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Talking Points: Ian Read at the Medical Innovation Summit

Thank you; delighted to be here at this year’s Medical Innovation Conference with a focus on cardiovascular technologies.

Pfizer has a long history of providing patients with innovative cardiovascular treatments:

  • Norvasc, Procardia/Procardia XL, Lipitor, Revatio for PAH, and of course our most famous CV failure - Viagra.
  • Recent innovations to benefit patients:  Eliquis with partner BMS, and a monoclonal antibody to lower LDL in pipeline

Three areas to speak about today:

  • What Pfizer is doing to increase R&D productivity
  • Internal challenges to those efforts
  • External barriers to innovation

At Pfizer, we have a continued commitment to improve patients’ lives through innovation and are doing a lot to improve our R&D productivity. 

  • Focusing in core areas:  Neuroscience, Cardiovascular, Oncology, Inflammation and Immunology, Vaccines, Pain and Sensory Disorders and Biosimilars
  • Realigning R&D network close to science and technology hubs
  • Establishing Centers for Therapeutic Innovation

I believe the industry has met its social responsibility in delivering innovation. 

  • The range of illnesses for which drug therapies exist has never been broader, and technological advances have yielded new drug treatments of increasing sophistication, convenience, and effectiveness.
  • In the past 60 years, the Pharma industry has delivered over 1220 new drugs that have played an important part in improving public health and extending life expectancy by an average of 2 months each year.  (Nature: Lessons from 60 years of pharmaceutical innovation; December 2009)
  • As these drugs become generic – an increased value for society is created. For example, in 2010 the available market for generic substitution of total prescriptions was 84%; the actual generic prescription share of total prescriptions reached 78%. (IMS Institute: The Use of Medicines in the United States: Review 2010; published April 2011)
  • Could anyone imagine modern medical practice today without the medicines discovered and developed by the pharmaceutical industry?

Internal challenges related to the science underlying the medicines we develop and their delivery to patients:     

  • The success of the past has resulted in a higher efficacy barrier that we have to pass.
  • Today, we know vastly more about biology and the genome and potential mechanisms and targets.  We are truly marrying chemistry and biology by taking new biologics and science deeper into the biological pathways. 
  • But this is a long, hard journey that requires focus, patience and persistence to get to the next level of understanding that will drive the benefits of innovation.
  • Two important conditions are needed to make these types of investments and take these risks:  a stability of rules and a real marketplace.

Let me say that while these internal challenges are significant, I believe the industry has the capability, persistence and talent to resolve these issues, especially in partnership with the scientific and medical community.    

Which brings me to the external barriers of innovation -- they are the ones that concern me the most……  Are the forces that are pro innovation still here?  Do we believe in the power of innovation to create health and wealth?

  • Will the US lose its lead in medical and pharmaceutical innovation and follow the path of other industries where the innovation started here but today the work resulting from the innovation is done outside the U.S.?
  • Examples include:  laptop computers, solar cells, robotics, flat panel displays, and lithium-ion batteries, to mention a few. 


External Barriers to US leadership:

First: Policymakers, opinion leaders appear to have lost faith in the value of pharmaceutical innovation and its value to society – view has shifted to cost containment

Concerned we’ve allowed ourselves -- scientific, medical and pharmaceutical industry - to be pushed into a cost-only conversation.

  • I see innovation as a virtuous or “open loop” cycle that leads to increased employment, wealth, and productivity.  It is more than just an expense.
  • Efficiency in healthcare delivery is always desirable through things such as better IT technology, better data management, more personal responsibility, prevention and payment for outcomes. 
  • I see cost containment as a vicious or “closed loop” cycle that stifles investment in innovation.
    • E.g.  Just look at the explosion of innovation post the Telecom Reform Act of 1996. By eliminating regulated rates of return, creating services, and protecting patents and copyrights in the telecomm industry, the government provoked investment in new broadband infrastructure.  There was an explosion of innovation including the birth of the wireless phone industry; Apple. 
    • Cost containment is the dead hand of bureaucrats.  How can we create innovation if it cannot be scored?  In the budget debate, the benefit of improved outcomes in never counted.

