May 20 • 6 min read

John Castellani, President and CEO of PhRMA (Pharmaceutical Research and Manufacturers of America), an organization representing America’s leading research-based biopharmaceutical companies, visited the Temple University campus on April 16. Castellani’s visit brought out a wide mixture of administrators and faculty interested and involved in pharmaceutical research and related issues.  The almost 2-hour engagement with administrators and faculty included Provost Hai-Lung Dai, Dean M. Moshe Porat of the Fox School, Dean Peter Doukas of the School of Pharmacy, and faculty from the Schools of Business, Medicine, Pharmacy, Science and Technology, and Fox Chase Cancer Center.  Castellani also spoke to a diverse group of Temple senior undergraduate and graduate students from various schools across Temple and outside invited guests to hear him speak.

“He’s not just on the pulse of what’s going on in this industry.  He’s in the vortex of policy changes being discussed that can alter the course for the pharmaceutical industry and healthcare in this country,” said George Chressanthis, the professor of healthcare management and marketing who arranged Castellani’s visit.  Chressanthis, who serves as Director of the Center for Healthcare Research and Management at the Fox School, also has a secondary appointment in the Temple School of Medicine Department of Clinical Sciences.  “People walked away with a new-found appreciation and insights about the challenges, opportunities, and uncertainties facing this critical industry that is so vital to our national well-being” noted Chressanthis upon hearing feedback from faculty and students on Castellani’s visit.

Castellani leads PhRMA’s efforts to preserve and strengthen a healthcare and economic environment that fosters medical innovation, new drug discovery and access to life-saving medicines.  Before his discussions with faculty and students, Castellani sat for an interview about his organization and priorities.

What’s the most enjoyable aspect of being President and CEO of PhRMA?

JC: What really gets my blood flowing is the promise of what medicine can do for patients.  That’s really the heart of what gets me in the office every day.  We have never been in a time when the promise of medicine has been more exciting.  Globally, there are 5,400 medicines in or awaiting clinical trials right now, and 70 percent of those are first in class; there’s nothing else like them out there.  There is some outstanding potential out there.  More than anything, that’s what gets me up.

Research and development can be incredibly costly.  What are some of the opportunities and challenges associated with the industry’s R&D timeline?

JC: If you step back and look at all medicines and at what they cost and how long they take, over the past several years, medicines by nature cost about $1.2 billion to $1.5 billion to bring to a patient and takes about 12-15 years.  For every 10,000 compounds you start with at the laboratory, you get one to a patient, and for every hundred that go into clinical trials you get 25.  For those related to neurology, such as dementia and Alzheimer’s, you get about four out of 100, so it is a very expensive and time-consuming process.

When you think about it in the context of business, being a CEO of a biopharmaceutical company, the investment decisions you’re making now in R&D will probably be realized in your successor or even further down the line, and if you were defensive about protecting the shareholder assets you would have a better track record if you said no to everyone than if you said yes.  Yet, despite that, unlike any other industry in the world, we put 20 percent of our revenue into R&D every year.  No one else comes close.

So what’s incumbent on us (the industry) is that we have to bring down that cost of discovery because what we’re developing are more and more medicines that are aimed at a genetically homogenous population, so it’s fewer people.  If you have fewer people over which you can spread that cost of development you have to do two things: you have to bring down the cost of R&D by being smarter, better and faster, and secondly you’re going to have to better demonstrate the value, not the cost, of that medicine before you start researching.  It’s an enormous challenge – and it’s exciting.

To bring down the cost of R&D, how do those conversations typically go with lawmakers?  What challenges do you face?

JC: What’s amazing after 24 years of trying, if you were a type-2 diabetic, which about 34 million Americans are, if you do not manage your disease, you get to an end state where you require dialysis.  Dialysis is about an $80,000 a year regime.  A management regime, like insulin or other diabetic drugs, typically averages $1,200 a year.  The way we’ve hand-structured accounting for cost in the healthcare system was we look at the $1,200 a year and not the $80,000.

Last year for the first time the federal budget finally recognized, based on very good research, something that is very interesting: The first time you brought a prescription drug benefit into the Medicare system in 2006, scientists looked at those patients who for the first time had access to prescription drugs, and they found out that they were saving $1,300 a patient to Medicare. Why?  Because they were avoiding acute care and long-term care.  They ultimately saved $13 billion on the first year alone.

Why are you interested in an opportunity to speak with Temple students and faculty?

Because I always learn something when I come to universities, and I particularly learn it from the students because they are skeptical and they are fresh and not entrenched.  But another reason why I’m here is if you look at the future of biopharmaceutical development, really what you see here at Temple are all the elements that are going to be necessary.

In an integrated way, if you’re going to be successful, you have to be smart from a science standpoint, you have to have the good basic research, which you have here, you have your clinical trial capability here, you have the School of Pharmacy with its capability, and you have to be able to convince people they should invest in you.  You really have all aspects of the R&D and commercialization process for the industry for its future.  There’s not a lot of places you can go in the country where you find them all in one place.