Raymond V. Gilmartin, the former Chairman, President and Chief Executive Officer of Merck & Co., Inc. (1994-2005) in a speech January 19, 2000 gave commentary about the Pharmaceutical and Medicine Manufacturing (PMM) industry. While the original reference ar Merck.com has been pulled, the following is faithful to his statements.
Mr. Gilmartin defends U.S. pricing of meds as follows: "government price controls… limit pharmaceutical prices or reimbursements in a manner that we believe does not reflect the value of medicines to patients and those paying for health care." [That may be, but is the medication affordable to those who need it?]
"Furthermore, a number of variables make simple price comparisons misleading. [E.G., rebates and discounts, retail pricing, market place competition or changing currency values.]
About the extraordinary profit of pharmaceutical companies? "During the past two decades, U.S. companies discovered about one-half of the world’s new medicines. The industry’s profitability, then, reflects this success…[and] studies demonstrate that the returns the industry earns are appropriate given the risks of research." There are now more new medicines being introduced than ever before, and "These innovative treatments are frequently introduced at higher prices than the older and often less effective therapies they replace." [Ed Comment: O.K., so long as the new form of the medication is actually better than the old one (not just given a purple color)]
He adds: "One of the major reasons drug costs are rising is that more people are using more medicines to prevent or treat diseases previously left untreated, such as heart disease, depression, asthma, osteoporosis, and glaucoma. Our population is aging, and therefore using more medicines. Regardless of age, patients and physicians are better informed about therapies and more accepting of their use. Patients and physicians are recognizing the benefits of using medicines on a daily basis to prevent serious conditions, such as heart disease. And patients, physicians, and health care payers are realizing that the appropriate use of medicines may reduce hospitalizations and other expensive and less effective medical interventions." [Ed Comment: The key word is "appropriate" use. How does marketing play on that concept?]
Mr. Gilmartin says: "And the real question is 'Are patients and those who pay for health care getting value from the new knowledge, new treatments, and the displacement of costlier treatments that the increase represents'? We believe the best answer for payers is to demand value – to ensure that pharmaceuticals are providing the best quality care in a cost-effective and cost-saving manner." In fact, you go on to suggest a number of excellent strategies to "control the rate of increase of drug spending and improve the quality of care through proper use of medicines with demonstrated value":
- Improved health plan benefit design
- Formulary management with cost sharing (multi-tiered pharmaceutical benefit [Ed Comment: but what about the hassle factor?]
- Substitution of bio-equivalent [Ed Comment: and other factors such as taste, frequency of administration, ease of mixing, etc. i.e., 'comparable'] generic drugs
- Utilization and health management, all supported by sophisticated information technology. Detecting and preventing "inappropriate prescription drug use among seniors, for example, have achieved documented success in improving safety and quality of care, while saving a considerable amount of money. Yet just as importantly, these strategies force competition – and challenge pharmaceutical companies to demonstrate improvements in patient care, health outcomes, quality of life, and cost effectiveness in order to gain formulary positions."
Remarks made by Raymond V. Gilmartin (Merck) Chief Executives’ Club of Boston Wednesday, January 19, 2000
See also: Pharmaceutical and Medicine Manufacturing, US Dept. of Labor; Bureau of Labor Statistics; specifically "Promoting Pharmaceutical Research under National Health Care Reform." Step.Berkeley.edu by Heller and Rocklin [PDF]
Mr Gilmartin: I thank you for these strategies; I especially applaud the idea of challenging "pharmaceutical companies to demonstrate improvements in patient care, health outcomes, quality of life, and cost effectiveness," however not simply in order to "gain formulary positions." Rather, I'm advocating what the PMM industry already does in post marketing surveillance (phase 4 trials). I want you to play a greater role in helping me, a practitioner, do a better job. This would be, after all, a win-win for both industries. Now, hold your seat—this can shift the emphasis from rebates and arbitrary pharmacy benefit tiers to practice improvement, outreach, adherence, drug refills, safety reporting, and so forth. What I am seeking is greater synergism between these two industries, but with arm's length relationships that mitigate any impression of conflict of interest. I'm also looking for a decided shift from trying to reduce the denominator of the "value" equation—"cost" to improving "cost effectiveness." I even have a name for this new collaborative—"post-marketing facilitation."
♦ Readers: Clearly physicians should not be paid by the pharmaceutical industry to use their products, but can you name indirect ways for them to help in the process and outcomes of care, to improve the "value" of care as it has been defined here.