19531963

19731983

1993

NPCNOW

NATI O N AL PHAR MAC E U TI C AL CO U N C I L

2003

Tetracycline invented.

First kidney transplant.

First anti-psychosis drugs enableoutpatient treatment and closingof mental institutions.

National Pharmaceutical Council(NPC) incorporated in New York.

Dr. Jonas Salk successfully tests apolio vaccine.

Watson & Crick identify thedouble helix structure of DNA.

First immunosuppressant drug usedto block transplant rejection.

Birth of an IndustryIn 1895, the first pharmaceutical research laboratory wasestablished, and the research-based pharmaceutical industry wasborn. While previous endeavors had focused on manufacturingand marketing, pharmaceutical companies now began toactively seek out new compounds with therapeutic properties.

By the turn of the century, the use of manufactured medicineswas so enthusiastically embraced by the American consumerthat federal oversight was deemed necessary. The modern Foodand Drug Administration (FDA), which began as a division ofthe Department of Agriculture, obtained some regulatoryfunctions with the passage of the Food and Drugs Act of 1906.Treatments at the turn of the 20th century focused primarily onalleviating symptoms of acute illness — aspirin wasn’t eveninvented until 1897. And although penicillin was discovered in1928, it was not available in a therapeutically usable form until1940, when it played a major role in treating injured soldiers inWorld War II.

As the industry evolved, so did legislation and oversight. In1938, the Federal Food, Drug and Cosmetic Act was passed,

requiring that new drugs be proven safe before they weremarketed. This legislation changed the nature of regulation andrefocused responsibility from the consumer to the drug’sdeveloper. In 1953, the department also came under thesupervision of the Department of Health, Education, andWelfare, around the same time that medical science took severalgiant leaps forward.

1953 was an extraordinary year, with two landmark discoveries.Dr. Jonas Salk first successfully tested his polio vaccine, andWatson and Crick published their work identifying the doublehelix structure of DNA, which would later win them the NobelPrize in Medicine.

The Early Years of NPC1953 was also the year that twelve pharmaceutical companiesdecided to establish the National Pharmaceutical Council withNewell Stewart as its first president.

1953 - The NationalPharmaceutical Council isestablished by twelvepharmaceutical companiesin New York City.

1953 1954 1955 1956 1957

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Thalidomide shown to cause birthdefects; FDA keeps drug from U.S.market.

Kefauver-Harris Act gives the FDAgreater control over Rx, requiringsubstantial evidence of both safetyand efficacy; adverse drug reactionsrequired on all advertising.

Pharmaceutical Manufacturers Association(PMA) incorporated in Delaware; known asPharmaceutical Research and ManufacturersAssociation (PhRMA) today.

First drug approved as anoral contraceptive.

NPC’s focus was to address the substitution, without thedoctor’s authorization, of an alternate product for the brand-name drug. Although substitution was generally consideredunethical among both pharmacists and physicians, there werefew effective controls or laws specifically prohibiting thepractice. Board of Pharmacy regulations on the subject werevague or non-existent, and state Boards of Pharmacy werereluctant to take action against offenders unless well-documented complaints were filed.

Under the laws in effect at that time, copies of innovative drugswere often introduced to the market without any review byFDA, based on the theory that they were “generally recognized

as safe.” There was thus no assurance that generic drugs wereequivalent to brand-name products, and many doctorsunderstandably relied on the reputation of research-basedmanufacturers when they prescribed for their patients.

NPC’s early years were primarily devoted to addressing concernsabout unauthorized substitution at the retail pharmacy level.Positive relationships were established and assistance wasprovided to state Boards of Pharmacy, state and nationalpharmacy organizations, and colleges of pharmacy. Within adecade of NPC’s establishment, most states, either through lawsor regulations, prohibited substitution when not expresslyauthorized by the prescribing doctor.

1958 1959 1960 1961 1962

NPC’s Founding Member Companies in 1953

• Abbott Laboratories• Ciba Pharmaceutical Products, Inc.• Hoffmann-La Roche, Inc.• Lederle Laboratories Division, American Cyanamid Company• McNeil Laboratories• The William S. Merrell Company

• Charles Pfizer & Co., Inc. (J.B. Roerig & Co.)• G.D. Searle & Co.• Smith, Kline & French Laboratories• E.R. Squibb & Sons, Division of Mathieson Chemical Corp.• The Upjohn Company• Winthrop-Stearns Inc.

