Skip to comments.(Vanity) Big Pharma and the Broken Window, or, Look at These Drug Prices, It's a Crime
Posted on 01/14/2007 1:54:10 PM PST by grey_whiskers
With the recent ascent of the Democrats to the majority party in both Houses of Congress, we are seeing a number of changes in the direction and focus of proposed legislation. Among these are the minimum wage increase, paygo (a good idea if not used solely as a trojan horse for tax increases), rollbacks of subsidies for Big Oil. And with it, a change in the attitude towards Big Pharmaceutical Industry. The last time we had Democrats in power, it was under Bill Clinton, when Hillary attempted to take over the US medical care system. And we all know how that turned out!
In light of this, it might be a good idea to revisit the pharmaceutical industry. One of the complaints is that the pharmaceutical companies are focused too much on profits, at the expense of the lifesaving drugs we all need. Or, according to some crusaders, deserveas though merely by being sick, one person can lay a claim on a multi-billion-dollar bureaucracy to turn on a dime and come up with a cure just to save *them*. And of course, when one hears of the cost of some treatments for AIDS, or the attitudes of drug companies towards some non-lucrative palliatives (e.g. nutraceuticals), one is tempted to agree with this point of view.
But this paints a false picture, since the drug companies dont operate in a vacuum. In particular, there is the heavy hand of government to consider. In order to keep people safe from scam artists (such as patent medicines of the early 1900s era) and to make sure that drugs have no unintended side effects (thalidomide), the U.S. government has mandated that a great deal of time be spent on scientific, clinical trials of any new candidates for drugs. These trials are intended to demonstrate both the safety and the efficacy of any new drug, before it is approved. This is a good thing. But insisting on clinical trials lead to unintended side effects and I dont mean the usual headache, dry mouth, itching, talk to your doctor. (Can you say lawyers?)
The first offshoot of clinical trials is that it takes a great deal of time to get any new drug approved, no matter how urgent the need. This makes drug companies look uncaring. The second offshoot of trials is that in order to jump through all of the regulatory hoops, it is necessary to spend a great deal of money. And money does not grow on trees. Therefore, the people who run the drug companies have done a simple-cost benefit analysis. It runs something like this:
1. The government wants me to spend up to $300 million researching a promising new drug (according to a 1993 study by the now-defunct US office of Technology Assessment).
2. Once I create the drug, I have to produce it, market it, protect my intellectual property rights, and pay all my employees and vendors.
3. And I have to keep feeding money into the pipeline for when the patent on this drug expires, so I can have a new drug to sell.
4. Given all those costs and risks, am I going to target an obscure disorder like Whipples Disease, or am I going to go for where the big money isheart disease, cancer, bird flu vaccines?
In a nutshell, then, the very regulatory process which is designed to ensure that patients have access to safe, effective drugswhen in interaction with other government strictures such as patent expirationsleads to fewer drugs being available for fewer people.
I fear that the populist remedies from the Democrats will kill the goose that lays the golden pillsand just in time for the baby boomers to retire. So what should be done? I have a suggestion, based upon another area of society which our government seems to have hosed up good and proper: the criminal justice system.
Our system is (quite correctly) based upon the presumption of innocence, and upon protections against self-incrimination. As a result, for many crimes, it is very hard for prosecutors to win a conviction against a defendant who has a skillful defence attorney. On the other hand, there is so much petty crime, and going after the small fry is so time consuming, that prosecutors focus on the highly publicized cases, to make it look like they are doing something. Never mind that the broken window theory shows that focusing on the smaller, victimless crimes do more to change the climate than one or two sensational convictions. Making the situation worse, another government policy--the war on drugsmeans that there is a flood of defendants, overwhelming the resources of the prosecutors for all but the biggest cases. Similar to drug companies focusing on the highest-payoff treatments. (And even so, sometimes the big one gets away. Pfizer had to discontinue research on torcetrapib; O.J. Simpson walked.)
So, if there is a similarity between the drug-discovery industry and the criminal justice system, maybe we can borrow solutions from the one to apply to the other. The prosecutors answer to swamped dockets and high evolutionary barriers is the plea bargain: a compromise between the interests of justice, the accused, and the prosecutor. A trial costs us a lot of money, but you dont know if youll get convicted or not. Lets split the difference. Well lower your sentence, if you agree to guilt on something smaller. An analogy for the drug industry might be: here is an important but not a lucrative illness. In order for you to get more drugs to treat this syndrome, we will lower the bar for testing say, if the drug has been used safely in Europe for so and so long, we will give expedited approval; or for terminal illnesses, we will allow less stringent trials, designed only to ensure efficacy. In return, you will agree to forego promoting this drug for off-label uses, or agree to license the drug to other manufacturers and split the profits. I dont know if this idea will make things better, or if it has already been tried. But the current standoff between competing interests, in the classic less filling! tastes great! fashion, is not serving anyones interests. Does anyone with experience in this area have any comments?
I always worry about additional governmental regulation and its unintended consequences, but in this case I don't see how the impact of such a policy could be any worse than the current structure.
I put 3 different types of drops in my eyes twice a day (glaucoma).
Each Rx costs between $130-$150. And that is for 10 ml, one month supply.
I figured it out, translating that to a gallon of the stuff (I used a gallon because I know what a gallon looks like, like in a milk container, or the gas tank), it is close to $40,000 a gallon.
A couple of thoughts:
Thank goodness for medical insurance!!
I'll never complain about the cost of gas again.
I told my doctor about the cost of the Rx he was prescribing and his response was a shrug of the shoulders and mumbled something about the purity the drug maker has to put into the Rx.
Rather like the IRS and "Fair Tax", ya' know?
And let's not forget all those John Deans out there. The Trial Liars Assoc., which you cite, would be down the throats of Congress in half a heart-beat. And most of the congress-critters are lawyers too.
As for the cost of drugs....I worked for a defense contractor in another life. I know exactly why toilet seats were $600 each. The pharma companies are in the same position with bureaucratic regulation compliance and performance administrivia. Billion$ in lost productivity and products is the result.
Your observation vis-a-vis the Justice(?) System is interesting, but until us Boomers start screaming (i.e. voting) when the drugs aren't forthcoming, we'll have no opportunity to 'plea bargain'
The average cost of bringing a new drug to market has now reached $800 million. These silver bullets are becoming more elusive, and more expensive, at a time when we need them most.
In a nutshell, then, the very regulatory process which is designed to ensure that patients have access to safe, effective drugs -- leads to fewer drugs being available for fewer people. I fear that the populist remedies from the Democrats will kill the goose that lays the golden pills -- and just in time for the baby boomers to retire.Euthanasia is part of their agenda, as is health care rationing for the elderly. Lester Thurow gave an op-ed some years ago on PBS' "Nightly Business Report" in which he noted that most of a American's health care dollars are spent in the last year of life, and that should be stopped.