After health reform, Lilly looking for more

September 1, 2010

The health reform debate may have ended in Congress, but Eli Lilly and Co. remains active, sponsoring a talk about the positives of the bill—and calling for further government efforts to help pharmaceutical research and development.

The Indianapolis drugmaker is sponsoring a Sept. 16 “policy summit” in Washington where panelists, including Indiana University President Michael McRobbie, will discuss the job-creating potential of the new health law. The summit is being organized by the National Journal.

By extending insurance coverage to 32 million more Americans, the law would certainly create more paying customers for medical services and products—like Lilly’s medicines.

However, Lilly has already reported that it will forego as much as $400 million in revenue this year alone because the law also required drugmakers to give bigger rebates to federal health insurance programs, such as Medicare and Medicaid. Also, $2.3 billion annually in taxes on the drug industry will dampen some of the boost from expanding those with insurance.

The only places Lilly is adding jobs are in emerging markets, such as China, where Lilly sales are surging. But in such mature markets as the United States and Europe, Lilly is slashing 5,500 jobs by the end of 2011.

Most other major pharmaceutical companies have also eliminated thousands of jobs over the past three years.

Last month, Lilly officials participated in a conference in Bloomington, talking up a report that called for further incentives for medical research and development in order to not fall behind other countries. The report was funded by the Council for American Medical Innovation, or CAMI, an industry funded group.

“Millions of people with devastating illnesses like diabetes, cancer, and Alzheimer’s disease are banking on better treatments that only medical innovation can produce,” said Bart Peterson, Lilly’s senior vice president of corporate affairs and communications. “The priorities recommended by CAMI will provide a critical boost to the innovation effort in our country.”

The report calls for several industry-friendly proposals:

—Making the federal R&D tax credit permanent and larger.
—Developing a regulatory roadmap at the U.S. Food and Drug Administration to help new drugs win approval. The past five years have seen approvals of new drugs wane, with Lilly suffering perhaps more than any other company.
—Federal money to improve math and science education in U.S. schools.

Such proposals are consistent with remarks made earlier this year by Lilly CEO John Lechleiter, who declared an “innovation crisis” in America.

Lilly is struggling through its own innovation crisis, having introduced just one drug to the market in the past five years. It has suffered repeated failures with experimental drugs in late-stage human trials, including two weeks ago when one of its Alzheimer's drugs actually worsened the disease in patients.


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