the value of innovative drugs – benefits to patients and society aarp conference washington, june...

The Value of Innovative Drugs – Benefits to Patients

and SocietyAARP Conference

Washington, June 10, 2003

Daniel Vasella, MDChairman and CEO

2 AARP Conference / Dr. Daniel Vasella, Chairman and CEO / June 10, 2003

Key Questions

Are Americans spending too much on healthcare and drugs?

What are we getting in return?

What are the choices and tradeoffs?

Why do we invest in research and develop of innovative drugs?

How can we best help patients in need?

Are Americans spending too much on healthcare and

drugs?


Source: Efpia 1999 - 2002

-80%

-75%

-68%

-67%

-61%

-41%

-31%

Early infancy diseases

Rheumatic fever and rheumatic heart disease

Atherosclerosis

Hypertensive heart disease

Ulcer of stomach and duodenum

Ischemic heart disease

Emphysema

Drop in death rate for diseases treated with pharmaceuticals 1965 - 1999

Major Achievements of Innovative Drug Therapy


Prescription Drugs Only Account for 10% of US Healthcare Expenditures

39%

22%

10%

6%

24%

Hospital /Long-Term Care

PhysicianServices

Other1

Administration

US national health care expenditure 2001: USD 1.4 bn

Prescription Drugs

1 Dentist and other professional services, Home health care, durable medical products, OTC drug and sundries,

public health, research and construction

Source: Centers for Meidcare & Medicaid Services 2003


US Spending on Drugs in Comparison withOther OECD Countries

1.91.8

1.6

1.4 1.4

1.11.0

0.0

0.5

1.0

1.5

2.0

France Italy UnitedStates

Canada Germany Switzer-land

Nether-lands

2000 Expenditure on Pharmaceuticals and other non-durable healthcare products in % of GDP

Source: OECD Health Data 2002.


Expenses For Prescription Drugs Are Increasing, but no More Than for Other Daily Expenses

Source: U.S. Department of Commerce, Bureau of Economic Analysis, 2003

Consumption expenditures in the US, USD bn (1996)

0

50

100

150

200

250

300

1995 1996 1997 1998 1999 2000 2001 2002

Video and audio

Auto Repair

Prescription Drugs

Telephone


Increased Spending on Prescription Drugs is Mainly Due to Higher Utilization

47

24

26

Source: Kaiser Family Foundation

Price increases

Increase in prescription volume

Changes in prescription mix

Factors Contributing to Increase in US Prescription Drug Expenditures 1997-2001


US Prescription Drug Expenditures Are Low Compared with other Every-day Expenses

3.10

1.77

1.58

1.48

1.28

1.27

0.78

HousingFood + Beverages1 Clothing

Auto repair

Prescription drugs

Telephone

Tobacco

Consumption expenditures per day, 2002 in USD

10.39

8.73

Gasoline and oil

Alcoholic beverages

1 excluding alcoholic beveragesSource: US Department of Commerce, Bureau of Economic Analysis, 2003

What are patients getting in return?


-3

-2

-1

0

1

2

+1.00 –3.65 +1.54 -1.11

Positive economic Effect of Innovative Drug Treatment

Source: American Economic Review, 1996

Medication Hospital charges

Outpatient care

Total Savin

gs

Total cost evaluation of innovative drug treatmentUSD


Higher Pharma Spending Offset by Lower Hospital Utilization

10

100

1 000

1960 1970 1980 1990 2000

0

1

2

3

Source: OECD Health Survey, 2002

US Pharma spending per capitain 1995 USD

Hospital daysper capita and year


435

44

Without Medicatio

n

WithMedicatio

n

Migraine medication significantly reduces employers’ cost

Total costs per employee & month USD 85

55

Without Medicatio

n

WithMedicatio

n

Growth factor (G-CSF) reduces hospital costs of cancer patients

Cost per patientUSD

Source: Legg et al “Cost Benefits of Sumatripton to an Employer” JOEM, Peters “Comparative effects of G-CSF and PBSC therapy” Blood

Innovative Medicines Reduce Total Costs to Society


Inhaled Steroids for Asthma Improved Outcomes and Reduced Costs for Medicaid

-50%

-26% -24%

-60%

-40%

-20%

0%

Hospitalizations Outpatient visitsTotal health-care

costs

Balkrishnan R, Norwood GJ, Anderson A. Outcomes and cost benefits associated with the introduction of inhaled corticosteroid therapy in a Medicaid population of asthmatic patients. Clin Ther. 1998 May-Jun;20(3):567-80.


