Lilly CEO Calls for Improved Dialogue in Germany Between Industry and the Government and Health Care System

BERLIN, July 7, 2011 /PRNewswire/ –In an address to the Federation of German
Industries Conference in Germany today, John C. Lechleiter, Ph.D., chairman,
president and chief executive officer of Eli Lilly and Company, offered to help
build a new level of trust between the biopharmaceutical industry and government
health care regulators. Lechleiter said collaboration can harness innovation to
help meet growing health care demands within increasingly constrained budgets,
create an environment where biopharmaceutical innovation can thrive, and achieve
victories on behalf of the people who are counting on medical advances to live
longer healthier lives.

Lechleiter, who in 2012 will serve as the chairman of PhRMA, the U.S.-based
association of global pharmaceutical research and biotechnology companies, noted
that Germany is the third-largest market in the world for most of the industry,
including Lilly.

“Although Lilly is based in the U.S., we have deep roots here in Germany and
enormous respect for this country’s legacy as a pharmaceutical powerhouse,” said
Lechleiter. “However, in no other place in the world has the environment for
innovative pharmaceuticals changed more in the last 12 months than it has in
Germany.” He noted that “recent health care reforms are jeopardizing the
country’s legacy of pharmaceutical innovation,” but added: “At the same time, I
see Germany as a place where the pharmaceutical industry can achieve a
breakthrough – a fresh start if you will – to develop more constructive and
collaborative relationships.”

Lechleiter said government and industry are on the same side in the fight
against disease. “We are collaborators, not competitors. We need to work
together in a spirit of openness and trust, and our industry bears
responsibility for helping to build – or rebuild – that trust.”

To open the dialogue, Lechleiter discussed recent health care reforms in Germany
that have created barriers for innovation. He cited action last year by the
German government to freeze prices for pharmaceuticals already in the market and
to increase significantly the mandatory rebates that industry must pay to the
health system on sales of its products. As well, in a law known by its German
acronym AMNOG, parliament imposed a complex new regulatory mechanism to assess
the added benefit of new pharmaceutical products entering the German market,
linking future net prices to the outcomes of this assessment.

“No other country in the world has a set of requirements quite like those
imposed by AMNOG. The potential effects are serious: launches of new medicines
that can benefit patients delayed or withdrawn, erosion of Germany’s strength in
pharmaceutical innovation, and the loss of high-paying jobs in research and
development.”

He said that AMNOG proposes to determine the value of a medicine in “a wholly
unnatural way: at the time it is launched in the market, before any real-world
experience with the new product is available.” In addition, he said, the
understanding of innovation reflected in German regulation fails to account for
the full value of innovation, with too much short-term focus on holding down
costs “by imposing impossible standards on new treatments that some of the most
effective medicines of the past never would have met.”

“Given that AMNOG is now the framework we have for assessing the value of new
medicines,” he said, “I believe it’s vitally important to find ways within that
framework to allow patients and the health care system to benefit from
pharmaceutical innovation.” He suggested, for example, that “the ‘Early
Assessment’ could be used not to define the potential of a new medicine as low
as possible to save money, but rather to take a comprehensive view of its
potential value for patients.”

Lechleiter will be in Germany for the next 7 days meeting with government
officials, members of parliament, and regulators to make a case for greater
dialogue and trust between industry and health care regulators. “For companies
like Lilly to make the enormous investments necessary to develop new medicines,
we need predictability and certainty in the regulatory process that will
determine whether or not those medicines will ever reach patients. We in
industry are prepared to work with regulators to help define clear, transparent,
and workable approaches to regulation, and we want to work in the same way with
health care policy makers to lay out the process that determines the value of
innovation.”

“We’re on the same side in this fight. We have a common enemy – disease,
disability, and premature death,” said Lechleiter. “And we have a common
interest in the only means by which our health system can help more people live
longer and healthier within constrained budgets – and that’s innovation.”

“I know I speak for colleagues in the biopharmaceutical industry when I say that
we seek a regular, open, and structured dialogue in Germany with the government
and the health care system,” Lechleiter concluded.

About Lilly’s presence in Germany

Germany is one of Lilly’s most important markets. Last year the company
celebrated its 50th anniversary in Germany, and its presence in the country
spans the full spectrum of its business with nearly 1,000 employees. Lilly’s
German headquarters are in Bad Homburg and it packages and distributes Lilly
products to more than 90 countries in Europe, the Middle East, and Africa from
its manufacturing facility in Giessen. The company is currently conducting more
than 120 clinical trials in the country alone, involving more than 14,000
patients and testing 26 potential new medicines. Heidelberg is the international
development base for Lilly’s subsidiary ImClone Systems, focused on development
of new cancer treatments. Earlier this year, Lilly and Boehringer Ingelheim
entered into a global alliance for the development and marketing of at least
four potential treatments for diabetes.

About Eli Lilly and Company

Lilly, a leading innovation-driven corporation, is developing a growing
portfolio of pharmaceutical products by applying the latest research from its
own worldwide laboratories and from collaborations with eminent scientific
organizations. Headquartered in Indianapolis, Ind., Lilly provides answers -
through medicines and information ? for some of the world’s most urgent medical
needs. Additional information about Lilly is available at www.lilly.com.

C-LLY

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SOURCE Eli Lilly and Company