We find ourselves in this cost containment debate because some parts of society believe the industry has not and is not delivering value through its innovation.  I completely accept it’s the industry’s responsibility to deliver clinical outcomes.   

  • While our goal is to create new innovative medicines; when the innovative process yields more incremental breakthroughs we still create value.   These drugs create competition; provide patients and physicians with choices; they provide convenient dosing, they provide benefits of adherence and individual variability and responses to drugs. 
  • Not having incremental innovation would create an enormous pricing ability on the part of the industry and lead to lower quality.  Imagine only Cognex to treat Alzheimer’s;  imagine only Mevacor to treat elevated cholesterol

We need for society to understand the benefits of innovation as a future investment; not just a present cost.

  • Health/wealth creation/job creation:
  • Between 1970-2000 increased longevity added about $3.2 trillion per year to national wealth (Murphy-Topel Study: The Value of Health and Longevity; June 2005)
  • In 2009 the US biomedical industry (biopharma, medical device; R&D, testing and labs) employed 1.2 million people in high-paying jobs equal to $96B in wages. The average job in the US biomedical industry paid $78,600, more than 70% higher than the nation’s average job. (Bureau of Labor Statistics, Moody’s Analytics, Milken Institute);
  • Cost effectiveness of drugs e.g. benefits of Lipitor well beyond patent expiry
  • Cost avoidance to society i.e. treating Alzheimer’s

Second:  We have moved to a very risk-averse regulatory environment.

Regulators are constrained by resources, but more importantly, they are constrained by an environment that wants risk-free. 

There is very-rarely a risk free medication, if ever.   So when we have a regulatory environment that is risk averse it leads to mandates for longer trials; changes to development plans mid-stream and the issuance of regulations without clarity and predictability.  The result is that the whole drug discovery cycle is slowed. 

We need to create with regulators an explicit quantification of a   risk benefit profile; need to give them the permission and the resources to accept a level of risk that will allow society to benefit from innovation.

We need a regulatory agency that is:

  • Sufficiently funded and has the ability to attract talent;
  • That has the tools to improve the efficiency and effectiveness of human drug/biologic review and enhances communications with sponsors throughout the process;
  • That has the ability to respond to emerging and evolving scientific challenges
    • What is the opportunity for investment in Alzheimer’s, for example, when adherence to outdated models of disease progression will result in approvals beyond periods of patent protection?  

Third:  We have policy constraints specifically related to IP and the tax climate for U.S. corporations

Need a stronger industrial policy that protects our IP and provides for an active trade policy. 

We need an industrial policy that globally provides the same type of support that other industries receive from the US; industries such as:  film, software, tech, steel, agriculture, airlines, etc.  That globally gives us protections so we are able to recover our research costs.

  • How research costs are recouped globally is a key determinant to how the industry is able to deliver value.  Being an innovative industry; costs are sunk.  In a world of monopsony purchases outside of the US, it’s not clear that the fair share of the innovation burden is being shared which ultimately can lead to higher costs for US consumers or less innovation.

Need a competitive tax structure that works to maintain the US as the center of healthcare research.    

  • European competitors have half our tax rate – 15%;
  • If we return all of our profits our tax effective tax rate is 38%;
    • Lower US corporate tax rate
    • Territorial system for taxes
  • That difference probably equals our whole research budget
  • Lack of tax reform threatens the viability and independence of our domestic industry



Despite these barriers – I am convinced the way forward is innovation. 

It will take a concerted effort by all of us --- Industry, medical and scientific communities. 

  • We need to work together; have to understand each other; we have more work to do

Thank you for this opportunity to share my thoughts with you today.  All of us here share a common goal to innovate on behalf of patients.