TCS Daily


Underdosing

By Brian Lee Crowley - August 25, 2003 12:00 AM

If you're sick, and there's a pill for your condition, you want it. Recent medical progress has made many more conditions treatable, but the cost is often high. The elderly, who vote more than any other segment of the population, need more pills than the rest of the population, and their numbers are climbing rapidly.

 

The result? Politicians around the world are trying to cut prescription drug costs to ingratiate themselves to fearful, aging boomers by demonizing drug companies and blackmailing them to drop their prices. They keep new drugs off the lists of products governments will pay for, create price controls, and reduce patent protection.

 

The goals may appear laudable -- achieving lower prices for drugs and easing the financial burden of those who take them.  In my country of Canada, the consequences of accomplishing these goals are on full display: Medicines sold in the U.S. are not available in Canada. Some Canadians even bussed to Maine recently to get the treatments they needed.

 

Drug companies will invest in finding the next miracle treatment only if they can recoup their expenses. The search for disease-defeating and life-prolonging drugs is hugely expensive. Industry estimates peg costs at around $1 billion to develop each major new drug. 

 

For every drug that is successfully brought to market, dozens of experimental agents fail and thousands of compounds are screened. But only three in ten new drugs sold generate sufficient revenues to cover their development costs.  Politicians often attack the "greedy" drug companies, yet no politician ever cured leukemia or prolonged the life of a beloved grandparent.

 

Research does that. Companies are shifting their research efforts out of countries where the returns are poor. For example, European drug giant Novartis recently cut its research effort at its home base in Basel, Switzerland -- at the same time that it was building a major new lab in Massachusetts.

 

Even worse, evidence is emerging of the destruction of a climate favorable to research and development around the world. Company after company has cited the deteriorating public policy situation for pharmaceutical research as a major cause of uncertainty, retrenchment and cost cutting, including in R&D. It now may make more sense to direct research to cosmetic and lifestyle drugs.

 

Political risk is the unseen hand that bruises the drug industry. Bowing to that risk means less research. Certainly, the struggle against disease and disability deserves better from politicians than cheap attempts at courting short-term popularity.

 

Yet the research is eloquent: newer drugs are frequently superior to older therapies.  They save more lives, improve life qualities, reduce side effects and, in some cases, effect cures.  They even reduce the need for much more expensive and invasive therapies and help to avoid costly hospitalization. 

 

Canada finances its drug habit by stealing -- it steals the research that underpins the drugs it craves. But that research won't occur unless someone is willing to pay for it. That someone has been the American consumer. If the U.S. Congress introduces Canadian-style price controls and allows re-importation of Canadian drugs whose prices do not reflect the research effort required to keep the flow of badly needed new drugs, it may mean lower prices for already discovered drugs in the short term. But in the long term the result will be fewer new drugs, prolonged pain and many preventable deaths.

 

No one wants to pay a high price for an existing drug. But someone watching himself, his child or someone else they love waste away from a condition like cancer or Alzheimer's would give everything they have for a cure. Research is costly, but saves lives -- if the politicians don't prevent it.

 

Brian Lee Crowley is president of the Atlantic Institute for Market Studies, a public policy think tank in Halifax.

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