and long-term care.  

Instead, then industry recommended the creation of Disease Management programs for patients to ensure the efficient use of the state’s resources and our citizens’ good health.  These programs have worked successful in Florida and other states and ensure that our elderly and disabled have access to the most modern medicines available. 

While concerns over access and cost were addressed this year, 2004 promises to be yet another landmark year in Trenton and Washington.  Some of the looming debates revolve around important policy questions that affect our ability to continue advancing health care. 

Here is what New Jersey’s pharmaceutical and medical technology industry will be concentrating on:

  • Enacting a comprehensive prescription drug benefit in Medicare.  A comprehensive drug benefit plan that recognizes the increased role of pharmaceuticals is the highest priority.  The challenge is to provide high-quality care and affordability without compromising medical innovation.  
  • Preventing new pharmaceutical price controls.  Experiences in Europe, Canada and Japan underscore that price controls stifle innovation and compromise patient access to new medicines. 
  • Defeating drug reimportation.  Part of the Medicare Prescription Drug Benefit legislation authorizes the reimportation of drugs from Canada, Mexico and numerous third-world countries.  The industry has intensely argued against this practice because of the safety and efficacy issues it presents.  The FDA has recently cracked down on this practice and exposed the number of counterfeit drugs that cross our borders each day.  While seniors point to the cheaper prices, the industry believes access and affordability can be achieved without compromising safety. 
  • Upholding the delicate Hatch-Waxman Act balance.  Hatch-Waxman has been extremely successful in striking a balance between the rights of generic companies and innovator companies.  Further eroding intellectual property rights will be detrimental to the discovery of new drugs since patents provide the necessary incentives to invest in research.  
  • Supporting cost-controls strategies that do not arbitrarily restrict access.  Instead of just reducing the prescription drug line item in state budgets, a strong emphasis should be placed on disease management programs that recognize the value of medicines in both improving patient care and offsetting health care expenditures.  
  • Fostering a strong industry-government partnership for research.  The NIH, research universities and the biotech industry have all played important roles in developing and commercializing technologies and therapies that might never have been used.  Patent protection for federally funded ideas and more public/private partnerships will be good for patients.  
  • Modernizing the FDA and Medicare to speed the approval of medical technology and allow appropriate reimbursement.  Medical technology has exploded in terms of its advances.  Unfortunately, the FDA cannot keep pace with reviewing and approving the applications that are currently on file.  Also, reimbursements for new medical devices are languishing as Medicare continues to pay for expensive, antiquated treatments.  Re-aligning the FDA’s and Medicare’s resources will ensure that patients get the best medical advances possible.