1962 - Watson and Crickwin the Nobel prize forMedicine for theirdiscoveries concerning themolecular structure ofnuclear acids and itssignificance for informationtransfer in living material.

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U.S. Congress creates Medicare and Medicaid.

200th anniversary of the beginning of U.S. medicaleducation at University of Pennsylvania.

First drug targeted at a receptor subtypeused for treatment of high blood pressure.

Measles vaccine licensed in U.S.

1965 - NPC moves it’soffices from New YorkCity to Washingon D.C.

1963 1964 1965 1966 1967

In the years that followed, other policies and practices closelyrelated to the initial substitution laws emerged and occupiedmuch of NPC’s attention, expanding its sphere of activitybeyond pharmacy. Most significant were new relationships withhospitals, physicians, federal and state government agencies,consumer organizations and related public interest groups. Assubstitution issues slowly re-emerged in the states, NPC playeda significant role in limiting the effects of substitution throughits educational efforts with key stakeholders.

Then in 1959, NPC launched an educational program designedto strengthen the relationship between the industry and thepharmacy community that would continue for decades. Theannual pharmacy internship program, a joint project betweenNPC and the American Pharmaceutical Association (APhA),placed pharmacy students in summer internships within NPC’smember companies in an effort to increase understandingbetween the two disciplines. The partnership programcontinued until 1994, at which time APhA became the soleadministrator.

Putting Down New RootsIn order to enable easier access to Washington-based policymakers and regulatory staff, NPC moved its offices from New

York City to Washington, D.C., in 1965. Along with the movecame new leadership, as Vernon Trygstad took over as NPC’spresident in 1966. Both changes were well suited to NPC’s shiftin focus.

Concerns about access to health care in the early 1960’s led tothe establishment of Medicare, Medicaid and other statemedical assistance programs. A major portion of NPC’sattention therefore turned to government policies relating toaccess to prescription drugs. NPC developed a substantial bodyof information concerning government and third-partyprograms and established relationships with health care officialsat the federal and state levels.

Among the resources NPC developed was the “Compilation onState Welfare Drug Programs,” begun in 1963. This annualpublication would later become NPC’s “Pharmaceutical BenefitsUnder State Medical Assistance Programs.” Known todaysimply as “the Compilation,” it is still produced and isconsidered an invaluable resource by many public officials andprivate analysts.

Under Trygstad’s leadership, NPC partnered with the CaliforniaDepartment of Health Care Services to determine whether

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FDA begins comprehensiveefficacy review of all OTC drugs.

Rubella vaccine developed.

American Pharmaceutical Associationseeks repeal of state antisubstitutionlaws and regulations.

FDA requires the first patientpackage insert.

utilization review and peer review could significantly reducehealth care costs. In the four counties studied, health care costsincreased to a much lesser degree than in the state as a whole,and the researchers extrapolated that the program could havesaved California $117 million per year if implementedstatewide. The 30 computer programs and managementtechniques developed during the study were made available toother states. Elements of the electronic data processing systemswere also adapted by the federal government and acknowledgedby the U.S. Department of Health, Education and Welfare as avaluable contribution to its own five-volume publication,“Medicaid Management Information System,” developed as aguide for the administration of State Medicaid Programs.

Interestingly, the original proposal for the California studyincluded a component to compare medical care costs with andwithout a formulary, but it was considered infeasible at the timedue to lack of sufficient accurate data. NPC went on to sponsorstudies in Iowa, Louisiana and Texas examining open drugprograms versus closed formularies. Each study providedevidence of the medical and economic advantages of an opendrug program.

That same year, the issue of substitution again gainedmomentum and included a new emphasis on formularies. In1970, the American Pharmaceutical Association (APhA)adopted a policy to seek the repeal of state antisubstitution lawsand regulations. In its efforts, the APhA specifically cited aMassachusetts law requiring a formulary that listed generic drugnames, which they claimed mandated generic substitution.APhA’s efforts were unsuccessful and many state laws opposingsubstitution were actually strengthened in the 1970s.

