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PMA BOARD APPROVES NINE STUDIES ON COST-EFFECTIVENESS OF DRUG THERAPY TO PROVIDE FOUNDATION FOR AGGRESSIVE PUBLIC AFFAIRS PROGRAM FOR 80's

Executive Summary

The PMA board approved nine reports on the cost-effectiveness of drugs at its May 5 annual meeting session in Phoenix. The cost-effectiveness studies will provide the foundation of a library of assn. materials to support the aggressive public affairs program for the assn. in the rest of the 1980's. The nine reports were drafted for PMA by outside groups (with the exception of one done in-house) over a period of several years. The most recent reports, on the cost-effectiveness of beta-blockers in three treatments (myocardial infarction, angina, and glaucoma) were delivered to the assn. in the spring of this year. PMA plans to begin widely publicizing the cost-effectiveness reports in the middle of next month. PMA 1983-1984 Chairman Jim Affleck reported that the studies include "the benefits of drugs" and "a measurement of how drugs improve the quality of life." In the past, the drug industry has been forced to rely on a smattering of studies of cost-effectiveness to support its claim that drugs are among the most cost-effective forms of treatment. The PMA project provides a spectrum of studies on hand for the assn. to cite. The A.D. Little study on beta blockers in the treatment of glaucoma, for example, reportedly calculates a savings of approximately $1 bil. per year in the use of drugs in lieu of surgery. In reviewing beta blocker cost efficacy v. Angina, A.D.Little is understood to have compared overall drug regimen to surgery. The report apparently avoids any drug-to-drug cost comparisons. PMA President Engman's Role In Establishing In-House Policy Analysis Group Cited Bay Affleck The assn. has also prepared five reports on health care financing issues including state efforts to cut Medicaid costs. Engman said that the health care financing reports were sent to member companies "a month ago." Affleck attributed the increase in research projects at PMA directly to Engman's leadership. "When Lew Engman first came to PMA," Affleck said, "he strongly felt an in-house policy component was essential for the assn. The board agreed and the Office of Policy Analysis was born." The assn. unveiled a study of the impact of drug regulatory policies in developing nations at a press briefing on the internatl. situation in Washington in late April. "It's major finding," Affleck reported, "is that tightening regulatory controls was generally self-defeating because it curtailed new investment and hampered development of the domestic sector of the industry, increasing imports and resulting in shortages of drugs." The six countries covered in the study are India, Brazil, Argentina, Mexico, South Korea, and Pakistan. PMA is further producing reports on science and public health policy, according to Affleck. A report on biotechnology "drafted by some of our company representatives," Affleck said, "reviews different types of recombinant DNA research and societal and ethical considerations of recombinant DNA." Two studies on patient labeliong are underway: a patient drug information interature review and a survey of patient drug information materials. Affleck, who was one of the most outspoken industry execs during the Puerto Rico tax debates of 1982, predicted more threats ahead to tax breaks which benefit research and drug manufacturing. Repeating a warning issued by PMA at the 1983 meeting, Affleck said: "Administration and congressional sources have clearly indicated that major tax reform legislation, tied to federal deficit reduction, should be anticipated in 1985." A PMA board cmte. headed by SmithKline Chairman Bob Dee "has given particular attention to the need for improved understanding within Congress of public interest and economic development realities associated with the possession credit under Section 936 of the Internal Revenue Code," Affleck reported. Upjohn recently included a special section on Puerto Rican manufacturing and its effects on the island in the company's annual report. Management consulting reports on the effects of the tax breaks are reportedly underway to help in the next round of debates over 936. Affleck said: "There is a critical need for establishing stability in the tax treatment of possessions corporation activities. This message must be clearly communicated to both the Administration and Congress as future tax revision measures are being contemplated." PMA Worked On 100 Proposals In 39 States, Including Rx Sampling Controls In Tennessee, Illinois Also high on PMA's list of key tax provisions are two incentives in the Economic Recovery Tax Act of 1981: the 25% tax credit for increased domestic R&D and the moratorium of IRS regulatory requirements for allocation of a portion of domestic R&D expenses to foreign income for foreign tax credit computation. "It is significant," Affleck maintained, "that the U.S. is the only nation requiring the allocation of R&D expenditures. In fact, other developed nations -- including Japan -- have instituted a variety of incentives to attract and stimulate R&D activities within their borders." In the state legislation area, Affleck reported that PMA dealt "with almost 100 major proposals in 39 states dealing with the thorny issues of health care financing, generic substitution, controls on the distribution of drugs, product liability and animal welfare." At a state legislative breakfast on May 9 at the annual meeting, California Senate Health chairman Diane Watson explained the situation on capitation in that state. There are four health capitation bills pending in the state legislature, but Watson said chances for one passing this year are "slim". Affleck also reported that PMA participated in state efforts to defeat or favorably amend "highly restrictive controls on the sampling of Rx drugs . . . in Tennessee and Illinois." He further maintained that the assn. expanded "lines of communication with consumer constituencies such as the Coalition of Hispanic Mental Health and Human Services Organizations, Public Voice, and the Consumer Federation of America." PMA 1984-1985 Chairman Joe Williams commented: "We need you to help broaden our exposure. We must go beyond selling ourselves to the doctors and pharmacists, to govt. agencies and legislative bodies, to the so-called movers and shakers. That we have done an excellent job here, no one can deny. However, we have somehow expected that our message gets to the general public through osmosis. It doesn't work that way. Like good politicians have always done, if you want to be accepted by the people, you make your pitch directly to the people -- at the grass roots level."
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