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1953

1963
1973
1983
1993
NPCNOW
NATI ONAL PHARMACEUTI CAL COUNCI L
2003
Tetracycline invented.
First kidney transplant.
First anti-psychosis drugs enable
outpatient treatment and closing
of mental institutions.
National Pharmaceutical Council
(NPC) incorporated in New York.
Dr. Jonas Salk successfully tests a
polio vaccine.
Watson & Crick identify the
double helix structure of DNA.
First immunosuppressant drug used
to block transplant rejection.
Birth of an Industry
In 1895, the first pharmaceutical research laboratory was
established, and the research-based pharmaceutical industry was
born. While previous endeavors had focused on manufacturing
and marketing, pharmaceutical companies now began to
actively seek out new compounds with therapeutic properties.
By the turn of the century, the use of manufactured medicines
was so enthusiastically embraced by the American consumer
that federal oversight was deemed necessary. The modern Food
and Drug Administration (FDA), which began as a division of
the Department of Agriculture, obtained some regulatory
functions with the passage of the Food and Drugs Act of 1906.
Treatments at the turn of the 20th century focused primarily on
alleviating symptoms of acute illness aspirin wasnt even
invented until 1897. And although penicillin was discovered in
1928, it was not available in a therapeutically usable form until
1940, when it played a major role in treating injured soldiers in
World War II.
As the industry evolved, so did legislation and oversight. In
1938, the Federal Food, Drug and Cosmetic Act was passed,
requiring that new drugs be proven safe before they were
marketed. This legislation changed the nature of regulation and
refocused responsibility from the consumer to the drugs
developer. In 1953, the department also came under the
supervision of the Department of Health, Education, and
Welfare, around the same time that medical science took several
giant leaps forward.
1953 was an extraordinary year, with two landmark discoveries.
Dr. Jonas Salk first successfully tested his polio vaccine, and
Watson and Crick published their work identifying the double
helix structure of DNA, which would later win them the Nobel
Prize in Medicine.
The Early Years of NPC
1953 was also the year that twelve pharmaceutical companies
decided to establish the National Pharmaceutical Council with
Newell Stewart as its first president.
1953 - The National
Pharmaceutical Council is
established by twelve
pharmaceutical companies
in New York City.
1953 1954 1955 1956 1957
1
Thalidomide shown to cause birth
defects; FDA keeps drug from U.S.
market.
Kefauver-Harris Act gives the FDA
greater control over Rx, requiring
substantial evidence of both safety
and efficacy; adverse drug reactions
required on all advertising.
Pharmaceutical Manufacturers Association
(PMA) incorporated in Delaware; known as
Pharmaceutical Research and Manufacturers
Association (PhRMA) today.
First drug approved as an
oral contraceptive.
NPCs focus was to address the substitution, without the
doctors authorization, of an alternate product for the brand-
name drug. Although substitution was generally considered
unethical among both pharmacists and physicians, there were
few effective controls or laws specifically prohibiting the
practice. Board of Pharmacy regulations on the subject were
vague or non-existent, and state Boards of Pharmacy were
reluctant to take action against offenders unless well-
documented complaints were filed.
Under the laws in effect at that time, copies of innovative drugs
were often introduced to the market without any review by
FDA, based on the theory that they were generally recognized
as safe. There was thus no assurance that generic drugs were
equivalent to brand-name products, and many doctors
understandably relied on the reputation of research-based
manufacturers when they prescribed for their patients.
NPCs early years were primarily devoted to addressing concerns
about unauthorized substitution at the retail pharmacy level.
Positive relationships were established and assistance was
provided to state Boards of Pharmacy, state and national
pharmacy organizations, and colleges of pharmacy. Within a
decade of NPCs establishment, most states, either through laws
or regulations, prohibited substitution when not expressly
authorized by the prescribing doctor.
1958 1959 1960 1961 1962
NPCs Founding Member Companies in 1953
Abbott Laboratories
Ciba Pharmaceutical Products, Inc.
Hoffmann-La Roche, Inc.
Lederle Laboratories Division, American Cyanamid Company
McNeil Laboratories
The William S. Merrell Company
Charles Pfizer & Co., Inc. (J.B. Roerig & Co.)
G.D. Searle & Co.