Innovative Anti-hypertensive Therapies Achieve Superior Compliance

67.4

60.7

54.1

45.6

20.8Thiazide diuretics

Beta-Blockers

Calcium ChannelBlockers

ACE-Inhibitors

AngiotensinReceptor Blockers

Persistence on drug after one year in % of patients

Source: Conlin et al. Clin Ther. 2001 Dec;23(12):1999


The Average Health of the Elderly Population is Improving

26.2%

19.7%

1982 1999

Manton KG, Gu X. Changes in the prevalence of chronic disability in the United States black and nonblack population above age 65 from 1982 to 1999. Proc Natl Acad Sci U S A. 2001 May 22;98(11):6354-9.

Prevalence of disability in US seniors

25% decrease between 1982 and

1999:

We are not only living

longer but also healthier!

In addition to better outcomes, what does the US get in return

for its high utilization of innovative drugs?


European Firms Are Moving Research and Operations to the US

GlaxoSmithKline moved its operational headquarters to the US in 2000

Novartis moved its research headquarters to Cambridge, Massachusetts

Schering AG moved its therapeutics division to the US

Organon relocated from the Netherlands to New Jersey


European Brain Drain to the US

50

60

70

80

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Share of EU born PhD candidates who plan to stay in the USin %

Source: Third European Report on S&T Indicators, 2003


Pharmaceutical Industry is of National Interest

Strategic value of the pharmaceutical industry

High investment in research and development

Export surplus

Valuable jobs and attraction of talent (brain gain)

Technology spill-over to other industries

What are the choices and tradeoffs from a

patient’s perspective?


Source: Novartis research

Earlier Access to Innovative Drugs for US Patients

51

47

3333

20

+29

New Drugs First Marketed in the United States% of all new drugs approved in the US

1987 - 89 1990 - 92 1993 - 95 1996 - 98 2001

Simultaneously launched


Delayed and Limited Access to Important Medical Innovation in Europe

0

10

20

30

40

50

60

1 2 3 4 5

USA

UK

Italy

France

Germany

Market share development of Zyprexa after first launch% of its category

Time since first launch in years

Source: IMS Health


Delayed Access to Glivec/Gleevec for Patients in Europe

Approval time in days

Source: Data from FDA and EMEA: European approval time includes 119 days CPMP assessment and

109 days decision making by the Commission

247

73US

Europe

Effect: Patients in Europe received Glivec 6

months later


Evidence from Research Reveals that….

Diffusion of Medicines in Europe Prof. Dr. Oliver Schöffski, MPH

Universität Erlangen-Nürnberg, Lehrstuhl für Gesundheitsmanagement

In Germany one million people unnecessarily suffer from migraine

In France, 9 in 10 patients with acute asthma do not receive adequate care

Only 5% of UK patients with a prostate cancer are treated by an oncologist


Percentage of eligible patients receiving Statins

More Patients In Europe Are Not Receiving Adequate Treatment

26

23

17

56

36

29

Diffusion of Medicines in Europe Prof. Dr. Oliver Schöffski, MPH

Universität Erlangen-Nürnberg, Lehrstuhl für Gesundheitsmanagement

United States

United Kingdom

Germany

Netherlands

Italy

Switzerland


There Are Clear Tradeoffs for Patients

Free pricing and fast approval secure rapid access to innovation without rationing

Market-driven generic substitution lowers cost and frees up resources for innovation

Innovative drugs lower overall healthcare expenditure as most are cost-effective

More choice, independence and modern therapies for US patients

Why do we invest in research and development of

innovative drugs?


