Health

The US Pharma Industry

By Dweep Chanana ⋅ September 1, 2006 ⋅  Email this post ⋅ Post a comment

Even as I was writing about problems of the pharmaceutical industry - in the context of R&D for developing world diseases - I come across two broader issues about the US.

First, Alex pointed me to Marcia Angell, a Senior Lecturer in Social Medicine at Harvard Medical School. Her book, The Truth About the Drug Companies: How They Deceive Us and What to Do About It (excerpts here), should provide interesting reading, perhaps with some hyperbole.

She makes a strong case for regulation of the industry, comparing it to a public utility:

Yet, unlike other businesses, drug companies are dependent on the public for a host of special favors—including the rights to NIH-funded research, long periods of market monopoly, and multiple tax breaks that almost guarantee a profit. Because of these special favors and the importance of its products to public health, as well as the fact that the government is a major purchaser of its products, the pharmaceutical industry should be regarded much as a public utility.

While she takes a US perspective, she also does mentions how the industry is not as innovative as it claims to be. Much of the research is now being done by public-funded institutions such as universities and the NIH. She quotes:

If I’m a manufacturer and I can change one molecule and get another twenty years of patent rights, and convince physicians to prescribe and consumers to demand the next form of Prilosec, or weekly Prozac instead of daily Prozac, just as my patent expires, then why would I be spending money on a lot less certain endeavor, which is looking for brand-new drugs?

Second, as if to illustrate some of these issues, the US has been witness to a dispute between Bristol-Myers Squibb and Apotex, a Canadian company, over the sale of a generic version of Plavix (Plavix is BMS’ best-selling drug, accounting for a third of sales). For updates on the issue, read:

• Judge halts sales of generic Plavix (September 1, 2006).
• Bristol-Myers Tries to Stop Apotex Sales (August 14, 2006).
• Bristol-Myers Squibb stock down 6.8% (August 8, 2006).

The public interest in lower-priced drugs is balanced by a significant public interest in encouraging the massive investment in research and development that is required before a new drug can be developed and brought to market.