Smith, Kline & French Laboratories
E.R. Squibb & Sons, Division of Mathieson Chemical Corp.
The Upjohn Company
Winthrop-Stearns Inc.
1962 - Watson and Crick
win the Nobel prize for
Medicine for their
discoveries concerning the
molecular structure of
nuclear acids and its
significance for information
transfer in living material.
2
U.S. Congress creates Medicare and Medicaid.
200th anniversary of the beginning of U.S. medical
education at University of Pennsylvania.
First drug targeted at a receptor subtype
used for treatment of high blood pressure.
Measles vaccine licensed in U.S.
1965 - NPC moves its
offices from New York
City to Washingon D.C.
1963 1964 1965 1966 1967
In the years that followed, other policies and practices closely
related to the initial substitution laws emerged and occupied
much of NPCs attention, expanding its sphere of activity
beyond pharmacy. Most significant were new relationships with
hospitals, physicians, federal and state government agencies,
consumer organizations and related public interest groups. As
substitution issues slowly re-emerged in the states, NPC played
a significant role in limiting the effects of substitution through
its educational efforts with key stakeholders.
Then in 1959, NPC launched an educational program designed
to strengthen the relationship between the industry and the
pharmacy community that would continue for decades. The
annual pharmacy internship program, a joint project between
NPC and the American Pharmaceutical Association (APhA),
placed pharmacy students in summer internships within NPCs
member companies in an effort to increase understanding
between the two disciplines. The partnership program
continued until 1994, at which time APhA became the sole
administrator.
Putting Down New Roots
In order to enable easier access to Washington-based policy
makers and regulatory staff, NPC moved its offices from New
York City to Washington, D.C., in 1965. Along with the move
came new leadership, as Vernon Trygstad took over as NPCs
president in 1966. Both changes were well suited to NPCs shift
in focus.
Concerns about access to health care in the early 1960s led to
the establishment of Medicare, Medicaid and other state
medical assistance programs. A major portion of NPCs
attention therefore turned to government policies relating to
access to prescription drugs. NPC developed a substantial body
of information concerning government and third-party
programs and established relationships with health care officials
at the federal and state levels.
Among the resources NPC developed was the Compilation on
State Welfare Drug Programs, begun in 1963. This annual
publication would later become NPCs Pharmaceutical Benefits
Under State Medical Assistance Programs. Known today
simply as the Compilation, it is still produced and is
considered an invaluable resource by many public officials and
private analysts.
Under Trygstads leadership, NPC partnered with the California
Department of Health Care Services to determine whether
3
FDA begins comprehensive
efficacy review of all OTC drugs.
Rubella vaccine developed.
American Pharmaceutical Association
seeks repeal of state antisubstitution
laws and regulations.
FDA requires the first patient
package insert.
utilization review and peer review could significantly reduce
health care costs. In the four counties studied, health care costs
increased to a much lesser degree than in the state as a whole,
and the researchers extrapolated that the program could have
saved California $117 million per year if implemented
statewide. The 30 computer programs and management
techniques developed during the study were made available to
other states. Elements of the electronic data processing systems
were also adapted by the federal government and acknowledged
by the U.S. Department of Health, Education and Welfare as a
valuable contribution to its own five-volume publication,
Medicaid Management Information System, developed as a
guide for the administration of State Medicaid Programs.
Interestingly, the original proposal for the California study
included a component to compare medical care costs with and
without a formulary, but it was considered infeasible at the time
due to lack of sufficient accurate data. NPC went on to sponsor
studies in Iowa, Louisiana and Texas examining open drug
programs versus closed formularies. Each study provided
evidence of the medical and economic advantages of an open
drug program.
That same year, the issue of substitution again gained
momentum and included a new emphasis on formularies. In
1970, the American Pharmaceutical Association (APhA)
adopted a policy to seek the repeal of state antisubstitution laws
and regulations. In its efforts, the APhA specifically cited a
Massachusetts law requiring a formulary that listed generic drug
names, which they claimed mandated generic substitution.
APhAs efforts were unsuccessful and many state laws opposing
substitution were actually strengthened in the 1970s.