GSK Pfizer Merck AstraZeneca

Aventis BMS J&J Pharmacia Novartis Lilly

2000 2001 2002

Novartis Launched Most New Molecular Entity Approvals Across Industry in Past Three Years

Number of NMEsZelnorm,

Elidel,Foradil,Gleevec,Zometa,Trileptal,Visudyne,

Exelon,Rescula,Starlix

23

2 21 1

2

4

10

1

US approvals (NMEs) for Top 10 pharma companies 2000 – 2002

Source: FDA website, company websites, other public domain information

How can we help patients?


Novartis Leads in Providing Discounts to Seniors: CareCard, CarePlan and Together Rx Card


Impressive Savings for US Seniors Through TogetherRx Card and Novartis CarePlan Up to 11 million Medicare enrollees are eligible

Seniors with low income1 and no prescription drug coverage receive Novartis drugs at significant discount

Currently there are 772 000 Together-Rx and 53 000 Novartis CareCard enrollees

Total savings for patients amount to over USD 90 million

Novartis has provided almost USD 24 million in savings1 Medicare enrollees without prescription drug coverage and annual income under USD 18,000 (couples under USD 24,000) receive Novartis prescriptions for USD 12.00. Individuals with annual incomes between USD 18,000 and USD 28,000 (couples between USD 24,000 and USD 38,000) receive a discount of 25% of Wholesale Acquisition Cost which translates into 25 - 40%


Novartis Patient Assistance Program Provides Drugs to Patients not Covered by Third Parties

The number of uninsured Americans increased to over 40 m

Key facts about the Novartis Patient Assistance Program

Easy access through toll-free phone, internet and physician offices

More than 30 Novartis products provided

Eligible are patients with low income, not covered by third parties

Currently there are over 200 000 enrollees

High customer satisfaction

Since 2001, products worth more than USD 200 m supplied


Novartis’ Patient Assistance Program for Gleevec

Facts about Gleevec/Glivec Revolutionary therapy for Chronic

Myeloid Leukemia and GIST High price but cost-effective

therapy based on unprecedented response rates

Relatively small patient population

Novartis Patient Assistance Program

Liberal patient assistance program: more than 10% of all patients receive drug for free or at significant discount1

Similar provisions for patients in other countries

1 Annual household income less than 500% of federal poverty level, assets not to exceed USD 250,000


Novartis Commitment to Patients

Patient Assistance ~ 1 m CHF per day contributed to those in need 12% of all Gleevec/Glivec patients receive assistance

worldwide Free medicine donation until leprosy is eliminated

worldwide Malaria drug, Coartem, provided at cost for the

developing world 100 000 treatments for tuberculosis per year for 5 years

in Africa

Innovative Medicines 10 new drugs brought to patients in key markets in

2000–2002 5 new molecular entities to launch in 2003-2004 Research and development grow overproportional to

sales 122 m USD funding with Singapore government for

Novartis Institute for Tropical Diseases for research in neglected diseases of the developing world


Shared Healthcare Imperative

1. Get Medicare drug benefit bill passed in the US during the 108th Congress bringing coverage, access and choice for senior patients

2. Accelerate drug development and improve regulatory communications to get medicines to patients faster

3. Respect IP, so industry continues to invest into R&D and provides a continuous flow of innovative drugs

4. After patent expiries generics free up funds to be redeployed in innovative medicines

5. Form genuine partnerships at the state level to manage healthcare cost pressures

6. Fund access to medicine initiatives with focus on distribution and infrastructure

A Wise Man Should Consider That Health Is The Greatest Of Human Blessings

Hippocrates 460-370 BC

the value of innovative drugs – benefits to patients and society aarp conference washington, june...

Documents

ceo slide

daniel vasella

bn prescription drugs

us spending

md chairman

alcoholic beverages

prescription volume

construction source