The influence of consumerism on public policy increasedsignificantly in the 1970s, due in great measure to a lack of fulland accurate information in the promotion of genericprescribing and substitution. Thus, the patient package insertrequirement enacted by the FDA in 1970 for certain types ofdrugs and the comprehensive review of the efficacy of all over-the-counter medicines begun in 1972 were well timed.

As the debate grew to include consumer groups and laborunions aimed at reducing prescription drug and pharmaceuticalservices costs, NPC again expanded its reach to buildrelationships with, and provide educational activities for,

The electronic dataprocessing systems developedduring the study conductedby NPC and the CaliforniaDepartment of Health CareServices were adapted by thefederal government andacknowledged by the U.S.Department of Health,Education and Welfare as a valuable contribution to its own five-volumepublication.

1968 1969 1970 1971 1972

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First H2 receptor enables ulcertreatment without surgery.

In the 1980s and 1990sthe pace of successfulresearch and developmentby the pharmaceuticalindustry increased andhundreds of new drugsand biologics entered the market.

1973 1974 1975 1976 1977

consumer organizations, medical and pharmacy students andtheir related organizations, and the Washington-based staffmembers of federal agencies.

But the push to reduce drug costs was on, and in the latter halfof the decade, there was considerable pressure to explore foreignsources if medicines could be obtained at a cost savings. In Juneof 1978, NPC President Trygstad wrote, “Especially because it iscurrent at the moment, mention should be made of pressuresbeing brought upon Federal agencies, through Congressionalhearings, to shop for and procure drugs from foreign sources.”

Unparalleled Successes, New ChallengesThe industry was again undergoing changes, and NPC changedwith it. In 1980, Mark Knowles joined NPC as its president,and in 1985, NPC established its offices in the current locationin Reston, Virginia. During the next two decades, the pace ofsuccessful research and development by the pharmaceuticalindustry increased and hundreds of new drugs and biologicsentered the market. It was also during this period that new drugtherapies began to address chronic disease, in addition to acuteconditions. These advances resulted in fundamental changes inthe location and the nature of care delivery by enabling morepatients to be treated on an outpatient basis. As a result, the

proportion of money spent on medicines, rather than on moreintense and invasive therapies such as hospitalizations andsurgeries, began to increase. Innovative drugs for conditionssuch as cardiovascular disease, diabetes, and ulcer changed thequality and length of patients’ lives. And diseases such as cancerand AIDS responded to new treatments, becoming manageablechronic illnesses instead of death sentences.

As the health care focus shifted to the delay of diseaseprogression, NPC began to devote significant attention topatient compliance with prescribed medication regimens.Efforts were made to raise awareness that noncompliance was amajor health problem in the United States. NPC producedseveral publications aimed at a wide variety of audiences andsponsored the first national symposium on the subject, featuringthen-Surgeon General C. Everett Koop and other leadingexperts in the field. NPC also developed a widely viewed publicservice announcement featuring professional tennis playerArthur Ashe. Ashe initially became an advocate for medicationcompliance as a result of his heart attack and related surgeries.In retrospect, he became an even more compelling spokespersonfor the compliance issue due to his later, very public battle withAIDS which he contracted from a tainted blood transfusionduring a 1983 heart surgery.

A technique for the cloning of DNA isinvented by Herbert Boyer and StanleyCohen. Synthetic insulin for diabetics and agrowth hormone for underdeveloped childrenwere made possible by their achievements.

Development of the firstinplantable drug pumpfrees patients from dailyinjections.

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Synthetic human insulin isfirst biotech drug approvedby FDA, eliminatesproblems with allergies.

FDA issues Tamper-Resistant Packagingregulations.

Smallpox eradicated.

First documented case of AIDS.

Generic Pharmaceutical IndustryAssociation founded; known as GenericPharmaceutical Association (GPhA) today.

The early 1980s brought some positive changes in theregulatory environment. For example, the Orphan Drug Act,which took effect in 1983, was associated with an increase inpharmaceutical research and development, and can be creditedin part for the introduction of the first effective anti-retroviraldrug for the treatment of AIDS in 1987, less than six years after the first case of the disease was originally documented. But even as these new breakthrough drugs came on the market,previously developed drugs, many of them standard therapies,faced new challenges as the formulary movement began to gainmomentum once again.