The influence of consumerism on public policy increased
significantly in the 1970s, due in great measure to a lack of full
and accurate information in the promotion of generic
prescribing and substitution. Thus, the patient package insert
requirement enacted by the FDA in 1970 for certain types of
drugs and the comprehensive review of the efficacy of all over-
the-counter medicines begun in 1972 were well timed.
As the debate grew to include consumer groups and labor
unions aimed at reducing prescription drug and pharmaceutical
services costs, NPC again expanded its reach to build
relationships with, and provide educational activities for,
The electronic data
processing systems developed
during the study conducted
by NPC and the California
Department of Health Care
Services were adapted by the
federal government and
acknowledged by the U.S.
Department of Health,
Education and Welfare as
a valuable contribution to
its own five-volume
publication.
1968 1969 1970 1971 1972
4
First H2 receptor enables ulcer
treatment without surgery.
In the 1980s and 1990s
the pace of successful
research and development
by the pharmaceutical
industry increased and
hundreds of new drugs
and biologics entered
the market.
1973 1974 1975 1976 1977
consumer organizations, medical and pharmacy students and
their related organizations, and the Washington-based staff
members of federal agencies.
But the push to reduce drug costs was on, and in the latter half
of the decade, there was considerable pressure to explore foreign
sources if medicines could be obtained at a cost savings. In June
of 1978, NPC President Trygstad wrote, Especially because it is
current at the moment, mention should be made of pressures
being brought upon Federal agencies, through Congressional
hearings, to shop for and procure drugs from foreign sources.
Unparalleled Successes, New Challenges
The industry was again undergoing changes, and NPC changed
with it. In 1980, Mark Knowles joined NPC as its president,
and in 1985, NPC established its offices in the current location
in Reston, Virginia. During the next two decades, the pace of
successful research and development by the pharmaceutical
industry increased and hundreds of new drugs and biologics
entered the market. It was also during this period that new drug
therapies began to address chronic disease, in addition to acute
conditions. These advances resulted in fundamental changes in
the location and the nature of care delivery by enabling more
patients to be treated on an outpatient basis. As a result, the
proportion of money spent on medicines, rather than on more
intense and invasive therapies such as hospitalizations and
surgeries, began to increase. Innovative drugs for conditions
such as cardiovascular disease, diabetes, and ulcer changed the
quality and length of patients lives. And diseases such as cancer
and AIDS responded to new treatments, becoming manageable
chronic illnesses instead of death sentences.
As the health care focus shifted to the delay of disease
progression, NPC began to devote significant attention to
patient compliance with prescribed medication regimens.
Efforts were made to raise awareness that noncompliance was a
major health problem in the United States. NPC produced
several publications aimed at a wide variety of audiences and
sponsored the first national symposium on the subject, featuring
then-Surgeon General C. Everett Koop and other leading
experts in the field. NPC also developed a widely viewed public
service announcement featuring professional tennis player
Arthur Ashe. Ashe initially became an advocate for medication
compliance as a result of his heart attack and related surgeries.
In retrospect, he became an even more compelling spokesperson
for the compliance issue due to his later, very public battle with
AIDS which he contracted from a tainted blood transfusion
during a 1983 heart surgery.
A technique for the cloning of DNA is
invented by Herbert Boyer and Stanley
Cohen. Synthetic insulin for diabetics and a
growth hormone for underdeveloped children
were made possible by their achievements.
Development of the first
inplantable drug pump
frees patients from daily
injections.
5
Synthetic human insulin is
first biotech drug approved
by FDA, eliminates
problems with allergies.
FDA issues Tamper-
Resistant Packaging
regulations.
Smallpox eradicated.
First documented case of AIDS.
Generic Pharmaceutical Industry
Association founded; known as Generic
Pharmaceutical Association (GPhA) today.
The early 1980s brought some positive changes in the
regulatory environment. For example, the Orphan Drug Act,
which took effect in 1983, was associated with an increase in
pharmaceutical research and development, and can be credited
in part for the introduction of the first effective anti-retroviral
drug for the treatment of AIDS in 1987, less than six years
after the first case of the disease was originally documented.
But even as these new breakthrough drugs came on the market,
previously developed drugs, many of them standard therapies,
faced new challenges as the formulary movement began to gain
momentum once again.
