Securing the Benefits of Medical Innovation for Seniors: The Role of Prescription Drugs and Drug Coverage. EXECUTIVE SUMMARY


Americans are living longer and healthier lives. By the year 2030, the number of Americans over the age of 65 is projected to double to 70 million. The life expectancy of the average American is increasing, and the rates of mortality, morbidity, and disability among Americans over age 65 have steadily decreased. In the past, aging has been associated with the development of chronic medical conditions, such as cancer, arthritis, diabetes, and heart disease, which limit participation in daily activities and reduce the quality of life. However, recent advances in the prevention and treatment of chronic diseases have radically altered the quality of life for older Americans.

Innovations in medical science, especially pharmaceuticals, have shifted the focus of medicine from highly invasive treatments and surgeries with potentially serious risks to less-invasive therapies focused on prevention and health maintenance. This shift has allowed many older Americans to remain healthy and independent, avoiding long hospital or nursing home stays. As a result, the Baby Boom and subsequent generations of seniors will likely live longer, healthier, and more productive lives.

The future of medical innovations appears to be even more promising. Many scientists believe that we are on the verge of another round of significant breakthroughs in medical research and development due to the recent mapping of the human genome. The rapidly evolving field of genetic medicine will provide researchers with many new targets for future drug development, as well as provide doctors with information about how to more effectively treat chronic medical conditions. In fact, as a result of pharmacogenomics, physicians may be able to select drugs that are ideally suited for individual patients based on their genetic makeup.

However, the development of valuable new treatments is often costly and time consuming. Consequently, continued investment in research and development is critical to ensure that new treatments are available to enrich the lives of tomorrow’s seniors. Both public and private sector efforts are required to maintain a full ‘pipeline’ of medical innovations.

The United States plays a vital role in the global development of new pharmaceutical treatments, leading the world in spending for research and development of new drugs and biologics and in the introduction and sale of major innovative new drug products. The U.S. leadership in medical innovation and in the availability of valuable new treatments is directly related to the U.S. reliance on competitive approaches in health insurance coverage to encourage medical innovations and reduce costs. For non-elderly Americans, private health insurance plans in the United States use competitive tools like volume purchasing and disease management programs to reduce drug costs. In contrast, many countries rely on direct government controls to keep costs down. These countries seek to reduce drug spending by using the government’s authority to delay or deny regulatory approvals or insurance coverage for new medicines, or to restrict coverage significantly for approved drugs (see appendix). These countries can do so because, in contrast to the United States, most health care is delivered through health insurance plans where the government can restrict coverage and availability of therapies.

For example, patients in some countries face restrictions on access to newer drugs (bisphosphonates) that are more effective and have fewer side effects compared to alternatives (e.g., hormone replacement therapies) in treating older women and others at risk of osteoporosis. Osteoporosis is associated with a significant risk of serious fractures, including hip fractures. In some countries, individuals must have conclusive evidence of low bone density, the hallmark of osteoporosis, or must actually have experienced an osteoporotic fracture before reimbursement for these newer agents is permitted.

As another example, several countries deny reimbursement for a new treatment of asthma—Singulair® (montelukast). This treatment provides for good control of asthma, reducing the need for steroid therapy. Although steroids are a standard treatment for asthma, they may induce significant side effects in individuals who require their long-term use.

This report demonstrates the potentially serious consequences to medical innovation and overall health posed by attempts to contain drug expenditures by implementing government controls that are inevitably arbitrary and out of touch with the diversity of patient needs and circumstances. If applied broadly in the United States, government-controlled restrictions on the coverage of new drugs could put the future of medical innovation at risk and may retard advances in treatment and in the development and introduction of new products. Moreover, government controls may reduce or delay access to specific drugs for seniors. Even when a drug is available, government controls often increase the likelihood that older, lower cost products will be prescribed rather than newer, more innovative products, which may have fewer side effects or other features that improve patient compliance and hence, the effectiveness of medical treatment.

In contrast to many other countries, the U.S. market is relatively free of government-controlled programs to contain medical costs. Although participation in many federal and state buying programs may require certain types of controls—such as rebates and coverage limits—these programs represent only a small fraction of the market.

To ensure continued progress in the fight to treat and prevent diseases, especially the chronic illnesses of older age for which we may be on the verge of unprecedented breakthroughs, the American health care system should not resort to government controlled drug coverage decisions. Other steps can and should be taken to reduce the costs of drugs, such as investing in biomedical research on less costly and more effective treatments, protecting the intellectual property rights of American companies worldwide, improving the efficiency of the regulatory process for new treatments, and increasing the availability and effectiveness of competitive approaches to limit the cost of new treatments. These steps will help keep drugs available and affordable without reducing access to valuable new treatments and discouraging innovation just at the time when the potential for innovation is greatest.

View full report


"innovation.pdf" (pdf, 708.29Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®