Medicaid Formularies and Managed Care

Throughout the late 1980’s and early 1990’s, NPC continuedoutreach to policy makers, the medical and consumercommunities, and corporate benefit managers about the value ofaccess to pharmaceuticals and the importance of patientcompliance. Through a series of educational forums, NPCsought to increase understanding of pharmaceuticals, theindustry and related issues. A video titled “Quality ThroughResearch” was widely distributed and used by membercompanies. In order to help its members respond to questions

from consumers and policy makers about the value ofpharmaceuticals, NPC also produced a video titled “Spread theWord,” which received the Telly Award for excellence incommunications in 1993.

Additional attention focused on NPC as a result of theManaged Care Health Outcomes Project in 1996. The studyexplored the impact of limiting access to prescription drugs andother cost-containment practices on the use of health careservices. It focused on patients with one or more of five diseases(asthma, ear infection, arthritis, ulcers and high blood pressure)in six geographically dispersed HMOs. Lead researcher Dr.Susan Horn found “unintended consequences” such that“greater formulary restrictions were associated with increased useof healthcare services, and therefore, greater costs.” The study’sauthors also suggested that greater formulary restrictions mightresult in decreased quality of patient care. Subsequent literaturesearches by NPC found that component management in theform of restrictions on drugs does not result in overall healthcare savings. Instead, increased restrictions appeared to shiftcosts from the pharmaceutical component to other areas of care.

NPC worked withnationally known figuresC. Everett Koop andArthur Ashe to promotebetter patient compliance.

1978 1979 1980 1981 1982

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First ACE inhibitor drug enables thetreatment of high blood pressure by a newmechanism, the modulation of the renin-angiotensin system.

First biotech-derived interferon drugs forthe treatment of cancer approved by FDA;critical to opening up the field ofrecombinant technology.

Drug Price Competition and PatentTerm Restoration Act (Hatch-Waxman) expedites the availability ofgenerics and allows additional patentprotection for new medicines tocompensate for time lost duringFDA approval process.

Orphan Drug Act passed,promoting research on drugtreatments for rare diseases.

First “clot buster” dramatically improves survival ratesafter heart attack or stroke.

First SSRI approved for treatment of depression.

First protease inhibitor improves drug therapy for AIDS.

In 1996 Karen Williams joined NPC as its president. At the same time, the Board of Directors revisited and refined the vision, mission and objectives of the organization (see box below).

NPC also committed to quality improvement initiatives withaccrediting agencies, medical societies and government agencies.

A Web site, www.npcnow.org, was launched in order to makeNPC’s materials more accessible to globally scattered audiencesand membership. Subsequently, a specialized Web site for stateofficials, www.dmnow.org, was developed on Medicaid diseasemanagement. Then in 1999, NPC held its first annual MemberForum in Florida in an effort to bring together a broad cross-section of company representatives. Attendees were hand-

1983 1984 1985 1986 1987

NPC Vision Statement

NPC communicates the economic, clinical and societalvalue of pharmaceuticals and advances the appropriate useof pharmaceuticals for the betterment of human health.

NPC Mission Statement

NPC conducts, supports and disseminates research forhealth care decision-makers and public and private payerson behalf of the research-based pharmaceutical industry. NPC has three major strategies:• Development of intellectual assets• Partnering with member companies and outside

organizations to achieve maximum impact• Direct dissemination of programs and products

NPC Objectives

NPC’s first objective is to replace component managementof the drug budget with a systems approach to valuingpharmaceutical therapy based on:• Integrating pharmaceutical care into total patient care• Recognizing the total cost benefit over time• Aligning incentives• Developing more accurate measures for integrated

pharmaceutical care

The Council’s second objective is to foster appropriate useof pharmaceuticals through:• Timely and accurate diagnosis• Initiation of treatment for diagnosed conditions• Rapid adoption of “state-of-the-art” therapies• Sustained compliance by patients

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First statin approved for loweringcholesterol.

FDA accelerates the review ofdrugs for life-threatening diseases.