Medicaid Formularies and Managed Care
Throughout the late 1980s and early 1990s, NPC continued
outreach to policy makers, the medical and consumer
communities, and corporate benefit managers about the value of
access to pharmaceuticals and the importance of patient
compliance. Through a series of educational forums, NPC
sought to increase understanding of pharmaceuticals, the
industry and related issues. A video titled Quality Through
Research was widely distributed and used by member
companies. In order to help its members respond to questions
from consumers and policy makers about the value of
pharmaceuticals, NPC also produced a video titled Spread the
Word, which received the Telly Award for excellence in
communications in 1993.
Additional attention focused on NPC as a result of the
Managed Care Health Outcomes Project in 1996. The study
explored the impact of limiting access to prescription drugs and
other cost-containment practices on the use of health care
services. It focused on patients with one or more of five diseases
(asthma, ear infection, arthritis, ulcers and high blood pressure)
in six geographically dispersed HMOs. Lead researcher Dr.
Susan Horn found unintended consequences such that
greater formulary restrictions were associated with increased use
of healthcare services, and therefore, greater costs. The studys
authors also suggested that greater formulary restrictions might
result in decreased quality of patient care. Subsequent literature
searches by NPC found that component management in the
form of restrictions on drugs does not result in overall health
care savings. Instead, increased restrictions appeared to shift
costs from the pharmaceutical component to other areas of care.
NPC worked with
nationally known figures
C. Everett Koop and
Arthur Ashe to promote
better patient compliance.
1978 1979 1980 1981 1982
6
First ACE inhibitor drug enables the
treatment of high blood pressure by a new
mechanism, the modulation of the renin-
angiotensin system.
First biotech-derived interferon drugs for
the treatment of cancer approved by FDA;
critical to opening up the field of
recombinant technology.
Drug Price Competition and Patent
Term Restoration Act (Hatch-
Waxman) expedites the availability of
generics and allows additional patent
protection for new medicines to
compensate for time lost during
FDA approval process.
Orphan Drug Act passed,
promoting research on drug
treatments for rare diseases.
First clot buster dramatically improves survival rates
after heart attack or stroke.
First SSRI approved for treatment of depression.
First protease inhibitor improves drug therapy for AIDS.
In 1996 Karen Williams joined NPC as its president. At
the same time, the Board of Directors revisited and refined
the vision, mission and objectives of the organization (see
box below).
NPC also committed to quality improvement initiatives with
accrediting agencies, medical societies and government agencies.
A Web site, www.npcnow.org, was launched in order to make
NPCs materials more accessible to globally scattered audiences
and membership. Subsequently, a specialized Web site for state
officials, www.dmnow.org, was developed on Medicaid disease
management. Then in 1999, NPC held its first annual Member
Forum in Florida in an effort to bring together a broad cross-
section of company representatives. Attendees were hand-
1983 1984 1985 1986 1987
NPC Vision Statement
NPC communicates the economic, clinical and societal
value of pharmaceuticals and advances the appropriate use
of pharmaceuticals for the betterment of human health.
NPC Mission Statement
NPC conducts, supports and disseminates research for
health care decision-makers and public and private payers
on behalf of the research-based pharmaceutical industry.
NPC has three major strategies:
Development of intellectual assets
Partnering with member companies and outside
organizations to achieve maximum impact
Direct dissemination of programs and products
NPC Objectives
NPCs first objective is to replace component management
of the drug budget with a systems approach to valuing
pharmaceutical therapy based on:
Integrating pharmaceutical care into total patient care
Recognizing the total cost benefit over time
Aligning incentives
Developing more accurate measures for integrated
pharmaceutical care
The Councils second objective is to foster appropriate use
of pharmaceuticals through:
Timely and accurate diagnosis
Initiation of treatment for diagnosed conditions
Rapid adoption of state-of-the-art therapies
Sustained compliance by patients
7
First statin approved for lowering
cholesterol.
FDA accelerates the review of
drugs for life-threatening diseases.
The Prescription Drug Marketing Act
establishes requirements for distribution
of samples and safeguards against the sale
of substandard or counterfeit drugs.
Human Genome
Project begins.
selected by their Board members to enhance their awareness of
and participation in NPC and related industry issues.
