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Survey Shows One Third of Americans USE ANTIBIOTICS INAPPROPRIATELY A survey conducted by Harris Interactive has revealed that one out of three Americans mistakenly believes antibiotics are effective in treating viruses such as cold and flu and takes these drugs to fight these viruses. The survey findings were released by the Council for Affordable Quality Healthcare (CAQH), a notforprofit alliance of healthcare plans and networks. Traditionally known to be powerful medications in reducing illness and death from infectious bacte rial diseases, antibiotics still kill bacteria that cause infection in most cases. But many bacteria are now fighting off antibiotics that once worked well against them, making them harder for physicians to treat. Consumers demanding antibiotic treatment for viruses, and physicians yielding to this demand,have led to the overprescribing of these drugs.According to the Centers for Disease Control and Prevention, more than 50% of all antibiotics prescribed are unnecessary and can do more harm than good. To help curb the inappropriate use of antibiotics and raise awareness of antibiotic resistance, CAQH, in partnership with the CDC, is launch ing an education initiative called Save Antibi otic Strength (SAS). San Diego, Calif.area CAQH members WellPoint, Health Net, and Aetna are participating in the SAS campaign by providing San Diego healthcare providers with the tools they need to educate con sumers about using antibiotics wisely. “Antibiotic resistance is a muchmore sig nificant problem than most people realize,” says Jeff Kamil,M.D., corporate medical direc tor of WellPoint and cochair of the SAS Initiative in San Diego. “With many serious bacterial infec tions in the United States and abroad developing resistance, it’s crucial that we take action now.” The SAS campaign features a variety of educa tional materials and community outreach programs promoting appropriate antibiotic use among healthcare providers and patients. The campaign also features a physician tool kit with a “prescription” pad for patients with symptoms of viral infections. The “prescription,” accompanied by the tool kit’s patient Q&A handouts and physician treatment guidelines for common bacterial (strep throat) and viral (common cold) infections, arms physicians with the means to effectively communicate the rationale of their diagnosis and treatment to the patient. Local health plans also are working with the Cal ifornia Medical Association Foundation’s Alliance Working for Antibiotic Resistance Education (AWARE) project to spread the word about antibiot ic resistance to consumers.The partnership includes a collaboration on a speaker’s bureau, which will make medical experts available to the community. Report Examines Causes and Solutions to U.S.HEALTHCARE CRISIS A joint publication released by Deloitte &Touche LLP and the UCLA Anderson Forecast examines what is driving the seemingly limitless rise in health care costs, and what are the solutions. The report, Forecast:What Every Business Needs to KnowAbout the Current Health Care Crisis, summarizes the anal yses shared by toplevel executives, policy makers, and economists during a oneday Anderson Fore cast conference on healthcare. Conference attendees agreed that escalating costs are a major driver in the rising health insurance premiums paid by employers and this trend is hurt ing the bottom line. Panelists addressed a range of factors that are coalescing to feed the upsurge in today’s healthcare costs, including new technology, consumer expectations, the diminished role of man aged care, legislation, the aging U.S. population,hos pital consolidation,and the high price of prescription medicines. “Healthcare costs are now rising at a rate consid erably higher than that of inflation,”says Steve Burrill, partner in charge of the Health Care Practice for the Pacific Southwest region of Deloitte & Touche. “As this rate of increase cannot be sustained, the need for logical solutions to this crisis is imperative.” Some of the tactics, strategies, and solutions to the healthcare crisis outlined by the conference pre senters include tiering pricing strategies, cost shift ing, identification of shortterm efficiencies, new health security models, modifying consumer expec tations,and evena completeoverhaul of the nation’s healthcare system. Report Investigates the COST OF DEVELOPING ADRUG A report titled, From Inception to Ingestion: The Cost of Creating New Drugs, from conservative think tank the Institute for Policy Innovation,investigates the question of how many millions of dollars are required to develop a drug. ONETHIRD of Americans has stopped taking an antibiotic before finishing the full amount prescribed. Not finishing a prescribed treatment of antibiotics contributes to the development of resistant bacteria. 64% of those whodid not finish their medication said that they stopped taking it because they were feeling better. 