The Prescription Drug Marketing Actestablishes requirements for distributionof samples and safeguards against the saleof substandard or counterfeit drugs.

Human GenomeProject begins.

selected by their Board members to enhance their awareness ofand participation in NPC and related industry issues.

NPC also worked to demonstrate effective alternatives torestrictive drug policies. The Virginia Department of MedicalAssistance Service partnered with NPC to develop ademonstration project in disease management for their fee-for-service Medicaid patients assigned to primary care physicians.NPC and the agency worked with the Virginia CommonwealthUniversity, the state medical society, and pharmacy and nurses’associations. The results of this project, which became known asthe Virginia Health Outcomes Partnership (VHOP), werepositive. The pilot program, implemented in eight Virginiacounties, increased appropriate medication usage by 25 percent,decreased urgent care visits by 41 percent, and saved an averageof three dollars for every dollar spent on physician training.NPC continues to use this project as a platform to educate stateofficials and others about how disease/case managementapproaches to care can help states improve the health of theirpatients and achieve better fiscal outcomes. NPC’s educationalprogramming and technical resources in this area remainpopular with state officials. The VHOP model, and subsequentefforts in West Virginia and other states, encouraged federalofficials to enable Medicaid agency adoption of disease

management programs and to include such programs in theirplans for Medicare reform.

As issues of restrictions on access continued to be debated, NPCemphasized the need for patients to have access to a broadpharmacopoeia in order to be responsive to the individual needsof a diverse patient population. Such analyses need to beconsidered as payers attempt to restrict coverage for individualpatients based on the effectiveness of a drug for an “averagepatient.” Literature reviews demonstrate that physicians must beable to use treatments that allow for the physiological andcultural differences among individuals that may affectmedication efficacy, safety, and compliance. Papers focus on theparticular clinical needs of a variety of subpopulations includingAfrican-Americans, Hispanics and the elderly. For example, co-morbidities common in the elderly may necessitate multipledrug therapies that could interact with each other, adverselyaffect a condition other than the one they are prescribed for, orbe processed differently than expected due to changes in organfunction as a part of the aging process.

At the close of the last century, the environment forpharmaceuticals saw many simultaneous changes. The managedcare revolution altered, at least for a time, how health care

1988 1989 1990 1991 1992

New generation antipsychoticdrugs enable the treatment of more patients with fewerside effects.

Prescription Drug User Fee Act (PDUFA) requiresmanufacturers to pay user fees to enhance FDA staffand resources for faster approvals of new drugs.

Literature reviews supportthe need for physicians toconsider the physiologicaland cultural differencesamong individuals that mayaffect medication efficacy,safety, and compliance.

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Chicken pox vaccinelicensed in the U.S.

First biguanide drug introducedto treat type 2 diabetes.

Biotechnology IndustryOrganization (BIO) incorporated.

FDA eases restrictions on direct-to-consumer advertisingof prescription drugs.

Food and Drug Administration Modernization Actreauthorizes PDUFA and mandates wide-rangingimprovements in the agency’s regulatory practices.

services were evaluated and delivered. While forcing a new levelof competition, managed care also tended to encourage bettermanagement of chronic disease through increased use ofprescription drugs and patient education. Around the sametime, the FDA underwent wide-ranging reforms, resulting infaster introduction of many new important therapies. It alsorelaxed restrictions on the advertising of drugs to consumers,particularly through television advertising. All of these changesincreased the demand for proof of the value of spending onpharmaceuticals.

By the start of a new century, NPC had a growing collection ofwork in support of the value of pharmaceuticals to patients, tothe economy and to society as a whole. The evidence mountedthat appropriate use of medicines could produce direct healthcare cost savings, improvements in workplace productivity, andcontributions to longevity and overall quality of life. A 2001Capitol Hill briefing, co-sponsored by NPC, the Alliance forHealth Reform and Health Affairs/Project Hope, featured aspecial issue on the value of medical innovation by the peer-reviewed journal Health Affairs. A companion primer of HealthAffairs articles focused specifically on pharmaceuticalinnovation.