NPC also worked to demonstrate effective alternatives to
restrictive drug policies. The Virginia Department of Medical
Assistance Service partnered with NPC to develop a
demonstration project in disease management for their fee-for-
service Medicaid patients assigned to primary care physicians.
NPC and the agency worked with the Virginia Commonwealth
University, the state medical society, and pharmacy and nurses
associations. The results of this project, which became known as
the Virginia Health Outcomes Partnership (VHOP), were
positive. The pilot program, implemented in eight Virginia
counties, increased appropriate medication usage by 25 percent,
decreased urgent care visits by 41 percent, and saved an average
of three dollars for every dollar spent on physician training.
NPC continues to use this project as a platform to educate state
officials and others about how disease/case management
approaches to care can help states improve the health of their
patients and achieve better fiscal outcomes. NPCs educational
programming and technical resources in this area remain
popular with state officials. The VHOP model, and subsequent
efforts in West Virginia and other states, encouraged federal
officials to enable Medicaid agency adoption of disease
management programs and to include such programs in their
plans for Medicare reform.
As issues of restrictions on access continued to be debated, NPC
emphasized the need for patients to have access to a broad
pharmacopoeia in order to be responsive to the individual needs
of a diverse patient population. Such analyses need to be
considered as payers attempt to restrict coverage for individual
patients based on the effectiveness of a drug for an average
patient. Literature reviews demonstrate that physicians must be
able to use treatments that allow for the physiological and
cultural differences among individuals that may affect
medication efficacy, safety, and compliance. Papers focus on the
particular clinical needs of a variety of subpopulations including
African-Americans, Hispanics and the elderly. For example, co-
morbidities common in the elderly may necessitate multiple
drug therapies that could interact with each other, adversely
affect a condition other than the one they are prescribed for, or
be processed differently than expected due to changes in organ
function as a part of the aging process.
At the close of the last century, the environment for
pharmaceuticals saw many simultaneous changes. The managed
care revolution altered, at least for a time, how health care
1988 1989 1990 1991 1992
New generation antipsychotic
drugs enable the treatment
of more patients with fewer
side effects.
Prescription Drug User Fee Act (PDUFA) requires
manufacturers to pay user fees to enhance FDA staff
and resources for faster approvals of new drugs.
Literature reviews support
the need for physicians to
consider the physiological
and cultural differences
among individuals that may
affect medication efficacy,
safety, and compliance.
8
Chicken pox vaccine
licensed in the U.S.
First biguanide drug introduced
to treat type 2 diabetes.
Biotechnology Industry
Organization (BIO) incorporated.
FDA eases restrictions on direct-to-consumer advertising
of prescription drugs.
Food and Drug Administration Modernization Act
reauthorizes PDUFA and mandates wide-ranging
improvements in the agencys regulatory practices.
services were evaluated and delivered. While forcing a new level
of competition, managed care also tended to encourage better
management of chronic disease through increased use of
prescription drugs and patient education. Around the same
time, the FDA underwent wide-ranging reforms, resulting in
faster introduction of many new important therapies. It also
relaxed restrictions on the advertising of drugs to consumers,
particularly through television advertising. All of these changes
increased the demand for proof of the value of spending on
pharmaceuticals.
By the start of a new century, NPC had a growing collection of
work in support of the value of pharmaceuticals to patients, to
the economy and to society as a whole. The evidence mounted
that appropriate use of medicines could produce direct health
care cost savings, improvements in workplace productivity, and
contributions to longevity and overall quality of life. A 2001
Capitol Hill briefing, co-sponsored by NPC, the Alliance for
Health Reform and Health Affairs/Project Hope, featured a
special issue on the value of medical innovation by the peer-
reviewed journal Health Affairs. A companion primer of Health
Affairs articles focused specifically on pharmaceutical
innovation.
Two NPC-supported studies were among the most compelling
in the primer. An analysis of drug spending factors for seven
common medical problems found that spending is driven, not
by price, but by more patients being diagnosed with chronic
diseases and taking more medicines for more days of the year. A
study by award-winning Columbia University economist Frank
Lichtenberg found that a modest increase in spending to pay for
newer drugs not only contributes to improved life expectancy
and quality of life, but can also lead to a four-fold reduction in
non-drug spending. Health Affairs and other peer-reviewed
journals are the venues for more recent NPC-supported research
on the most costly physical and mental health conditions faced
by employers and on the positive effects of direct-to-consumer
advertising on treatment of important health conditions and on
appropriate use of medicines.
