Although pharmaceutical and medical technology companies here face real challenges, they are not as likely to suffer as some neighbors from the economic downturn, says Bob Franks, president of the HealthCare Institute of New Jersey.

First, most New Jerseyans have health insurance that covers most of the cost for prescription medications. Even if a copay is required, says Franks, “most people take very seriously the prescriptions that their doctors give them and will choose to remain healthy by getting those prescriptions filled.”

For people who fall between the cracks, the industry offers a program to provide medicine free or at reduced cost. The income limit (available through www.rx4nj.org) is 200 percent of the federal poverty level or less. “Rx4NJ has already helped a quarter million people obtain medicine,” notes Franks.

Another reality that bolsters these industries is that people are always getting sick. “Illness is recession proof,” says Franks. “People will go either to an emergency room or a doctor and will get a prescription, and it will be filled.” The health of many New Jerseyans on maintenance medications, he adds, depends on their being able to maintain their medication regimen.

Franks will speak on the state of healthcare here on Thursday, November 20, at 12:15 p.m., at the Hyatt Regency in New Brunswick. Cost: $75. For information contact Deborah Miller at debbie@mcrcc.org or 732-745-8090, ext. 202. To register, go to www.mcrcc.org.

Although the existence of sickness and the need for medications are indisputable, the pharmaceutical and medical technology industries nonetheless face several serious challenges:

Limited patent protection. “Many of the leading medications on the market today will have their patent protection expire in the next three to five years,” says Franks. To bring a drug from the scientist’s bench to the drugstore takes more than a billion dollars, he continues. Consequently, the price charged for a drug must both recoup the costs of development and testing as well as generate the cash to fill their future pipelines.

Although those in the industry believe that the current protection period is too short, many politicians, whose constituents are looking for less expensive medicines, are pushing for more limited patent protection in order to get generics into the market more quickly. Franks is concerned that with insufficient patent protection and exclusivity, companies would be unwilling to make the initial investment to produce a new drug. “If they don’t have time to recoup their investment, they won’t invest,” says Franks. “It will hurt those who suffer from cancer, AIDS, diabetes, and heart disease.”

Increasing difficulty in the science. Because most of the “low-hanging fruit” has already been picked, the next level of drugs is much harder to develop.

Decreasing and slower approvals by Food and Drug Administration. The number of new drugs being approved is way down. Although this is due in part to fewer new drug applications being submitted, the FDA is also taking much longer to review submissions and is approving fewer. One big problem Franks identifies is that the FDA does not have enough competent scientists on staff to expedite the review period. But the review process has also slowed because high-profile drug safety issues have made the FDA more cautious. “They are demanding more expensive, larger, and longer trials before they will agree to approve new drugs,” says Franks.

Potential governmental price controls. “About 50.1 percent of all medicines out there are being purchased by federal and state government,” says Franks. The fed is by far the largest purchaser. This hefty buying power could lead to the imposition of price controls, as other governments have done. Franks fears such action could endanger the continuing viability of New Jersey’s pharmaceutical industry. Says Franks, “That would derail innovation and put welfare of patients at great risk.”

Franks grew up in Glen Rock in Bergen County and graduated from Summit High School. His father worked for a variety of manufacturing enterprises, and his mother was a homemaker.

He earned a bachelor of arts in communications and political science from DePauw University in Indiana, and a law degree from Southern Methodist University in Dallas. In college he was deeply involved in student government and after law school started to work in elective politics. “I grew up in 1960s and ‘70s at a time when kids believed that they could improve the life of their community through public service, “ Franks says.

After serving as a key advisor to Governor Tom Kean in his 1981 gubernatorial election, Franks managed the campaigns of New Jersey Congressmen Jim Courter and Dean Gallo. Franks was a member of the New Jersey General Assembly for 13 years, and served as state Republican chairman between 1987 and 1992, before stepping down to run for Congress.

Franks served four consecutive terms as Congressman for New Jersey’s seventh district and served as acting governor after Christie Whitman was tapped by the Bush Administration to head the EPA. After he lost his gubernatorial bid to Jim McGreevey in 2000 industry leaders asked him to run the trade organization that represents them; in 2001 he became president of the HealthCare Institute of New Jersey, an association of 22 research-based pharmaceutical and medical technology companies.

Drug development is slow and expensive, says Franks. Assuming that today somebody in a lab in Plainsboro breaks through with a cancer cure, it will take three to five years to get approval for the drug. “This is a high-risk business,” he says, “and most of the activity in the lab does not yield success.”

But there are two excellent reasons for New Jersey to support its pharmaceutical and medical technology industries. The first is the actual and potential contributions to the health of New Jersey residents. “Our researchers are working on 912 different compounds today,” says Franks. “Hopefully some of those will represent significant breakthroughs in treating dread diseases.”

The second is the impact of the industry on the New Jersey economy. A 2007 survey by the HealthCare Institute asked its New Jersey-based companies how many dollars in contracts they issued for products and services from third-party vendors — for example, ad agencies, law practices, accounting firms, and clinical research organizations. The answer was $3.451 billion.

“There are thousands of small and mid-sized businesses that we are keeping viable on the basis of the fact that we are in New Jersey, spending that money for a wide array of services and products,” says Franks. “It is not just our direct employment that is an engine to the economy, but the money our companies spend with other New Jersey businesses that gives it an enormous ripple effect.”

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