Wednesday, August 23, 2006

Pharmaceutical companies and the "innovation" myth.

Why is it that whenever a pharmaceutical manufacturer's patent is threatened, they have to go for the "but this will stifle innovation!" defense? See here for my inspiration. There's a couple of problems with this whole line of defense. First, pharmaceutical companies aren't terribly innovative. They keep churning out drugs for the same, relatively narrow scope of problems -- largely ones which affect Westerners, because those are the people they can sell to. One of my favourite examples of this is the anti-allergy medication, Claritin, manufactured by Schering-Plough. Claritin has been over the counter (OTC) in Canada for years, but was only approved OTC by the FDA in 2002 ( Moving from prescription to OTC generally drops the price of a drug significantly. So, what does Schering-Plough do? They start to manufacture Clarinex -- which is, as far as I can tell, basically the same chemical -- which requires a prescription.

Second problem is the presumption that private pharmaceutical funding is the only, or even the primary, source of money for drug development. I've seen no data, ever, to suggest that public funding is not at least equal to private funding. And, certainly, if private funding drops below a reasonable level, the public funding could be stepped up to cover it.

Third problem, and really most severe, is the conceit that a thriving industry needs to be sheltered from market forces, else simply die. That is, are we really supposed to believe that the pharmaceutical industry is so tenuous, so close to bankruptcy, that forcing it to compete with generic drug manufacturers would lead to the end of pharmaceuticals as we know it? Granted the generics profit largely because they have little or no R&D costs, while the prescription drug manufacturers do have an R&D overhead. But, on the other hand, I have a hard time believing that the difference in price between name and generic branded versions of a drug is solely due to the associated R&D costs of the name brand manufacturers. I find it more plausible that the name brand manufacturers are exploiting the protection of their patents to, not to put too fine a point on it, screw over sick people. Really, then, if name brand manufacturers want these iron-clad patents to recover their R&D costs, why shouldn't they be price-controlled -- to ensure that they are only recovering their R&D costs?

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