Friday, December 22, 2006
Apologist for Big Pharma
He goes on to write :
THE PHARMACEUTICAL industry is getting bad press. Recent books by Marcia Angell, the former editor of the New England Journal of Medicine, and Jerome Kassirer, another former editor of the journal, have harshly condemned the industry for recklessness, insensitivity and all-consuming greed. They gain sales by spicing up their titles with inflammatory phrases about "deception," "complicity" and how drug companies "endanger your health."He points out the following constraints under which pharmaceutical firms operate:
- Rather than "heartless, avaricious behemoths that act in whatever manner they choose and always get their way, drug companies are too heavily regulated." They operate "in a hostile and excessive regulatory environment that frustrates sound business decision-making and keeps down pharmaceutical company share prices in the stock market."
- "Ever-tougher conflict-of-interest rules in the National Institutes of Health and such academic medical centers as the University of Pennsylvania, Stanford and Yale have reduced opportunities for fruitful collaboration between industry, government and universities."
- In addition, "the industry faces major liability risks. Consumer fraud legislation adopted in many states has generated massive, often eye-popping claims for refunds of the original purchase price — in some cases even for drugs that have worked as promised or on the part of people who have not taken the drugs at all."
- "Regulatory attacks on the industry's pricing model, including recent proposals to have the government negotiate rates for all senior citizens covered under Medicare Part D, threaten its revenue stream."
He continues by pointing out the expense of developing a new drug and raised the question of who pays for the development costs? He argues that price controls, or "even talk of price controls" discourages pharmaceutical companies from the investment needed to develop new drugs. He contrasts two strategies: (a) avoid regulation and encourage new companies to enter the business; (b) imposing price controls. He writes that the second strategy leads to lower prices now but fewer new drugs in the future. The first strategy leads to higher prices for new drugs but a more plentiful supply and variety of drugs later on.
By now you must realize that I have a rather strong reaction to this article or I wouldn't bother to be writing this post about it. My reaction is that it is a typical conservative attempt to salvage an existing system of drug development and distribution by applying palliatives and band-aids. I ask, why should drug companies be required to make heavy investments in the development of new drugs and other medications that are of great benefit to the public? Instead of requiring the first users of these medications to pay, why not let everyone pay? Why not let government laboratories develop the drugs and then license their manufacture by private firms?
A problem with our present system of developing and distribution new drugs that Mr. Epstein doesn't mention is that drug companies are motivated to develop drugs that they believe they can sell in large quantities, such as Viagra and Cialis and other cures for erectile disfunction, rather than drugs that can save lives by treating serious but uncommon ailments. Big Pharma may not be heartless but it knows where the money is.
My suggestion to have government laboratories develop and license new drugs is not intended to try to replace the present system of private investment. Let Big Pharma keep its Viagra. Let government or other publicly funded non-profit laboratories develop drugs for serious medical problems where there isn't a lot of profit available.
RICHARD A. EPSTEIN is a professor of law at the University of Chicago and a senior fellow at the Hoover Institution who has often consulted for the pharmaceutical industry.Labels: Big Pharma, Drug prices, erectile disfunction, regulation
