Profit and PR are the real enemies of innovation

[Póg mo 1,749]

Good article on what is wrong with the US pharmaceutical industry:

"The US drugs industry, say Light and Lexchin, spends only 1.3% of revenues (excluding taxpayer subsidies) on basic research to discover molecules that could lead to genuinely new medicines. It spends far more on maintaining profits – among the highest of any industry, after tax – and on PR, marketing and lobbying. There is an innovation crisis, but largely of the companies' own making."

"For years nearly all original drugs brought to market have been based on research either at taxpayer-funded institutions, mainly universities, or in small biotechnology companies. Big companies, such as Pfizer and GlaxoSmithKline (recently fined $3bn by US regulators for aggressive and misleading marketing), are essentially rent-seekers. They do not create wealth and add social benefit, but enrich themselves through control of resources, as landowners have done for generations. And what has happened in "big pharma" – long marked down by the left, and some on the right, as an unacceptable face of capitalism – mirrors what has happened across the British and US economies. The innovation crisis is not confined to the drugs industry."

"In short, rent-seeking is now far more lucrative than innovation that delivers social benefits. The big rewards go to directors and executives of large companies – and financial traders, the ultimate rent-seekers who impose an unproductive tax on invention, investment and hard work across the world. Like the inventors of lasers and transistors, Alan Turing – without whom the modern computer wouldn't exist – and Tim Berners-Lee, inventor of the worldwide web, did not become rich. Bill Gates and the late Steve Jobs did.

Profits are the enemies of innovation

[rocks 494]

It is bizzare that pharmaceutical companies advertise on TV to the layman. Surely doctors should be the ones exposed to the advertising, not us?

[I AM NOT THAT GUY 5,715]

Yes nationalize the pharma industry and we can be as mediocre as Britain and the rest of the EU.

[Póg mo 1,749]

Yes nationalize the pharma industry and we can be as mediocre as Britain and the rest of the EU.

Maybe you missed it, but European companies are already ahead, last I checked, of US the pharmacological industry. Never mind, just carry on bashing anything remotely connected with socialism.

Edited August 12, 2012 by InKorea

[I AM NOT THAT GUY 5,715]

Maybe you missed it, but European companies are already ahead, last I checked, of US the pharmacological industry.

I don't think so, unless you mean as a testing ground for US drug companies.

Why Europe Lags in Pharmaceuticals and Biotech -- Harvard Business School

Europe 'lagging further behind US on drugs'

Is the randomized controlled drug trial in Europe lagging behind the USA?

Edited August 12, 2012 by The Patriot

[Póg mo 1,749]

I don't think so, unless you mean as a testing ground for US drug companies.

Why Europe Lags in Pharmaceuticals and Biotech -- Harvard Business School

Europe 'lagging further behind US on drugs'

Is the randomized controlled drug trial in Europe lagging behind the USA?

Interesting:

Global Drug Discovery: Europe Is Ahead

Donald W. Light

+ Author Affiliations

Lorry Lokey Visiting Professor at Stanford University, in Stanford, California

Donald Light (dlight@stanford.edu )

Abstract

It is widely believed that the United States has eclipsed Europe in pharmaceutical research productivity. Some leading analysts claim that although fewer drugs have been discovered worldwide over the past decade, most are therapeutically important. Yet a comprehensive data set of all new chemical entities approved between 1982 and 2003 shows that the United States never overtook Europe in research productivity, and that Europe in fact is pulling ahead of U.S. productivity. Other large studies show that most new drugs add few if any clinical benefits over previously discovered drugs. I discuss ways in which Congress, employers, and insurers can increase the value of drugs and revitalize the U.S. pharmaceutical industry.

http://content.healthaffairs.org/content/28/5/w969.abstract

[I AM NOT THAT GUY 5,715]

Interesting:

Global Drug Discovery: Europe Is Ahead

Donald W. Light

+ Author Affiliations

Lorry Lokey Visiting Professor at Stanford University, in Stanford, California

Donald Light (dlight@stanford.edu )

Abstract

It is widely believed that the United States has eclipsed Europe in pharmaceutical research productivity. Some leading analysts claim that although fewer drugs have been discovered worldwide over the past decade, most are therapeutically important. Yet a comprehensive data set of all new chemical entities approved between 1982 and 2003 shows that the United States never overtook Europe in research productivity, and that Europe in fact is pulling ahead of U.S. productivity. Other large studies show that most new drugs add few if any clinical benefits over previously discovered drugs. I discuss ways in which Congress, employers, and insurers can increase the value of drugs and revitalize the U.S. pharmaceutical industry.

http://content.healthaffairs.org/content/28/5/w969.abstract

And summarily rejected:

Donald Light inaccurately argues that recently Europe has been more productive than the U.S. in biopharmaceutical R&D and ignores the significant innovations achieved in recent years.

Light designates a drug’s origin by the location of the innovator company’s headquarters, which is not dispositive of where a drug is developed. For example, numerous EU-headquartered companies have moved large R&D operations to the U.S. To counteract this trend the European Commission recently launched the Innovative Medicine Initiative, stating that “Europe’s pharmaceutical research and development basis has gradually eroded, with new leading-edge technology research units being increasingly transferred out of Europe, mainly to the United States and recently also to Asia.” This is evident in the National Academies finding that the U.S. “supports by far the single largest biotechnology industry.”

Although the analysis is very instructive, it seems to me that there is a concern in the methodology, which weakens the conclusions drawn from the data: (1) The "area" R&D productivity ratio used is: (no. of drugs found by companies headquartered in the area) / (total R&D costs in the area). (2) The numerator and the denominator do not refer to the same thing: a company headquartered in the U.S. can conduct its R&D activities in Europe, or vice versa. Indeed, many big European pharma companies (Roche, Novartis, GSK, etc.) have important research sites based in the U.S. and may therefore conduct more research in the U.S. than in Europe

Unfortunately, this paper paints a distorted picture, gives short shrift to medical advances made possible by America’s pharmaceutical research and biotechnology companies, and ignores the chilling effect that government price controls have on innovation.

