John Castellani: Industry's Level Bet on a Dizzying Future - Pharmaceutical Executive


John Castellani: Industry's Level Bet on a Dizzying Future
Will reinforced evidence and messaging continue to deliver results in a changing healthcare marketplace? Can PhRMA's own business model synch with industry's? Pharm Exec takes a closer look at PhRMA's new leadership

Pharmaceutical Executive

Top of the Food Chain

WL: Of these broad policy issues, which is the most important to you right now?

JC: The issue that "binds all" is reimbursement. It is central to the four tasks I noted earlier as being PhRMA's mission. And it drives the fundamental question of healthcare today—how to establish value in the delivery of healthcare, in our case by giving providers the flexibility and access in prescribing that leads to the best outcome for the patient. We have not as a society resolved this question, despite the fact that the US faces a tidal wave of chronic disease. The way reimbursement works right now, the incentive is to pay for a diabetic's amputation rather than the insulin that would prevent it. There is no margin for investments in prevention and wellness, which hurts us because medicines are often the first line of attack in any strategy to avoid acute care, institutionalized interventions that cost our system billions of dollars each year.

A simple statistic says it all: Drugs constitute only a little more than 10 percent of total health spending, yet they account for upwards of 40 percent of what the average patient has to spend out of pocket for healthcare each year. In practice, this means the consumer will be driven to rely on acute care services that cost him less rather than use the drugs that are a better deal when you look at the treatment costs systemwide.

Our challenge is to turn this debate about costs on its head, to force people to think logically, and to put more emphasis on the long-term. You may have seen several new reports—not sponsored by PhRMA—that estimate the total economic cost of Alzheimer's disease alone will reach $1 trillion annually by 2050. That's about as much as what we pay for the entire cost of healthcare in the US today. The biggest-selling drug on the market brings in about $11 billion dollars [annually]. Does it not make sense to invest around an approach that would build the incentive to develop drugs with high revenue potential in treating an unmet medical need—to spend $11 billion to ameliorate a far bigger, trillion-dollar liability?

WL: Where are the policy gaps that PhRMA needs to fill?

JC: The defense of innovation is central to everything we do, so as part of that, we must work to promote PhRMA as a key player in science. The debate is not just about economics and politics. We have to provide a voice for the science of discovery. Our scientists have to be mobilized to help shape the environment where innovation takes place. Drug regulation is another area of growing need. The regulatory process in science is no longer a technical sidebar for a few industry specialists. It's a strategic priority that—done right—can reduce the time, cost, and uncertainty of drug development.

And of course we have to continue to review how we communicate our messages, particularly in the online space. Last month, PhRMA launched a new website and I will contribute to our new blog ("The Catalyst"), just as I did when I was at the Business Roundtable.

What fuses all this together is PhRMA's reputation as a thought leader. Ultimately, perception of the industry is influenced by our role in the delivery system of healthcare. Do we contribute in a way that positions us as a reform leader to make the system more innovative, accessible, and affordable? It's not effective to be seen as a force for "No," avoiding the search for new solutions because we define our task as just selling a medicine.


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