Two NPC-supported studies were among the most compellingin the primer. An analysis of drug spending factors for seven

common medical problems found that spending is driven, notby price, but by more patients being diagnosed with chronicdiseases and taking more medicines for more days of the year. Astudy by award-winning Columbia University economist FrankLichtenberg found that a modest increase in spending to pay fornewer drugs not only contributes to improved life expectancyand quality of life, but can also lead to a four-fold reduction innon-drug spending. Health Affairs and other peer-reviewedjournals are the venues for more recent NPC-supported researchon the most costly physical and mental health conditions facedby employers and on the positive effects of direct-to-consumeradvertising on treatment of important health conditions and onappropriate use of medicines.

NPC was established at the same time that the scientificcommunity began unlocking the first pieces of the humangenetic code. Fifty years later, with the mapping of the humangenome, America is on the brink of a new era in pharmaceuticalresearch. But with new medical discoveries, there will beadditional opportunities and challenges for patients, payers andour industry. NPC is proud to have been a part of the history ofthis important industry and will continue to anticipate theissues, produce strong, evidence-based research, build newpartnerships, and demonstrate the benefits of new medicines topatients and to society.

1993 1994 1995 1996 1997 19

By 2000 NPC had evidencethat the appropriate use ofmedicines could producedirect health care cost savings,improvements in workplaceproductivity, andcontributions to longevityand overall quality of life.

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Board Chairs: The First 50 Years

First targeted cancer therapydeveloped through molecularbiology greatly reducesunwanted side effects.

998 1999 2000 2001 2002 2003

Human Genome Project sequencesfirst human chromosome.

The first bone-formation agent isapproved for the treatment ofosteoporosis.

The Human GenomeProject to completesequencing of thegenome with anaccuracy of greaterthan 99.99 percent.

1953 - Paul Gerden, Abbott Laboratories1954 - Theodore G. Klumpp, Winthrop Laboratories, Inc.1956 - Robert A. Hardt, Hoffmann-La Roche Inc.1958 - Carl K. Raiser, Smith, Kline & French Laboratories1960 - Nelson M. Gampfer, The Wm. S. Merrell Company1962 - Henry S. McNeil, McNeil Laboratories, Inc.1965 - Charles V. Owens, Jr, Ames Company, Inc.1966 - George Squibb, E.R. Squibb & Sons, Inc.1967 - J.R. Mason, Sandoz Pharmaceuticals1969 - Henry F. DeBoest, Eli Lilly and Company1971 - Robert H. Hensel, Lederle Laboratories1972 - Garth Quinn, Burroughs Wellcome Co.1973 - William L. Searle, G.D. Searle & Company1975 - Irwin Lerner, Hoffmann-La Roche Inc.1976 - Michael Bongiovanni, E.R. Squibb & Sons, Inc.1977 - Lawrence C. Hoff, The Upjohn Company1978 - John E. Lyons, Merck Sharp & Dohme1979 - George W. Eckelmann, Hoechst-Roussel1981 - Paul E. Freiman, Syntex Laboratories1982 - Peter S. Howsam, Burroughs Wellcome Co.1983 - Robert L. Hanson, Schering Laboratories

1984 - Milton J. Henrichs, Abbott Laboratories1985 - Alfred A. Mannino, Marion Laboratories1986 - C.J. Cowles, Parke-Davis1987 - Douglas J. MacMaster, Jr., Merck Sharp & Dohme1988 - Thomas W. Hoffmeister, Syntex Laboratories1989 - John H. Dillon II, Smith Kline & French1990 - Paul N. Clark, Abbott Laboratories1991 - E.M. Cavalier, Eli Lilly and Company1992 - Donald R. Lee, Procter & Gamble Pharmaceuticals1993 - Peter R. Seaver, The Upjohn Company1994 - Harold F. Oberkfell, Parke-Davis1995 - Kurt M. Landgraf, The DuPont Merck Pharmaceutical Co.1996 - Stephen G. Sudovar, Hoffmann-La Roche Inc.1997 - David W. Anstice, Merck & Co.1998 - David B. Goffredo, Abbott Laboratories1999 - Karen Katen, Pfizer Inc.2000 - Gerald B. Rosenberg, Bayer Corporation2001 - Stan Benson, Amgen Inc.2002 - W. James O’Shea, Sepracor Inc.2003 - Gerald P. Belle, Aventis Pharmaceuticals Inc.

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