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STRONG PHARMACEUTICAL ROLE DEEMED CRITICAL TO EFFECTIVE HEALTH CARE REFORM, NEW STUDY SAYS

 WASHINGTON, Sept. 9 /PRNewswire/ -- "The focus of the current debate on drug prices misses the point. This country has seen too many serious problems made worse by `quick fixes.' The real question is how to ensure that pharmaceuticals continue to play a key role in improving the quality and cost-effectiveness of health care," a major new study concludes.
 The study, conducted by The Boston Consulting Group (BCG), documents how the development of new drugs by the U.S. pharmaceutical industry in the past one-third century (since 1960) has significantly improved health and lowered health care costs. Health care costs have risen, despite these new treatments, primarily because people are living longer and are dying of more complex diseases than in the past, and because treatment of diseases is more technologically advanced, the study says.
 "This report recasts some key assumptions about the pharmaceutical industry," said Eran Broshy, vice president of BCG and co-author of the report. "Our study should lead the public policy sector to think differently about this vital, high-technology industry."
 The report, titled "The Contribution of Pharmaceutical Companies: What's at Stake for America," is the first comprehensive review of the central role of the pharmaceutical industry in enhancing health and reducing health care costs. It provides historical perspective on the industry from Jack Kennedy's America to Bill Clinton's. The study was conducted independently by BCG under the financial sponsorship of 19 pharmaceutical companies.
 Said Philip B. Evans, vice president of BCG and a study co-author: "We hope and expect this report will become an important resource during the upcoming health care reform debate, as well as provide a more accurate and comprehensive view of the pharmaceutical industry. It demonstrates that this industry is the kind that `industrial policy' seeks to build."
 The report reaches five key conclusions:
 1. Pharmaceutical companies have scored extraordinary and sustained
 success in controlling, curing and preventing disease.
 2. Pharmaceuticals have added very little directly to the cost of
 health care and have generally replaced less effective and more
 expensive therapies. Pharmaceuticals save money.
 3. There is every prospect that this pattern of cost-effective
 medical advance will continue, and that pharmaceuticals offer
 the best chance to find dramatically more effective and lower-
 cost solutions to today's most serious diseases.
 4. Health care costs are rising primarily because people are living
 longer and dying of more complex diseases, and because the
 treatment of these diseases is becoming more technology-
 intensive. The long-term solution to this problem does not lie
 in capping the costs of individual components of diagnosing and
 treating diseases, such as physician and hospital costs. A
 better approach is to develop systems that more efficiently
 manage diseases over the lifetime of individual patients, i.e.,
 systems that focus explicitly on each disease's entire cost
 structure over a patient's lifetime. Pharmaceutical companies
 have an integral role in facilitating improved care management.
 5. Success of the U.S. pharmaceutical industry is fragile. The
 industry is intensely competitive and must take substantial
 risks, with entry barriers that are lower and company failure
 rates that are higher than is generally understood. The
 earnings of surviving companies reflect not monopoly profits but
 the economic reward for risk-taking, long-term investment and
 superior capabilities.
 Because drug development entails high costs and high risks, substantial rewards are necessary to motivate investment, the study observes. Mandatory restraints on pharmaceuticals, if implemented, could put at risk the best potential means for eventually lowering health care costs.
 Said David H.M. Matheson, senior vice president of BCG and co-author of the report, "At this point, many of the most prevalent diseases are at a high-cost stage in the cycle of innovation. The annual medical costs of only seven major uncured diseases account for about half of today's health care bill."
 The study concludes: "If the cycle of innovation is disrupted, the potential cost to society will be enormous. Many diseases are now within reach of a highly effective (pharmaceutical) control or cure. As the industry moves to that point, the cost of treating today's major ailments should fall sharply. If the cycle of pharmaceutical innovation stalls out, there is the risk of being trapped with today's higher-cost, less-effective solutions."
 Evidence supporting the study's various points includes the following:
 -- Perhaps most dramatically, the eradication, prevention and control of disease has been the single most significant factor in increasing life expectancy from 54 in 1920, to 70 in 1965, and to 75 in 1990 -- 21 years in total.
 -- The annual savings from the examples of drug therapy given in the report -- a small fraction of the total -- exceed half the entire annual cost of drugs in the United States.
 -- Since 1960, 598 new molecular entities targeted against various diseases have been approved and introduced. During this period, the number of new drugs focused on cancer has increased by 57; on cardiovascular diseases by 86; and, the number classified as cures by 144.
 -- Today's diseases -- AIDS, Alzheimer's and various cancers -- are far more complex than those of the 1920s, but there is reason to be optimistic that pharmaceutical innovation will continue. Under biotechnology's impetus, the number of cures is expected to accelerate. Indeed, the pharmaceutical industry is rapidly becoming a high- technology, bio-pharmaceutical industry. There are already 25 biotechnology products on the market and 153 more in clinical research.
 -- A disease-oriented systems approach to health care is greatly needed, and pharmaceutical companies are uniquely positioned to work as partners of managed care organizations, providing physicians and patients with information on the value and cost-effectiveness of treatments, developing measures of health care outcomes and enhancing compliance.
 The Boston Consulting Group is one of the world's foremost management consulting firms and is the originator of business strategy consulting. BCG has a consulting staff of 900 professionals in 24 offices worldwide servicing a broad client mix and a wide range of industries.
 The sponsors of the study comprise an independent coalition of 19 large and small pharmaceutical companies: Adria Laboratories; American Home Products Company; Berlex Laboratories Inc.; Biogen; Bristol-Myers Squibb; Hoffmann-La Roche Incorporated; Johnson & Johnson; Marion Merrell Dow, Incorporated; Miles Inc.; Pfizer Incorporated; Rhone- Poulenc Rorer, Inc.; Schering-Plough Corporation; Searle; SmithKline Beecham; Sterling Winthrop Inc.; Syntex Corporation; The Upjohn Company; Warner-Lambert Company; and Zeneca Pharmaceuticals Group (formerly ICI Pharmaceuticals Group).
 -0- 9/9/93
 /CONTACT: Joan Wheeler of The Boston Consulting Group, 617-973-1347; Stephen Galpin of Schering-Plough, 201-822-7415; or Jay Hyde of Burson-Marsteller, 202-833-4481, for the BCG/


CO: The Boston Consulting Group ST: District of Columbia IN: MTC HEA SU:

KD-DC -- DC001 -- 0260 09/09/93 11:03 EDT
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Date:Sep 9, 1993
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