44% of those who did not finish their medication said that they save the leftover medication for the next time they are ill. Source:Harris Interactive SURVEY FINDINGS ON ANTIBIOTIC USE HEIGHTENEDCONSUMERDEMAND.With the advent of the Internet, consumers have become more educated about their health care options.They want unlimited benefits, access to new medical treatments,brand name drugs,and less restrictive networks — and they want it at an affordable premium. NEWTECHNOLOGY.Although medical tech nologies have improved, many have become more expensive.One source estimates that new technology contributes up to a third of the annual increase in healthcare costs throughout the U.S. HOSPITAL CONSOLIDATION.Due to a wave of consolidation,the share of admissions con trolled by the largest hospitals has grown dramatically.While conventional wisdom asserts that economies of scale yield reduced costs, that benefit has not yet been realized in most consolidating markets. INCREASE IN PHARMACEUTICALPRODUCT USAGE.Many Americans believe there is a pill for everything,and they want full access.Both physicians and patients are using more pre scriptions at higher prices than ever before. Source: Deloitte & Touche and UCLA Anderson Forecast FACTORS ATTRIBUTEDTO RISING HEALTHCARECOSTS: PHARMA TRAX SALES, MARKETING, AND R&D TRENDS AFFECTING THE HEALTHCARE INDUSTRY PHARMA trax “The pharmaceuti cal industry cites stud ies that suggest it costs more than $800 mil lion to approve a new drug, while other orga nizations, such as Ralph Nader’s Public Citizen,claim the cost is roughly $110 million,” says Merrill Matthews, Ph.D., a visiting scholar with the Institute for Policy Innovation and author of the study. “But there is a way to resolve the discrepancy,”he says. “By dividing the research and development costs by the number of drugs approved in a given year, we get a rough but accurate picture over time of the money it takes to move a drug from inception to ingestion.” For example, researchbased pharmaceutical companies spent about $26 billion on research and development in 2000,and 27 drugs were approved. Thus, it cost about $964 million per drug approved in 2000. While the author notes that this approach is not as scientifically rigorous as other methods, it still pro vides a relatively accurate estimate whenconsidered over time. He also points out that the pharmaceutical industry pours billions of dollars annually into new, innovative drugs. New drugs, however, face numer ous hurdles that can drive up costs. Dr. Matthews notes that if pharmaceutical com panies spent $110 million to get a new drug approved in 2000, as claimed by Public Citizen, including failed drugs, but spent $26 billion on research and development, then 236 new drugs should have been approved that year. The number of new, approved drugs, however, has remained relatively stable during recent years, he adds. Study Finds Pharma Companies Target Pharmacy Providers and Consultants to LONGTERM CARE MARKET According to a Verispan report, pharmacy providers/consultants see the most pharmaceutical representatives in longterm care facilities. The report,Seniors and the LongTerm Care Mar ket, has found that medical directors prefer to see representatives in their private practice. Almost 60% of the medical directors reported details in their private practice are tailored to their elderly population; 53% reported these visits influ ence their prescription decisions at the longterm “Drug industry critics constantly complain that pharmaceutical manufacturers overstate the costs of creating a new drug, but this paper makes it clear that companies are spending roughly $900 million to get one new drug approved,” says Merrill Matthews, Ph.D. THECOSTOF CREATING ANEWDRUG R&D No.Approved Cost/Approved Year (billions) in Year Drug (millions) 2000 $26.0 27 $964.1 1999 $22.7 35 $649.1 1998 $21.1 30 $702.0 1997 $19.0 39 $487.4 1996 $16.9 53 $319.0 1995 $15.2 28 $543.1 1994 $13.4 22 $611.3 1993 $12.7 25 $509.6 1992 $11.5 26 $441.1 1991 $9.7 30 $323.5 1990 $8.4 23 $366.1 1989 $7.3 23 $318.7 1988 $6.5 20 $326.9 1987 $5.5 21 $262.0 Source:Pharmaceutical Research and Manufacturers of America 78 F e b ru a r y 20 03 PharmaVOICE PHARMA trax care facility. Verispan’s study found that other long term care personnel do not see pharmaceutical representatives as often as they would like. Assistedliving personnel see pharmaceutical representa tives infrequently, but express interest in seeing them more often.These caregivers want up todate information and data on medicationmanagement programs. The study was designed to answer many questions about the current and future state of longterm care. These include, are pharmaceutical companies focusing on the right areas and the right personnel? Who are the key players in the longterm care industry? And what are their unique needs? The study also assesses the roles, responsibilities, and needs of pharmacy providers and con sultants, medical directors, and assisted living facilities. Topics explored include: for mulary and contract influences;impact of state and federal regulations; reimbursement issues; interac tions with longterm care and assistedliving per sonnel; and valueadded services in LTC and assist edliving facilities. Tufts Center Studies Examine BLOCKBUSTER DRUG RETURNS, and Development Strategies Despite rising research and development costs associated with new drugs, research shows that the top 10% of newly marketed drugs account for half of the financial returns on all new drug