Let there be no mistake: America leads the world in developing innovative medical therapies that have revolutionized health care, helping patients to live longer, healthier, and more productive lives.

Donald Light compiled an impressive set of Notes in the conduct of his research. However, Note 23 isn't representative of P.M. Danzon's findings on international drug pricing. In her 1993 research, she found that many governments, such as Japan, Denmark, the U.K., and France, subsidize the R&D components of their pharmaceutical industries, making international comparisons difficult. She also found that most governments other than the U.S. regulate prices either directly or indirectly. France and Italy directly regulate prices at launch and subsequent rates of increase. Germany, the Netherlands, and Denmark operate reference price systems and thereby exert strong pressure on prices charged by manufacturers. The U.K. operates a system of profit regulation that constrain prices to yield no more than a target overall rate of return on capital.

If Light had compared apples to apples, the following statement would have been greatly moderated: "Congressional leaders and others concerned about high prices of new patented drugs will be heartened by this analysis, because lower European prices seem to be no deterrent to strong research productivity."

In France, the government decides which drugs to use and at what prices. American pharmaceutical companies must either accept the dictated prices or risk losing market share. So, they sell at higher prices in the U.S., in effect subsidizing French citizens -- who get the same drugs, but at lower prices.

http://content.healthaffairs.org/content/28/5/w969.abstract/reply#healthaff_el_31850

[Póg mo 1,749]

And summarily rejected:

http://content.healthaffairs.org/content/28/5/w969.abstract/reply#healthaff_el_31850

Yes, then Donald W. Light summarily and convincingly rejected the rejections:

Ken Johnson, SVP of PhRMA, asserts that my article "gives short shrift to medical advances" by American companies. But my analysis is based on Grabowski and Wang's sample of all NCEs approved in the U.S., Europe, and Japan, provided to them by IMS. In fact, Grabowski and Wang's methods favored the U.S. by counting NCEs sold in the U.S. but not sold in Europe, while not counting NCEs sold in Europe but not the U.S. If Johnson had read the article, he would have seen that the data are over-generous toward the United States.

Johnson's citing of a statistic from the industry's top policy research center is one of many that industry advocates cite that is selective, short-term, or biased. The great strength of the data set used in the article is that it is a total sample over a long period.

Further, all classifications and methods were devised by Grabowski and Wang, not me, and used to "prove" that the U.S. has eclipsed Europe in pharmaceutical research productivity. All I did was control for the huge shift of R&D investment to the U.S., which makes this a self-fulfilling prophecy, and asked how productive the two regions were, dollar for dollar. Faston-Mathe, Reilly, and others are correct that the measures are crude and misleading (and also biased towards the U.S.); but these are the measures and data used by PhRMA's favorite economists to "prove" how Europe is all washed up -- as Johnson and Reilly emphasize.

Their message is clear: European public policies are "ill-conceived" and "chilled innovation." All new drugs are better, and the quicker that more people take them, the healthier they will be. Any measures taken to weigh the comparative advantage of new drugs to existing ones, or to get good value for money or be concerned about rising costs, are ill-conceived and chill innovation.

Jerry Norris raises some interesting facts not considered in the article, but ends with the widely promoted "free rider" claim that lower prices in other countries force Americans to subsidize them. Not true, except by assertion. See the 2005 BMJ article cited in my article. Government and industry reports abroad indicate that companies recover all costs and make a good profit at European prices; so Americans pay super prices for super gross profits, which then fund massive marketing and lobbying costs. But the whole argument depends on a silo-market view of the world that has little to do with how new drugs are sold internationally, and it assumes that one can attribute certain proportions of R&D to country A or B (France and the U.S. in Norris's comment). How would Norris or anyone else persuasively assign such costs in order to verify that French prices require cross-subsidies from American buyers? Much more likely is that U.S. buyers are over-paying and getting poorer value.

Johnson and Reilly emphasize how many lives have been saved or extended by new drugs; but such general evidence does not address the question of how many additional lives have been saved or extended by new drugs when independently compared to older drugs and when taking into account other important factors. Nor does it address the detailed evidence that only 1 in 7 new drugs offers significant therapeutic advances, while the other 6 of 7 do not but cost employers and taxpayers billions as they are vigorously sold to physicians and patients, using far more money than is put into R&D. One in seven still results in a steadily growing repertoire of superior new drugs, which could explain the health gains these highly paid officers of the industry's public relations organization emphasize. They do not mention that drugs have become, according to the FDA and others, a leading cause of death and hospitalizations as well.

[I AM NOT THAT GUY 5,715]

So, you are going to rely on the one author that is bucking the trend. I see.

[Póg mo 1,749]

So, you are going to rely on the one author that is bucking the trend. I see.

No, I will just believe what ever big pharma tells me and just because doing the opposite might cause me to question my belief system.

[I AM NOT THAT GUY 5,715]

No, I will just believe what ever big pharma tells me and just because doing the opposite might cause me to question my belief system.

I see. Presume much and fail? You could expand your reference base, analyze various positions, and then come to your own conclusions. In the current curriculum, that has been replaced by regurgitation. In the old days, we had to rely on libraries (large buildings for the lending and examination of books (large collections, usually sheets of paper bound and contained within a thicker material(s), with symbols indelibly written on them) and other items) to expose ourselves to new ideas and ways of thinking. Now there is the internet, where a near infinite amount of material is available, should you wish to venture into the brave old world of critical thinking.