NPC was established at the same time that the scientific
community began unlocking the first pieces of the human
genetic code. Fifty years later, with the mapping of the human
genome, America is on the brink of a new era in pharmaceutical
research. But with new medical discoveries, there will be
additional opportunities and challenges for patients, payers and
our industry. NPC is proud to have been a part of the history of
this important industry and will continue to anticipate the
issues, produce strong, evidence-based research, build new
partnerships, and demonstrate the benefits of new medicines to
patients and to society.
1993 1994 1995 1996 1997 19
By 2000 NPC had evidence
that the appropriate use of
medicines could produce
direct health care cost savings,
improvements in workplace
productivity, and
contributions to longevity
and overall quality of life.
9
Board Chairs: The First 50 Years
First targeted cancer therapy
developed through molecular
biology greatly reduces
unwanted side effects.
998 1999 2000 2001 2002 2003
Human Genome Project sequences
first human chromosome.
The first bone-formation agent is
approved for the treatment of
osteoporosis.
The Human Genome
Project to complete
sequencing of the
genome with an
accuracy of greater
than 99.99 percent.
1953 - Paul Gerden, Abbott Laboratories
1954 - Theodore G. Klumpp, Winthrop Laboratories, Inc.
1956 - Robert A. Hardt, Hoffmann-La Roche Inc.
1958 - Carl K. Raiser, Smith, Kline & French Laboratories
1960 - Nelson M. Gampfer, The Wm. S. Merrell Company
1962 - Henry S. McNeil, McNeil Laboratories, Inc.
1965 - Charles V. Owens, Jr, Ames Company, Inc.
1966 - George Squibb, E.R. Squibb & Sons, Inc.
1967 - J.R. Mason, Sandoz Pharmaceuticals
1969 - Henry F. DeBoest, Eli Lilly and Company
1971 - Robert H. Hensel, Lederle Laboratories
1972 - Garth Quinn, Burroughs Wellcome Co.
1973 - William L. Searle, G.D. Searle & Company
1975 - Irwin Lerner, Hoffmann-La Roche Inc.
1976 - Michael Bongiovanni, E.R. Squibb & Sons, Inc.
1977 - Lawrence C. Hoff, The Upjohn Company
1978 - John E. Lyons, Merck Sharp & Dohme
1979 - George W. Eckelmann, Hoechst-Roussel
1981 - Paul E. Freiman, Syntex Laboratories
1982 - Peter S. Howsam, Burroughs Wellcome Co.
1983 - Robert L. Hanson, Schering Laboratories
1984 - Milton J. Henrichs, Abbott Laboratories
1985 - Alfred A. Mannino, Marion Laboratories
1986 - C.J. Cowles, Parke-Davis
1987 - Douglas J. MacMaster, Jr., Merck Sharp & Dohme
1988 - Thomas W. Hoffmeister, Syntex Laboratories
1989 - John H. Dillon II, Smith Kline & French
1990 - Paul N. Clark, Abbott Laboratories
1991 - E.M. Cavalier, Eli Lilly and Company
1992 - Donald R. Lee, Procter & Gamble Pharmaceuticals
1993 - Peter R. Seaver, The Upjohn Company
1994 - Harold F. Oberkfell, Parke-Davis
1995 - Kurt M. Landgraf, The DuPont Merck Pharmaceutical Co.
1996 - Stephen G. Sudovar, Hoffmann-La Roche Inc.
1997 - David W. Anstice, Merck & Co.
1998 - David B. Goffredo, Abbott Laboratories
1999 - Karen Katen, Pfizer Inc.
2000 - Gerald B. Rosenberg, Bayer Corporation
2001 - Stan Benson, Amgen Inc.
2002 - W. James OShea, Sepracor Inc.
2003 - Gerald P. Belle, Aventis Pharmaceuticals Inc.
10
NATI ONAL PHARMACEUTI CAL COUNCI L
1894 Preston White Drive
Reston, VA 20191-5433
Phone: 703.620.6390
Fax: 703.476.0904
Web: www.npcnow.org

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