development, and only onethird of newly introduced drugs gen erate earnings that exceed average research and development costs. The findings from a study conducted by researchers at the Tufts Center for the Study of Drug Development and Duke University have found that decisions to terminate unpromising drugs earlier in development,more productive discovery programs, and shorter clinical phases could potentially reduce the cost for a new drug by hundreds of millions of dollars. According to the authors, Henry Grabowski and John Vernon of Duke University, and Joseph A. DiMasi, Ph.D., of the Tufts Center, the estimated aver age rate of return for 118 new drugs introduced between 1990 and 1994 was 11.5%. During the same time, the real cost of capital was 11%. The assessment of the earning power of new drugs reflect conclusions from a similar study done a decade earlier. The authors note that since the 1970s, rapid growth in R&D spending has coincided with the introduction of new therapeutic classes and block buster compounds. But, they added, whether increasing research and development spending and innovative new product introductions will con tinue remains to be seen. “How quickly these technologies lead to impor tant new medicines will depend not only on scien tific and economics factors, but also on the course of public policy actions,” say the report’s authors. In a separate study involving 68 drugs intro duced during the 1990s, Dr. DiMasi concluded that preclinical screens that boost clinical success rates from the current one in five to one in three would lower the average cost of a new drug to $560 mil lion. According to the Tufts Center, the costs associ ated with bringing a new drug to market are esti mated at $802 million. Another study from The Tufts Center for the Study of Drug Development predicts that develop ment strategies geared toward bringing blockbuster drugs to market (products that generate annual rev enue of $1 billion or more) will give way to alterna tive drugdevelopment plans by pharmaceutical companies that can produce more predictable rev enue streams. “Since blockbusters are relatively rare and the cost of new drug development continues to rise, many pharmaceutical companies, confronting strong and growing pressure to enhance drug development pipelines, will reevaluate their tradi tional blockbuster development strategies,” says Tufts Center Director Kenneth I. Kaitin. “Also, as patents on several lucrative drugs expire this year, many companies will take a closer look at prescrip tion to overthecounter switches as a way to main tain revenue flow.” Mr.Kaitin added that the most consistently prof itable drug companies will be those that succeed in shortening development times and terminating unpromising drugs earlier in the research and development cycle. THECOUNCIL FORAFFORDABLE QUALITY HEALTHCARE,Washington,D.C., is a nonprofit alliance of health plans and networks committed to improving the quality of healthcare and reducing administrative burdens for patients, physicians and payers. For more information,visit DELOITTE &TOUCHE LLP,NewYork, is a professional services firm.The Health Care and Life Sciences Practices division includes more than 1,800 professionals providing a broad range of auditing, accounting, tax, and consulting services to payers, providers, and lifesciences organizations.For more information,visit HARRIS INTERACTIVE,Rochester,New York, is a worldwide market research and consulting firm, best known for The Harris Poll and for its use of the Inter net to conduct scientifically accurate market research.The company combines the power of unique methodologies and technology with international expertise in predictive, custom,and strategic research. For more information,visit INSTITUTEFOR POLICY INNOVATION, Lewisville,Texas, is a conservativeleaning organization that offers position papers and other documents on current policy issues, including tax policy, economic growth, technology policy, intellectual property,healthcare,and education reform. For more information, visit THETUFTSCENTER FORTHE STUDYOF DRUGDEVELOPMENT,Boston,provides strategic information to help drugdevelopers, regulators, and policy makers improve the quality and efficiency of pharmaceutical development, review,and utilization.For more information,visit UCLAANDERSON FORECAST,Los Angeles, is one of the most widely watched and oftencited economic outlooks for California and the nation. For more information, visit VERISPAN,Newtown,Pa., is a healthcare informatics joint venture of Quintiles Transnational Corp. and McKesson Corp., and is one of the nation’s leading providers of patientlevel,longitudinal data,with deidentified data from about 1.7 billion transactions and 275 million electronic medical transactions annually. For more information,visit Follow up NOVARTIS is the company that calls on assistedliving facilities most often PFIZER has the strongest focus on corporate longterm care providers, according to pharmacy providers/consultants PHARMACIA sponsors the most pullthrough programs JOHNSON& JOHNSON offers the most valueadded services to longterm care facilities Source:Verispan,Newtown,Pa. SENIORS AND LONG TERMCAREMARKET:

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