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HHS Conference on Pharmaceutical Pricing Practices, Utilization, and Costs: Opening Remarks by Dr. Margaret A. Hamburg

HHS Conference on Pharmaceutical Pricing Practices, Utilization, and Costs

August 8-9, 2000

Opening Remarks

Dr. Margaret A. Hamburg,
Assistant Secretary for Planning and Evaluation
U.S. Department of Health and Human Services

I want to thank you all for coming to what we expect will be a very lively and informative meeting on a timely and significant subject. I am Margaret Hamburg, the Assistant Secretary for Planning and Evaluation (ASPE) in the Department of Health and Human Services. My role, and that of my office, is to serve as the principal advisor to the Secretary of the Department of Health and Human Services on policy development. We are responsible for major activities in the areas of policy coordination, legislation development, strategic planning, policy research and evaluation, and economic analysis. This conference is part of our ongoing effort to inform the Department and the wider policy community about critical issues in health care policy and program evaluation.

Prescription drugs play an ever-increasing role in modern medicine. New medications are improving health outcomes and quality of life, replacing surgery and other invasive treatments, and providing new hope for patients with conditions that previously had no treatment. Drugs can reduce the need for bypass surgery, help prevent brain damage in stroke victims, or provide relief for chronic pain. Continued progress in biotechnology and genetic research promises still more innovative therapies in the coming years.

Even as pharmaceutical advances have reshaped the practice of medicine, innovations in health care delivery systems and insurance arrangements have transformed the complex set of transactions by which drugs move from manufacturers to the patients that need them. In particular, developments including the growth of managed care and the development of the pharmaceutical benefit management industry have changed the way prescription drugs are prescribed, distributed and purchased. In this era of rapidly rising drug costs and continuous transformations in therapies and delivery systems, the need for up-to-date knowledge by policy makers is crucial.

On April 10, 2000, the President released a study, prepared by my office, on Prescription Drug Coverage, Spending, Utilization, and Prices. The study showed, among other findings, that seniors without drug coverage not only lack insurance against high costs, but do not have access to the discounts and rebates that insured people receive. It also found that not enough was known about costs and pricing practices within the pharmaceutical industry and the distribution chain. Because of this limited information, the President called for this conference to learn more about drug pricing. As a result, the Department has convened a meeting which includes representatives of consumers, purchasers, pharmacists, pharmaceutical manufacturers, health care providers, as well as researchers to:

  • examine factors influencing prescription drug costs and expenditures,
  • the elements of drug pricing practices across markets,
  • the effects of changes and trends in drug utilization, and
  • strategies for realizing the benefits of pharmacological advances while controlling the growth in drug expenditures.

This conference brings together 150 key stakeholders, researchers and policy makers who together will examine these and other related issues. It should be emphasized that the focus of this meeting will not be on the discussion of design options for a Medicare drug benefit, or on the political debate over the benefit. Instead, our goal is to examine the relevant information and research that could inform such design decisions, now or in the future. We dont expect the conference attendees to draw any conclusions or make any recommendations.

We hope that this meeting will help raise understanding by making available some of the newest research and by sharing perspectives and insights from practitioners on the front lines. Together we can explore what is known about pharmaceutical pricing and utilization, what we need to know, and what we will never know. It is my expectation that we will not only advance the state of our knowledge today but also, by identifying the gaps in our knowledge, encourage the development of a research agenda to inform policy makers in the coming years.

Before we begin our discussion, Id like to take a moment to thank the Kaiser Family Foundation for their generous support in helping to make this conference a reality. Further, I want to acknowledge the tremendous hard work and dedication of Larry Bartlett and his staff at Health Systems Research, and the staff of ASPE (Gary Claxton, Christy Schmidt, Jack Hoadley and Joan Sokolovsky) in putting together this meeting.